Galanda: Defending against attacks on tribal sovereign immunity

Tribal sovereign immunity - the legal principle that Indian tribal governments, like other sovereigns, may not be sued without their own consent - is under a full frontal attack. Consider these passages from recent federal and state court opinions:

Tribal immunity is ''divorced from the realities of the modern world.''

''[H]opefully [tribes] will eventually conclude that this litigation tactic [of asserting sovereign immunity] is not the best policy to promote a profitable business.''

''[T]he constitutional right of the State to preserve its republican form of government trumps the common law doctrine of tribal immunity.''

Unless Indian country reacts to such scathing judicial indictments through more strategically thought-out assertions of sovereign immunity, tribal governments will lose that right and the ability to develop reservation economies without the threat of ruinous lawsuits.

Presently, sovereign immunity is the strongest defense to litigation attacks against tribal treasuries and the assertion of state regulatory authority on tribal lands. See Oklahoma Tax Comm'n v. Citizen Band of Potawatomi, 498 U.S. 505 (1991). Without immunity protection, tribes would be faced with an avalanche of personal injury and class action lawsuits that could bankrupt tribal treasuries. Unimpeded by tribal immunity doctrine, state and local governments could sustain legal attacks on tribal governments in state courts that would further erode Indian sovereignty and regulatory control over the reservation.

On May 14, the Native Nations Institute for Leadership, Management and Policy and Indigenous Peoples Law and Policy Program at the University of Arizona hosted a roundtable forum on tribal sovereign immunity. Led by Harvard economist and anti-trust expert Joseph Kalt and Indian law professor and tribal court chief justice Robert Williams, the sovereign immunity forum coincided with the Economic Policy Summit that the National Congress of American Indians hosted in Phoenix. Tribal government and business leaders and tribal attorneys from throughout Indian country, as well as BIA officials and representatives from the private financial, construction and surety markets, participated in the forum.

The lively discussion moved from the arcane (e.g., the mysteries of calculating basis points on commercial loans to tribal governments) to the mundane (as one tribal leader recounted how a safe holding the tribe's gaming receipts fell through the floor of a double-wide trailer that once housed a tribal bank). Even more importantly, there were passionate defenses of tribal sovereignty and amazing success stories of tribal economic development and diversification achieved through strategic decisions about when, where and how to make limited waivers of immunity and/or avoid asserting an immunity defense in court.

The dialogue made clear that when a tribal government waives sovereign immunity in limited fashion, or foregoes the assertion of the defense in litigation for policy reasons, that tribe is exercising its sovereignty - not abandoning it. Moreover, the participants remarked that unless tribal governments define the time, place, manner and limits for claims against them or tribal entities, the Congress or state, federal and even tribal court judges will take it upon themselves to waive, or outright do away with, the tribal immunity defense.

In the end, the forum yielded the following proactive business steps and pre-litigation strategies and litigation alternatives to use, and protect, tribal immunity as a nation-building tool for Indian country:

"Tribal organization: Many tribes are organized under Section 16 and/or 17 of the Indian Reorganization Act of 1934. Under Section 16 - a tribe will have adopted a constitution and bylaws that set forth the tribe's governmental framework. A tribe may also be incorporated under Section 17 pursuant to a standard federal charter issued by the secretary of the Interior Department, ostensibly to divide its governmental and business activities.

So-called ''IRA tribes'' must cautiously appreciate the risk that courts could construe the ''sue and be sued'' language in Section 17 charters as a tribal immunity waiver and thus make tribal treasuries vulnerable to court judgments arising from Section 17 business activities. The 9th Circuit Court of Appeals recently held that such language did operate to waive a tribal housing authority's immunity, in Marceau v. Blackfeet Tribal Housing Authority, 455 F.3d 974 (9th Cir. 2006).

Although the ''sue and be sued'' language at issue in Marceau reads slightly different than that in Section 17 charters, that case illustrates how courts can and will construe such federally-imposed, boilerplate language to allow suit against tribal sovereigns. Accordingly, IRA tribes should reconsider doing business under their Section 17 corporate charter in favor of pursuing economic development activities as a Section 16 (or other) entity.

"Tribal corporate formation: The Washington Supreme Court recently explained that ''a tribe may waive immunity by incorporating the enterprise under state law, rather than tribal law'' in Wright v. CTEC, 159 Wash .2d 108 (Wash. 2006). Tribes that do not yet have business formation codes should pass such tribal laws - another necessary tool to build for vibrant tribal and inter-tribal economies.

If it makes political and business sense for tribally owned enterprises to be incorporated under tribal law, tribes should form them under tribal rather than state law. In addition to cloaking tribally owned businesses with immunity, incorporating under tribal law could also shield tribal companies -especially those doing business off the reservation - with tribal regulatory protection, to the exclusion of state authority.

"Tribal legislative intent: In a recent Washington Law Review article titled ''Intent Matters: Assessing Sovereign Immunity for Tribal Entities,'' 82 Wash. L. Rev. 205 (2007), Greg Wong argues that courts err if they do not examine a tribe's intent to extend its sovereign immunity to, e.g., a tribal corporation or economic development agency, when analyzing such an entity's amenability to suit.

Courts, which examine the federal and state governments' intent to extend or deny immunity to a governmental entity, should likewise defer to tribal sovereign status by examining a tribe's intent when determining whether a tribal business entity stands immune from suit. In order to allow such judicial deference to tribal self-rule, tribes should pass resolutions that affirmatively declare tribal intent regarding whether or not their business entities should be afforded immunity protection.

Gabriel Galanda is an attorney with Williams Kastner's Tribal Practice Team in Seattle. He is a descendant of the Nomlaki and Concow tribes and an enrolled member of the Round Valley Indian Tribes.