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Kansas loses another decision to Ho-Chunk Inc.

DENVER, Colo. - Ho-Chunk Inc., the commercial company of the Winnebago Tribe, continues to beat the state of Kansas in federal court over fuel tax revenue while the state continues to try to stay in the game and take its lumps.

The 10th Circuit Court of Appeals ruled in favor of Ho-Chunk Inc. and affirmed the temporary restraining order that prevents the state from collecting motor fuel taxes on fuel transported from Nebraska to the Sac and Fox, Kickapoo and the Iowa tribes imposed by the lower U.S. District Court.

U.S. District Judge Dale E. Saffels barred the state from collecting the taxes in May 2002. He also stopped criminal proceedings against Tribal Chairman John Blackhawk, Lance Morgan, executive director of Ho-Chunk Inc. Morgan's wife Erin, manager of a tribal business and a tribal employee. Saffels passed away shortly after issuing that temporary injunction.

"We are very pleased with the opinion. Now we will see what happens next," said Skip Durocher, attorney for the Winnebago Tribe.

"It makes you wonder whether at some point the state of Kansas will say enough is enough and will realize they won't beat the tribes," he said.

Durocher said he will speak with the state's attorneys and again ask them if they won't sit down with the tribe and work out an agreement. "But I don't have high hopes. We'll just keep beating them in court."

And even though the tribe and the state are footing the attorney's fees, there will come a time when the tribe will ask the federal court to make the state pay all attorney fees. That's when reality could hit the state of Kansas.

The state of Kansas appealed the District Court's ruling on the grounds that it erred by failing to abstain from hearing the case while state criminal charges were pending; erred in granting the temporary injunction because the state claimed immunity with the 11th amendment and that the District Court abused discretion in granting injunctive relief to Ho-Chunk Inc. and Ho-Chunk Distributing.

The appeals court found against the state in all three allegations. In fact the three judge panel found that the state did not bring up the 11th amendment immunity question until after the District Court had ruled. The state also did not make its case on what is known as the Younger Doctrine that requires a district court to abstain from a hearing while a state court has criminal proceedings ongoing. The 10th Circuit found that the state did not meet all three of the required criteria to allow a district court from abstaining.

And the District Court did not terminate the state criminal proceedings against the individuals, but stayed them temporarily.

The state also argued that the District Court failed to be specific that tribal self-government was interfered with. The Appeals Court disagreed by stating that the state ignored the courts consideration of the "evidence of loss of business, reputation, future viability, and access to credit, all of which interfered with the tribe's self-sufficiency and economic development."

There are still court battles coming up. A pending case that asks for a permanent injunction against the state and a pending motion for a contempt charge against the state of Kansas may now be opened and be placed on the District Court docket, Durocher said.

The entire litigation started when the state of Kansas Department of Taxation issued an order for Ho-Chunk Distributing to pay $1.5 million in back motor fuel taxes on motor fuel distributed to the three Kansas tribes, which also act as plaintiffs in the case.

Ho-Chunk Inc. owners of the distributing company refused. After a second request by the state, in March 2002 it seized delivery trucks owned by Ho-Chunk Distributing and filed criminal charges against Blackhawk, Morgan and Morgan in an attempt to confiscate personal property to pay for the back taxes. That case has yet to be heard in a Kansas Court.

The state was ordered by the District Court to return the trucks, which it did not do and claimed the trucks were evidence. The court ruled that the trucks need not be held as evidence.

The state of Kansas has lost every court decision in this case since it began in May 2002.