KIOWA TRIBE OF OKLAHOMA v. MANUFACTURING TECHNOLOGIES, INC.
The U.S. holds in trust the Oklahoma land that the federally recognized Kiowa Tribe owns. In 1990, the then-Chairman of the Tribe's Business Committee signed a promissory note in the Tribe's name in order to purchase stock from Manufacturing Technologies, Inc. The note states that it was signed on tribal lands and provides that nothing in it subjects or limits the Tribe's sovereign rights. After the Tribe defaulted, Manufacturing Technologies sued the Tribe in state court, claiming that the note was executed and delivered beyond tribal lands. The Tribe moved to dismiss for lack of jurisdiction. Denying the motion, the trial court entered judgment for Manufacturing Technologies. In affirming, the Oklahoma Court of Civil Appeals held that Indian tribes are subject to suit in state court for breaches of contract involving off- reservation commercial conduct.
May Indian tribes be sued in state courts for breaches of contract involving off-reservation commercial conduct?
No. In a 6-3 opinion delivered by Justice Anthony M. Kennedy, the Court held that Indian tribes enjoy sovereign immunity from civil suits on contracts, whether those contracts involve governmental or commercial activities and whether they were made on or off a reservation. Noting that an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity, Justice Kennedy deferred to Congress, which has not abrogated a tribe's immunity from civil suits on contracts. In a dissenting opinion, in which Justices Clarence Thomas and Ruth Bader Ginsburg joined, Justice John Paul Stevens argued that the Court should consider "whether a tribe is immune from a suit that has no meaningful nexus to the Tribe's land or its sovereign functions."
Argument of R. Brown Wallace
Chief Justice Rehnquist: We'll hear argument now in Number 96-1037, the Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc.--
Mr. Wallace: Mr. Chief Justice, and may it please the Court:
Oklahoma State courts have entered a money judgment against the Kiowa Tribe of Oklahoma.
They have entered that judgment notwithstanding the fact that neither the tribe nor Congress have weighed the tribe's inherent immunity to suit, and despite the fact that in the very note sued upon, the parties agreed that nothing in that note would subject or limit the sovereign rights of the Kiowa Tribe.
This is one of a series of judgments that has been entered against the Kiowa Tribe that arises out of the same transaction, same series of transactions.
The enforcement of these judgments has resulted in a seizure of the tribal tax revenues, an enjoining of the tribe from enforcing tribal law on tribal land, a garnishment of the tribal bank accounts, even accounts containing federally appropriated funds, and generally a draining of the tribal treasury to the point of crippling the tribe's ability to maintain its governmental functions.
Unknown Speaker: Well, are those issues that you mentioned just now, are they necessarily involved in this case?
Mr. Wallace: They are involved in the case, in this case to the extent that they show the true impact of the judgment and some of the policy reasons why Congress has not elected to waive the sovereign immunity of tribes.
Unknown Speaker: It is quite possible, it seems to me, that a State court might have jurisdiction to enter a judgment but perhaps not have the jurisdiction to do some of the things which you describe as having happened in this case.
Mr. Wallace: I think you would have to look more deeply at what kind of judgment, and whether or not there was in fact a waiver.
Now, if we assume that there was no waiver, I would take the position that the judgment could be at best declaratory, and relating to the application of tribal... the application of State, regulatory, or taxation laws to the tribe when it's operating certainly without tribal country, and in some cases I think the State taxation laws should be respected by the tribe within Indian country.
Unknown Speaker: Well, suppose there had been a waiver, would you think that these actions could then have been undertaken?
I mean, when the Federal Government waives its sovereign immunity I don't think that means that whoever gets the judgment can move in and cart off money from the Federal Treasury.
Mr. Wallace: Well, that's true, Your Honor, and it depends very much on how the waiver is structured.
Typically, when tribes engage in the activity of waiving their immunity they not only select a court that they're going to go into, designate the kind of causes of action that they will be subject to, but they also regulate the extent to which they expose their assets to court process.
Unknown Speaker: But suppose they didn't.
I mean, I would be just as concerned about the effects that you're concerned about here in that situation where there was a waiver, without saying anything about what you can do to the tribe to enforce the liability.
Mr. Wallace: Well, in representing a tribe in that situation I would certainly take the position that until there is a waiver with respect to what assets can be subjected to the judgment, then the waiver is incomplete, that in order to have a complete and effective waiver so that a judgment can be entered and can be enforced, the waiver has got to have the court agreeing that it... excuse me, have the tribe agreeing that it will be subject to court process, and then the enforcement must also be specifically covered.
Unknown Speaker: So that if the tribe said, the tribe hereby waives sovereign immunity for liability on this note, that would be insufficient to waive immunity if a court ordered execution or attachment of a tribal bank account.
Mr. Wallace: I think it's in... yes.
I think it's insufficient because it fails to designate the property, the sovereign property to which the waiver attaches.
The... you know, the immunity of a sovereign has two basic concepts.
Number 1, the agreement of the sovereign to subject itself to court jurisdiction, in essence the agreement to create jurisdiction in a court, and then the second concept is the enforcement, the designation of exactly what remedial devices that the sovereign will be subject to.
Unknown Speaker: I just don't know if it's the tradition in our law to parse and separate sovereign immunity into those two components or not.
Mr. Wallace: State statutes that deal with State sovereign immunity very regularly say the State will agree to be sued for these causes of action, and then very regularly address the means of enforcement of those causes of action... or, excuse me, of any judgments under those causes of action.
Unknown Speaker: Usually by appropriation by the State legislature, or something.
Mr. Wallace: That is one of the devices that's used.
Oklahoma in fact does use that device.
I'm familiar with that.
Unknown Speaker: That is certainly not the case, I am sure, with regard to foreign sovereign immunity under the Foreign Sovereign Immunities Act, where a foreign sovereign is liable for its commercial activities--
Mr. Wallace: Foreign sovereign--
Unknown Speaker: --and I'm quite sure that even when there's been no waiver what you can do is, if the foreign sovereign has a bank account in this country, you can move against the bank account, period.
Mr. Wallace: --Yes, sir.
The Foreign Sovereign Immunities Act proceeds on a slightly different theory with respect to the handling of sovereign immunity.
That's a situation where you have the foreign sovereign dealing with the immunity of another sovereign.
In the Foreign Sovereign Immunities Act, the legislature has chosen to respect the assets of the foreign sovereign by desig... or by limiting some of the assets that are subject to attachment.
It... you know, it attempts to leave its truly governmental assets, you know, free from--
Unknown Speaker: I must confess, I'm a little puzzled by--
Mr. Wallace: --Excuse me?
Unknown Speaker: --the discussion.
There's no waiver in this case, is there?
Why are we talking about waiver?
The question is whether there's anything that needs to be waived.
Isn't that the issue?
Mr. Wallace: Well, that's true.
This case does not have a waiver or any language in it that even purports to be a waiver.
This is a situation where the State of Oklahoma has concluded that its courts have inherent jurisdiction over an Indian tribe, and it does not need the federally required consent to suit or waiver of immunity in order to create jurisdiction in Oklahoma courts.
The reason why it's concluded that is, Oklahoma has said that when the Kiowa Tribe engaged in commerce off of Kiowa country, then it did away with the Federal requirement that jurisdiction be created by consent or waiver.
Unknown Speaker: Now, that's the question we have here, is it not?
Mr. Wallace: That's... yes, sir.
Unknown Speaker: Yes, that's the question--
Mr. Wallace: Yes, Your Honor.
Unknown Speaker: --you presented in your petition.
Mr. Wallace: Yes, Your Honor.
That is the question.
Unknown Speaker: In so holding was the Oklahoma court in effect accepting the invitation... maybe that's too strong a word, at least the suggestion in the, what was it, the Cabazon case that in fact that might be the case.
Didn't this Court suggest that that might be possible?
Mr. Wallace: I can remember a point in a concurring opinion in Citizen Band Potawatomi where there were... where there was a question raised with respect to whether the immunity of a tribe would apply to commercial activities off of Indian country, yes, sir, Your Honor.
Unknown Speaker: All right.
Now, why was the suggestion ill-taken?
Why was the Oklahoma court wrong?
Mr. Wallace: The Congress is vested with exclusive control over tribal sovereignty and tribal immunity as a part of tribal sovereignty.
Congress has never drawn that line in tribal immunity.
In fact, when Congress approaches the issue of tribal immunity, it consistently expresses its approval of the doctrine.
Unknown Speaker: Well, in our Mescalero opinion we said that activities conducted by the Mescalero Band off the reservation were subject to nondiscriminatory State taxes, didn't we?
Mr. Wallace: Absent... yes, absent Federal law to the contrary, the Court held that the activities were subject to nondiscriminatory State taxes.
Unknown Speaker: So to say, absent Federal law to the contrary, these activities are subject to State authority suggests that the Congress would have to affirmatively prohibit the jurisdiction, rather than affirmatively authorize it, the way you're talking.
Mr. Wallace: I think the problem with the line of reasoning there is a couplefold.
Number one, Mescalero did not involve immunity to suit.
Mescalero was talking about immunity with respect to taxation.
This Court has characteristically treated the tribes' immunity with respect to taxation and regulation very differently than it has the treated tribes' immunity to suit.
As an example, I take you to the Citizen Band case, where the issue was whether or not Oklahoma could require a tribe to collect Oklahoma's cigarette taxes for on-reservation sales to nonmembers.
You said, yes, it could, but when Oklahoma then asked for a judgment against the tribe, a money judgment against the tribe for taxes that hadn't been collected, the Court went directly to the issue, or directly to the point of tribal immunity to suit, and pointed out that Congress has long approved it, Congress uses it as a part of its overall policy with respect to Indian tribes, and the Court was not, under those circumstances, disposed to modify its longstanding approval of tribal immunity.
Unknown Speaker: But Mr. Wallace, it has to come from some place originally.
It wasn't Congress that invented the doctrine of sovereign immunity.
It is a doctrine that the Court has applied and interpreted, so the Court must make a determination whether the immunity you claim exists or not.
It can't just say, well, we'll leave it to Congress.
Mr. Wallace: Yes, and the Court has found in the past that the immunity exists as an aspect, an inherent aspect of a sovereign that preexists the Constitution.
The Court has recog--
Unknown Speaker: But then you're distinguishing the tribes as sovereign from a sister State as sovereign, from a foreign nation as sovereign.
Mr. Wallace: --Yes, Your Honor, and I think the distinction is probably valid.
Tribes have a unique relationship with the Federal Government.
The Federal Government has adopted a trust responsibility toward tribes.
It makes them extremely different, very different from either sister States or foreign nations.
Unknown Speaker: What is... if the... suppose the tribe goes downtown Tulsa and they buy a piece of property and open an office, and the taxes are [dollars] 4,000 a year, and they don't pay, right.
Can the city or the State sue the tribe and get the taxes?
Mr. Wallace: For taxes?
Unknown Speaker: Yes.
Mr. Wallace: Well, I... if the acquisition is done appropriately--
Unknown Speaker: Yes... they buy it.
Mr. Wallace: --The ad valorem taxes do not apply to the--
Unknown Speaker: All right, fine.
What is the theory under which Oklahoma can get the taxes for the property but cannot get the rent?
Mr. Wallace: --Well, Oklahoma has to figure out collection and remedial devices short of going to the court and filing a lawsuit.
Unknown Speaker: So you think Oklahoma cannot collect the taxes, either.
I mean, what I'm trying to do is, I want to understand the theory of sovereign immunity under which... or, what is the case?
There are a lot of possibilities.
Maybe they have oil bubbling up underneath in the basement, violating environmental laws.
Can you get an injunction?
What about a fine?
What about taxes, and what about the rent?
What's the theory of the sovereign immunity for the Indian tribe that says which of those they can get, which they can't, and why?
Mr. Wallace: Well, in the regulatory and taxation cases this Court has approached the issue on an infringement and preemption analysis.
You cannot infringe upon tribal self-government, and states cannot... and States cannot do anything preempted by Congress.
That has never been applied, though, to a damage lawsuit against a tribe in State court.
I'd like to reserve the remainder of my time for rebuttal.
Unknown Speaker: Very well, Mr. Wallace.
Mr. DuMont, we'll hear from you.
Argument of Edward C. DuMont
Mr. DuMont: Thank you, Mr. Chief Justice, and may it please the Court:
I think the problem here is a State court did... entered a judgment which did two things, it held that as a matter of State law the tribe was not immune from suit, and that's wrong for two reasons.
First of all, it's not a question of State law, it's a question of Federal law, and second, Federal law, Federal substantive law preserves the tribe's immunity from suit, and let me just address those for moment.
The... I think it should be common ground that this is a matter of Federal law, supervening Federal law, so if we move to the substance of the Federal law, the rule derives from... as my colleague said, it originally derives from the preconstitutional sovereign status of the tribes, and this Court has made that clear repeatedly.
Now, it is also supported in the modern context by at least three very firm foundations.
First, the powerful general background principle of what sovereign immunity from suit means, second, the history of the Federal Government's relationship with the tribes, Government to Government, and this Court's precedents, and third, the critical practical importance of immunity from suit from money judgments to the tribes in modern-day America.
Unknown Speaker: Well, let's talk about the practical importance a minute.
With increasing commercial activity between tribes and nontribal members off the reservation there may be, indeed, a need for some waiver of sovereign immunity to make it possible for tribes to have... enter into business dealings with people off the reservation.
Is Congress considering legislation about this right now, do you know, Mr. DuMont?
Mr. DuMont: They are actively considering it.
Hearings, extensive hearings were held in 1996.
There was a bill which passed the Senate which would have waived immunity in certain circumstances in '97.
That provision was removed on the premise, publicly stated, that hearings would be held by April 30th of 1998, and those hearings have been tentatively scheduled by the Committee on Indian Affairs of the Senate.
Unknown Speaker: But Congress is debating the desirability, or lack thereof, of certain waivers of sovereign immunity.
Mr. DuMont: That's absolutely correct, and Congress as long ago as 1934 in the Indian Reorganization Act recognized exactly this issue that you bring up about, and that the Oklahoma courts adverted to as a matter of policy, which is, will anyone deal with the tribes, and they provided in the Oklahoma Welfare... Indian Welfare Act, for one thing, for not only the incorporation of tribal governments as governments, but also separate incorporation as business entities, and those entities are or may be subject to suit in certain circumstances, limited to their business property, just like a normal corporation would be.
So Congress has thought about this and has addressed it in the past, and they're preparing to think about it again.
Unknown Speaker: Have they ever passed a statute saying the tribes have immunity?
Mr. DuMont: --There are a number of statutes, I think the most recent one being the Indian Tribal Native American Agricultural Reform Act of 1993, which recognized that implicitly by saying that nothing that Congress is doing--
Unknown Speaker: I understand all the implicit record.
Is there any statute in which Congress has expressly said tribes shall have immunity?
Mr. DuMont: --I'm not aware of any statute that says that in those terms.
I would say... I could say, though, that to pass a statute saying the tribe's immunity will be waived in the following circumstances, or under the following very special circumstances, is to say that we assume the background principle is immunity.
Unknown Speaker: Well, of course they can assume that, because we have cases that have said that, but let me ask this.
If the Foreign Sovereign Immunities Act had not been passed, do you think that this Court could by judicial decision have adopted as part of our domestic law of foreign sovereign immunity the commercial acts exception, which have become almost uniform in international law?
Do you think we would have had to wait for Congress to pass the Foreign Sovereign Immunities Act before we could revise our jurisprudence on sovereign immunity to comport with the new international understanding?
Mr. DuMont: Yes, and I would say that because--
Unknown Speaker: Yes.
Mr. DuMont: --Yes.
Unknown Speaker: We would have had to wait for Congress?
Mr. DuMont: You would have had to wait for Congress, and I would say that because the original common law, if you will, recognition of the foreign... of the scope of a foreign sovereign's immunity came so early in this Court's history and this country's history in the Schooner Exchange case that by the time you got to the 1950's, when the State Department was recognizing the commercial exception, it was already firmly settled in this Court's jurisprudence.
The Berizzi Brothers case in 1926, for instance, made clear that extended to commercial property of a sovereign.
Unknown Speaker: So it never changes?
I mean, what if circumstances dramatically change?
Mr. DuMont: If circumstances dramatically change, then it is always the prerogative of the sovereign to make its own decisions about what cases its courts will entertain, and that's true from the Schooner Exchange on, but the question here would be who would represent the sovereign of the United States, and this Court had made clear consistently that the default rule was going to be absolute immunity, and it was then up to Congress to vary that.
Unknown Speaker: Then what was going on with the Tate letter?
Before the Foreign Sovereign Immunities Act, courts were recognizing that there were occasions where the sovereign was not immune, and Congress had passed no legislation.
Mr. DuMont: I think what the courts had recognized was that in cases where the State Department was willing to represent to the Court that it was important... that it was not important that immunity should not be recognized, then the courts would frequently accept that as consistent with--
Unknown Speaker: But the State Department is not Congress.
Mr. DuMont: --No, but the State Department is a political branch of the Government, and I think our submission is merely that the Court's policy... whether the Court had the power to do it or not, it may very well have had the power to see a development in common law, but the Court did not do that.
The Court said, look, we have always... and Berizzi Brothers is the prime case on this.
The Court said we have always applied a rule of absolute immunity.
We see no reason to make an exception for commercial property just because it's owned by a sovereign.
That's going to be our rule.
Now, of course, in situations where the political branches which are responsible under the Constitution for foreign affairs tell us to do something different, then we will do something different, but the default rule is going to be immunity, and I think that's really very close to what we're saying here.
Now, Indian tribal sovereigns are different from foreign sovereigns--
Unknown Speaker: In particular, what is the default rule?
Is it the case that if they rent a building in downtown Tulsa, they don't... there's no way to collect taxes?
Mr. DuMont: --Against a foreign sovereign, or against a tribal--
Unknown Speaker: No, say the Indian tribe in your view.
Mr. DuMont: --Well, there are... as the Court had recognized in Potawatomi, there may be ways, some of them more effective, some of them less effective.
There might be a suit against a tribal officer, for instance--
Unknown Speaker: In other words, the answer is they cannot sue to get the money from the tribe.
Mr. DuMont: --They cannot sue the tribe, and the tribe--
Unknown Speaker: Can they sue to get the... can they sue to enforce the environmental regulation?
That is to say, can they bring an injunction against the tribe so that the oil isn't bubbling up from the basement?
Mr. DuMont: --Well, under... if there's a specific Federal statute, which in RCRA I believe there is, there's a specific waiver by Congress of the--
Unknown Speaker: Well, all these... there's a State law that says you can't keep owls in the basement, or you can't keep... you can't have holes for the coyotes, whatever.
I mean, there can be a million different State laws, and they want to bring... a State environmental law is violated and they want to bring an injunction to prevent it.
Can the State do that, enjoin the tribe to keep the building according to whatever the State law is, a reasonable State law?
Mr. DuMont: --Under State... a State may not proceed under State law to get an injunction directly against the tribe.
Now, in the situations you--
Unknown Speaker: Even though it's in downtown... so in fact, an officer of the tribe is driving a tribe truck, and he speeds.
Can they stop him?
I mean, he's driving a... it's a tribal business in downtown--
Mr. DuMont: --Yes.
Yes, of course you can stop the officer, because then you're stopping... you're exercising jurisdiction over the individual, not over the tribe, but can you seize the truck?
I mean, probably not, because then you are talking about the property of the tribe, and that's the distinction.
It's a crucial distinction between the tribe, quae tribe--
Unknown Speaker: --Where does your position leave what we said in Mescalero?
I mean, in theory the State can collect taxes, but it can't in... it has no practical way of doing it?
Mr. DuMont: --I think it leaves the tribe... it leaves the States in exactly the place they were left in Potawatomi, which is they have a variety of mechanisms to enforce their valid regulations, but those mechanisms do not include a direct judgment, either injunctive or monetary, against the tribe, and that's... I think that's really precisely what the Court said in Potawatomi.
Unknown Speaker: But in Mescalero they said the tribe was subject to taxation.
Mr. DuMont: It is crucial to distinguish between... we heard in the first argument about the many... the hydra-headed concept of jurisdiction.
I think it's very critical to distinguish between regulatory jurisdiction, jurisdiction to impose rules which are valid and must be obeyed from enforcement, judicial enforcement jurisdiction, and tribal immunity from suit, like the United States' immunity from suit, or a State's immunity from suit, is about enforcement jurisdiction.
It's about amenability to suit in another sovereign's courts.
Unknown Speaker: But that is entirely... but that... as I understand it, your argument rests entirely upon a rule of prudence, self-administered by this Court, that we will not revise or consider revising the traditional rule, and I'm not sure why we should be bound by that rule of prudence.
Mr. DuMont: --I think it rests on something that is... the Court has always recognized that the tribes were created as sovereign, they have sovereignty.
Now, that is--
Unknown Speaker: And we developed this rule at a time when the kinds of problems that are being hypothesized in this argument really would not have been realistic hypotheses.
Now they are realistic hypotheses.
Mr. DuMont: --Well, I think that because the Court has recognized the tribes are sovereigns, and because immunity from suit is such a central part of the inherent background of the rule of sovereignty... and we see this in cases like Couer d'Alene, we see it in cases under the Eleventh Amendment before the States, we see it in cases involving the United States.
Those principles of sovereign immunity aren't written down somewhere.
They are simply part, a constitutive part of our law.
They are not the kind of common law--
Unknown Speaker: Mr. DuMont, those principles have changed, at least with respect to sister States, and with respect to foreign countries, so you are now urging a kind of sovereign immunity that doesn't... no longer exists State-to-State or foreign nation vis-a-vis the United States.
Mr. DuMont: --Well, let me make two points about that in reverse order.
As to foreign nations, it does not exist in the commercial context because Congress has passed a statute that addresses that, and may I just revert to the prior argument of my colleague by pointing out that in the Foreign Sovereign Immunities Act Congress was able to consider the problem holistically and to address issues like forum.
There's automatic removal for a foreign sovereign to Federal court, like enforcement.
There are provisions about what property of the sovereign you can attach for a judgment, and issues like damages.
There are limitations on the kind of damages that apply.
Now, as to States, first of all there's a bit of a canard going around that State sovereignty doesn't exist any more, but that's only as the States have waived it, and in Nevada v. Hall the Court recognized that some of those waivers are very limited, and those apply to the court... the State's own courts.
Now, as to Nevada v. Hall itself, that rests on a premise that the States were independent sovereigns when they went into the compact of the Constitution, and the Court found nothing in the Constitution that purported to give away each State's right to subject another sister State to its own jurisdiction, but what the States did give away was their ability to regulate Indian affairs and their ability to regulate Indian tribes.
That became a matter of exclusive Federal jurisdiction.
I think that's pellucid under the Court's cases.
Unknown Speaker: Do you think that's true with regard to tribal commercial activities off the reservation?
Are there no State regulatory powers there?
Mr. DuMont: Again, regulatory power has to be distinguished, but I think it is true with respect to jurisdiction, and the tribal immunity from suit, and what that effectively did was to freeze into place a Federal common law rule which, Nevada v. Hall recognized that if you had looked at that rule at the time of the Constitution you would have said that every State would recognize immunity for every other State.
Unknown Speaker: But the regulatory jurisdiction is just illusory if there's no way to enforce it.
Mr. DuMont: I think that's not correct, for all the reasons that were stated in the opinion in Potawatomi, which is to say that there may be damage actions or injunctive actions against--
Unknown Speaker: But how could there be damage actions against the tribe?
On your submission, there can't be.
Mr. DuMont: --I'm sorry, against tribal officers.
There may be actions against officers, there's always the potential for agreement with the tribe--
Unknown Speaker: Officers have no money.
I mean, the tribe has collected all of this tax money and hasn't turned it over to the State, billions of dollars, and they're going to sue some--
Mr. DuMont: --Well, I--
Unknown Speaker: --tribal officer for millions of dollars?
Mr. DuMont: --I simply have to suggest that if that were the controlling principle, then the result in Potawatomi would have been otherwise.
It would also have been--
Unknown Speaker: Is this true in anti-discrimination legislation, too?
If the tribe does business they don't have to live up to any of that, insofar as there could be monetary judgments or injunctions to enforce.
Mr. DuMont: --Well, I think it's very instructive that when Congress applied parts of the Fourteenth Amendment and the Constitution to Indian tribes in the Indian Civil Rights Act the Court has held that it clearly thought about this issue and decided that damage actions were not... against the tribe were not an appropriate means of resolution, so it specifically withheld jurisdiction to enter... even under a Federal law to enter money judgments against the tribe, and the same principle applies here, that you have to protect these small governments.
The same functional reasons that supported immunity for State governments when they were smaller and more vulnerable than they are now still support that immunity for Indian tribes.
Unknown Speaker: Mr. Dumont, there's one justice of this Court that said, if there's jurisdiction to regulate, and specifically jurisdiction to tax, then of course there must be jurisdiction to enforce that tax.
That was the International Shoe case.
Mr. DuMont: Well, I would suggest that, for instance, there are a variety of Federal laws that clearly impose mandatory Federal law obligations on the States and State officers, and yet they are not... the State is not amenable to a private suit in Federal... even in Federal court to enforce those obligations.
It's exactly the same distinction.
Sometimes you have a right, but you need to go to the sovereign's own forum to enforce it, or you need to go to Congress to try to get something done about it.
There are problems that are inherent in sovereign immunity, and that, I think, is recognized in the Three Affiliated Tribes decision.
Sometimes you will end up with a result, if you are suing a sovereign, which will perhaps seem unfair.
That is... it is an ineluctable aspect of the tribe's sovereign immunity, and as long as we're going to recognize that immunity, that may be true.
Now, if there are valid policy arguments, and I think there may be, for adjusting this situation, then they are the province of Congress, and Congress has been apprised of them and is actively considering them.
Unknown Speaker: Thank you, Mr. DuMont.
Mr. Patterson, we'll hear from you.
Argument of John E. Patterson, Jr.
Mr. Patterson: Mr. Chief Justice, and may it please the Court:
The issue in this case is very simple.
It's whether the tribe has sovereign immunity for its offreservation commercial activities.
The tribe and the United States urge a... an immunity for the tribe which is greater than that which is afforded to a State, which is greater than that afforded to a foreign sovereign.
Unknown Speaker: Do you concede that the issue is a Federal law issue, not a State law issue?
Mr. Patterson: It is a Federal law issue which can be determined very properly, as this was, in the District Court of Oklahoma County and in the State courts of Oklahoma under Oklahoma Tax Commission v. Graham.
Unknown Speaker: But the State applied its own State law in resolving this.
Don't we have to look at Federal law?
Mr. Patterson: The State--
Unknown Speaker: How can you defend the State court decision by applying State law to answer this question?
Mr. Patterson: --The State court looked to Federal common law in part.
It looked to Padilla, a New Mexico case, which in turn looked to Nevada v. Hall for the principles of sovereign immunity as between competing sovereigns.
Unknown Speaker: Well, I would have thought that for you to argue for affirmance here you would have to at least justify it on the basis of Federal law principles.
Mr. Patterson: And we do very much.
Unknown Speaker: But were Federal law principles decided below?
In other words, if we were to accept your suggestion that we affirm based on Federal law, wouldn't we be making a judgment about or a decision about Federal law which has not been made by a lower court in this case?
In other words, we would not be reviewing, we would be taking up a question in the first instance, wouldn't we?
Mr. Patterson: Yes, except the... if I understand your question, Justice Souter, the lower court made its decision based on principally Mescalero Apache Tribe v. Jones, and the language which has been referred to, the situation has been referred to which is to the effect--
Unknown Speaker: If I understand you... you correct me if I wrong.
If I understand it, the Court was, as it were, informed by that case in making a State law judgment.
Mr. Patterson: --The Oklahoma supreme court in Hoover, which is... was held to be controlling in this case, was based on an examination, and my understanding of Federal law as enunciated by this Court, and in light of Federal statutes.
The question is, what is the nature of sovereign immunity, and that's the question that is before you for your decision today.
The Congress has not created any immunity for the tribe when it goes off-reservation in tribal activities.
This has been adverted to previously.
The principles of immunity, if applied as the tribe and the United States are urging, then any of 320 approximately federally recognized Indian tribes can go off tribal lands into the 50 United States and engage in any kind of commercial activity with complete immunity from Federal law, with impunity, if you will--
Unknown Speaker: It usually takes two to engage in commercial activity, doesn't it?
I mean, can a tribe force anybody to enter into commercial arrangements with it?
Mr. Patterson: --The tribe can't... in the commercial contract case you have two parties of supposedly equal statute.
Unknown Speaker: Right.
Mr. Patterson: If you have a tribal operation, a business office in Tulsa, Oklahoma, for instance, where there are business invitees in that tribe, they are not people who have available waiver, for instance, of sovereign immunity.
If they suffer an injury on the premises, then their only recourse is against the owner-landlord-manager.
Unknown Speaker: Well, this is a suit on a promissory note where on its face it said sovereign immunity wasn't waived.
I mean, what if somebody's going to enter into a deal with an Indian tribe, and accept a promissory note, I guess you could as a matter of contract law insist that there be a tribal waiver before you'll accept that arrangement and note, and there wasn't here.
Mr. Patterson: If I might, Justice O'Connor, reading from the record at page 14, the language is, nothing in this note subjects or limits the sovereign rights of the Kiowa Tribe of Oklahoma, and we don't have any argument with that language.
I'm not sure what it means, but it's based on a premise--
Unknown Speaker: Well, it's a little like buyer beware.
I mean, if in fact the law is, as this Court seems to have recognized in the past, that the tribe enjoys sovereign immunity from private suits, then someone dealing with the tribe should protect himself in the contractual arrangements that he makes.
Mr. Patterson: --Once again, if it's activity which is protected by sovereign immunity that's exactly the case.
It's our position that the tribe has no sovereign immunity when it goes off tribal lands--
Unknown Speaker: What's the--
Mr. Patterson: --in a commercial--
Unknown Speaker: --That is to say, if there's anything to... maybe there's no sovereign immunity, but if there's any sovereign immunity, wouldn't it at least at its heart be there to protect the treasury in a contract suit from money damages, and if that's so, why does it matter?
What's the principle on which it matters whether that commercial activity that led to the effort to get money from the tribal treasury, what's the difference whether it took place on or off?
Mr. Patterson: --The cases which amounts to the general rule that the tribe is not subject to suit absent its waiver or a congressional abrogation of immunity arose historically out of cases where the tribe was acting in proper tribal matters on a tribal reservation, on land.
Unknown Speaker: Yes, that's true, so that's why I ask.
I mean, that happens to be the history, so why... in terms of the... of a sovereign immunity principle, wouldn't contractual damages be at its heart, and what could the reason be... what reason that's related to sovereign immunity could there be for saying that the place of a contract makes a difference?
Mr. Patterson: The place of the contract in this particular case is of critical difference.
If the place of the contract and place of performance were to be on tribal lands, then we would have the rules which the Government and the Kiowa tribe argue.
When the tribe goes outside tribal lands in a commercial venture, then you have to look to the nature of its sovereignty, and we say that in that instance the tribe has no sovereign immunity from suit.
The expression of the inability of money damage, a suit being brought against the tribe, was looked at in Potawatomi, Citizens Band Potawatomi, and there the State was found to have sufficient interest in the activity, the levy of an Oklahoma tax on a nonmember of the tribe in a sale on tribal lands, that the State was allowed to impose certain minimal regulation on the tribe.
However, the second aspect of that, could the State exercise the most efficient means of collecting the monies that were owed to it, could it sue the tribe directly, the answer was no.
Now then, when you read that, and look at that in light of Mescalero... and Mescalero Apache was cited in Citizen Band Potawatomi for the proposition that you don't find the same immunity when the tribe goes off of tribal lands.
Unknown Speaker: Well then, the rule you're arguing for really is not... is not a... analogous to the rule in the Foreign Sovereign Immunities Act at all.
I mean, if you have a foreign sovereign that engages in commercial activities, even if the company that it sets up enters its contracts at home, there would still be liability for the commercial activities, wouldn't there?
Mr. Patterson: There--
Unknown Speaker: You can't really appeal to the change in sovereign immunity internationally, or the provisions of the Foreign Sovereign Immunities Act as exemplifying what you would want us to do.
You want us to create some new kind of exemption from sovereign immunity, one that only applies when you're acting outside your own country.
Mr. Patterson: --And we would urge that that is, in fact, the rule.
That is the common law rule that when a sovereign goes outside its sovereign territory, outside its jurisdiction, then it is no longer covered by sovereign immunity as a matter of right.
The only protection that it receives is under the principles of race and comity, will comity be accorded the visiting sovereign when... in Nevada v. Hall, one which is not an Indian exemption, Indian sovereign immunity case but it has... the principles are appropriate.
Unknown Speaker: You, do you just so... I don't mind you saying all of this, but so long as you get around to answering my question.
Do you agree that the Foreign Sovereign Immunities Act and the international concept of commercial liability for sovereigns does not work the way the principle you're urging on us would work?
Mr. Patterson: That's not my understanding, Justice Scalia.
Unknown Speaker: You think if France sets up an aircraft company and it's a purely commercial venture, profit-making venture, but all the shares are owned by the State of France, the Nation of France, that if that company makes a contract, so long as it makes the contract in France the commercial activities exception to sovereign immunity does not apply?
Mr. Patterson: --No, absolutely not, it does apply.
Unknown Speaker: I think so.
Mr. Patterson: I was afraid I was not communicating with you--
Unknown Speaker: Mm-hmm.
Mr. Patterson: --I had misspoken my position.
It's Manufacturing Technologies' position that when the tribe goes outside of its reservation boundaries, then it's subject to--
Unknown Speaker: Okay.
Mr. Patterson: --as per Mescalero--
Unknown Speaker: But not if conducted the commercial activities on its reservation.
Mr. Patterson: --And that is the distinction.
Unknown Speaker: And that's different from the international rule, isn't it?
Mr. Patterson: In the international rule, once again, when a sovereign conducts activities on its... in its own jurisdiction, then it is sovereign.
Unknown Speaker: Does this tribe have a reservation?
Mr. Patterson: This tribe has approximately 1,200 acres of land--
Unknown Speaker: Does it have a reservation?
Mr. Patterson: --It does not have a reservation.
Unknown Speaker: No.
So under your position, whatever it does, wherever it does it, there's no immunity, because there is no reservation here.
Mr. Patterson: That's not our position.
When... the Mescalero case speaks in terms of reservation.
Some tribes have very large reservations... the Navajo.
Others have less, less acres of land under their jurisdiction and control than do the Kiowas, but Indian country, reservation, lands held in tribal trust, I believe that to some degree, each of those may be, may support activities which are protected by sovereign immunity.
Unknown Speaker: Well, I can understand... I guess I can understand what you're saying, but I don't understand the justification for it.
Let me ask basically the same kind of question that Justice Breyer asked, but in a different way.
One way of looking at sovereign immunity is to look at it as a doctrine about the relationship between sovereign A and sovereign B whose courts assert judicial jurisdiction over sovereign A. Why should the policy that says their relationship is such that B's courts should not have jurisdiction over A, why should the doctrine that embodies that relationship depend for its application on whether a contract was made on a piece of trust land, or in downtown Tulsa?
Mr. Patterson: Because the... historically the immunity which was accorded the Indian sovereign was as to the tribe's acts on tribal lands in relation to its own internal affairs, management of its internal affairs.
Unknown Speaker: Well, that... historically that is certainly true with respect... I guess it's certainly true with respect to legislative or regulatory jurisdiction, but we're now talking about judicial jurisdiction, and I'm not sure that it... anything follows with respect to judicial jurisdiction.
Mr. Patterson: --The... if I may answer indirectly, the rationale of Potawatomi in separating regulatory and adjudicatory authority of the State in that case, it was critical that the activities there involved took place on State land... I'm sorry, on tribal lands.
The first ruling of the Court was to the effect that the lands, which were lands which had been purchased and held in trust, were held in trust for the tribe, were in fact tribal lands sufficient to invoke jurisdiction... invoke immunity.
When you move then, though, to Mescalero Apache, you go to an activity which is off tribal lands and now you have to look once again at the question whether or not there is tribal sovereign immunity for acts which take place off lands, off tribal lands, and this Court found in Mescalero that there was no immunity for off-reservation commercial activities.
Unknown Speaker: But that was in the context of State taxation, wasn't it?
Mr. Patterson: And... that is correct.
Unknown Speaker: Might not that principle be perfectly sound in the case of State taxation but perhaps be of more limited effect where you're talking about the jurisdiction of a court?
Mr. Patterson: That may very well be of more limited jurisdiction.
However, the principles announced in Mescalero would support our position that when the tribe goes off tribal lands it's then subject to nondiscriminatory State law, applied equally to all citizens of the State.
The stretch for Manufacturing Technologies is to get from a taxation case, State taxation case to a commercial activity off tribal lands, and we feel that you can make that... we feel that you can rule that the tribe does not have immunity in an off-tribal-land commercial activity because of the general principle enunciated in Mescalero Apache.
Unknown Speaker: Is it your view, too... you also have asserted what I call an all-or-nothing position that once the tribe... there are a lot of different kinds of laws.
There are State discrimination laws.
There are State environmental laws.
There are State property tax laws.
There are State tort laws.
There are State contract laws.
Is it your view that once the tribe goes off the reservation, the State, or a private person, where appropriate, could bring a lawsuit in a State court against the tribe and there's no assertion of sovereign immunity possible for all those things, or for some?
Mr. Patterson: That... no... that would be correct.
To run down the line, when the tribe goes off tribal lands, then in the language of, I think Nevada v. Hall, it implicates the jurisdiction of the State of Oklahoma, but this can be true in any one of the 50 States.
There's no limitation on Kiowa tribal activities in Oklahoma.
They may be activities conducted in Honolulu, Hawaii.
Commercial laws of the State where the State interest in Potawatomi was limited in a nontribal land situation, the State interest is much greater in an off-reservation situation, so you have nondiscriminatory State laws regarding contract, commercial, occupational, licensing... the whole gamut of possible State regulation, and the tribe would be subject to that.
Unknown Speaker: So the... you and the Solicitor General agree that either you can bring a lawsuit against the tribe acting off-reservation under all these laws or under none of them, and you say you can bring the suit irrespective, and they say none.
You say all, they say none.
Is... am I right?
Is that what you--
Mr. Patterson: That is right, once again, as modified by the language in Mescalero, absent Federal law to the contrary.
Unknown Speaker: --And of course the debate between the majority and the dissent in Mescalero was whether there was Federal law to the contrary in that case, because the dissenters claimed that they were... the tribe was a Federal instrumentality, in effect.
Mr. Patterson: The... and... I believe that I'm correct when I say that the... they... the rule of Mescalero is based on a finding that there was no tribal sovereign immunity for the off-reservation activity.
That was the foundation for that rule.
Unknown Speaker: In Potawatomi... you're more familiar... I looked at it quickly, but... or is there some other precedent that makes clear that in the noncontract context, say the State regulatory law context, or the State tax context, that the State or a city or some private person can maintain a lawsuit and collect money from the tribe, or didn't Potawatomi leave that open?
Mr. Patterson: Well, once again, in respondent's view, Potawatomi announced the rule for onreservation activity.
Unknown Speaker: Yes.
Mr. Patterson: Our position is that that rule doesn't travel off the reservation.
Unknown Speaker: So that... but you... there is no authority, I take it, either way in respect to any of these laws for tribe activity, in respect to any of these laws off the reservation, any category, which makes clear that the State or a city or a private person can sue the tribe, or that makes clear it can't sue the tribe.
Mr. Patterson: Justice--
Unknown Speaker: There is no clear authority either way on that, I take it.
Is that right?
Mr. Patterson: --Justice Breyer, I find none.
We believe that this is a case of first impression.
However, Mescalero once again stands for the proposition that the State... I'm sorry, the Federal Government does not have exclusive jurisdiction over the tribe.
There are a number of cases arising in tribal taxing situations, mostly, to the effect that the States do have authority over certain aspects of activities on tribal lands.
The Potawatomi case separated the regulatory from the adjudicatory authority, and it wasn't the first case.
I think Colville perhaps did the same thing, and in Colville the Court said that the State of Washington could seize cigarettes before they ever got to the reservation, and thereby satisfy its claims.
United States v. Strate was a case which I believe remarried the adjudicatory and regulatory authority of a State on certain activities on tribal lands, but it's really not to the point that we're talking about today.
Our point is that we have one rule for Potawatomi, for on-reservation activity.
Off-reservation activity is a whole different matter.
Unknown Speaker: What is... but I'm beginning to... I hadn't seen fully the implications for tax law, regulatory law, all kinds of other laws, and if there are... I'm not certain they've been fully argued out, because you've been focusing on contract.
Does it make sense, then, to say the State was wrong in going on State law and then permit this thing to be argued more fully where all these implications are explored?
Mr. Patterson: If I... if I understand you, you ask is this a State law question to be--
Unknown Speaker: No, I'm thinking... I think perhaps the lower court said it was State law, and perhaps it's wrong on that.
Mr. Patterson: --I--
Unknown Speaker: If it's wrong on that, I wonder if we shouldn't send it back.
I... that's... rather than try to go into this very broad question, well beyond contract law that's at stake here.
Mr. Patterson: --In my view this is not a State law question.
We're talking about Federal statutes, treaties, the Constitution... these are Federal questions.
Unknown Speaker: Well, isn't it correct to say that it's both a Federal law question and a State law question, because if there is a Federal law that says the tribe's immune here, that would obviously control.
If there's no Federal law, a State still could, as a matter of comity, recognize the immunity of the tribe, just as in Nevada v. Hall it could have been decided the other way as a matter of State law.
So you've got... it seems to me inevitably you have both a Federal issue and a State law issue, and the State law issue has been decided.
They're not going to show comity here, and they've assumed the answer to the Federal question, and... which we have to really resolve.
Mr. Patterson: I would agree that... I think the principal issues are Federal law principles, but once you find that a State has certain rights, then you do get into the State law aspect of the question, and this Court has dealt with that in a number of cases on-reservation, arising out of State regulatory actions.
The... I think that Puyallup was mentioned a moment ago.
Puyallup had to do with fishing rights onreservation.
To that degree, we feel that it's not controlling in our situation.
This situation relates to the activities of the tribe when it goes beyond its boundaries.
Nevada, in reciting some of the rule says, Number 1, a sovereign cannot be sued in its own courts without its consent.
That is the rule.
Whatever rights the visiting sovereign, the sovereign that comes into the property, into the jurisdiction of the first sovereign, the host sovereign has, are there merely as a matter of comity.
They're not accorded any rights as a matter of their own independent sovereignty, because they're now in some other sovereign's jurisdiction.
What the tribe seeks, what the United States wants to give them in this case is a sovereignty which says that when the tribe goes into another court's jurisdiction... the State of Oklahoma, the State of Hawaii, the State of whatever, that at that point the tribe's sovereignty supersedes that of the jurisdiction of the State of Oklahoma, and the State of Oklahoma has no ability to sue it or to control that activity.
Unknown Speaker: Until Congress says otherwise.
I thought the United States was taking the position that it's the peculiar relationship of trust between the United States and the tribes that gives them this kind of unusual dependent sovereignty, not really the kind of sovereign... sovereignty that a sister State or a foreign nation would have, but a dependent, depending on the United States.
Mr. Patterson: That is correct, Justice Ginsburg.
The basis for Indian law, Indian sovereignty, certainly has to do with the relationship between the tribe and the U.S. Government.
In this case, however, in our opinion the U.S. tries to go outside of Federal common law and other law as we know it and give the tribe immunity when it takes whatever acts in a commercial vein in this situation outside its own reservation, outside the area where it has territorial sovereign immunity.
Sovereign immunity always has a territorial aspect, and that's what we ask in this case, is that territorial aspect be respected and accorded the appropriate proper weight.
Any further questions?
Unknown Speaker: Thank you, Mr. Paterson.
Mr. Wallace, you have a minute remaining.
Rebuttal of R. Brown Wallace
Mr. Wallace: The Puyallup Three case involved a situation where tribal immunity protected a tribe from suit by the State to regulate off-reservation fishing.
The fishing was both on and off the reservation.
The tribe was protected by this Court from State suit.
The Citizen Band case, with respect to its handling of tribal immunity, did not turn on geography.
Instead, the Court went directly to the concept that there had been a long recognition of the inherent immunity of the tribe.
Chief Justice Rehnquist: Thank you, Mr. Wallace.
The case is submitted.
Unknown Speaker: The honorable court is now adjourned until tomorrow at ten o'clock.