POOSPATUCK RESERVATION, N.Y. – With two important legal victories affirming Indian retailers’ right not to tax goods sold on reservations, the chief of the Unkechaug Indian Nation is calling on Gov. David Paterson to negotiate with the state’s tribes.
On Jan. 21, a state appellate court granted the Cayuga Indian Nation’s request for a preliminary injunction barring Cayuga and Seneca County district attorney from pursuing felony tax evasion charges against the nation.
A week later, at a Jan. 27 hearing, State Supreme Court Justice Rose Sconiers extended a preliminary injunction indefinitely that stops the state, and anyone charged with enforcing the state’s tax laws, from restricting state stamping agents from selling unstamped cigarettes to reservation cigarette sellers, or restricting reservation retailers from selling unstamped cigarettes to tribal and non-tribal members until the state Department of Taxation and Finance comes up with a viable system to distribute tax exempt coupons for sales to tribal members.
“These battles won in court are victories for Indian nations across the state,” Unkechaug Nation Chief Harry Wallace said. “The rulings hold up Indian nations’ sovereignty. It’s time for pointless litigation against Indian nations to end, and for Gov. Paterson to sit down with the tribes to devise a workable solution. The Unkechaug Indian nation has historically maintained the position that these disputes must be resolved between governments.”
The Cayuga Nation sought the preliminary injunction as part of its appeal of a lower court ruling that said the nation was unlawfully selling cigarettes at its two Lakeside Trading convenience stores in Union Springs and Seneca Falls. The nation was forced to close the stores in November after Seneca and Cayuga county sheriff’s deputies raided them and seized 17,600 cartons of cigarettes, computers and business records.
County officials claimed the nation violated state law by selling cigarettes without charging the required tax and owed $485,000 in state excise taxes.
New York Supreme Court Justice Kenneth R. Fisher sided with the Cayuga and Seneca county law enforcement officials’ claims that the two convenience stores are not on sovereign territory or on a “qualified reservation” and, therefore, the tribe cannot exercise the sovereign right of Indian nations to trade tax free on their lands.
The Jan. 21 preliminary injunction stops the counties from pursuing the tax evasion charges and prohibits further raids against the nation until the nation’s appeal is heard in May or June.
The Lakeside Trading stores re-opened for business Jan. 30. That morning, county officials went back to Fisher to try to shut them down again, seeking an order to show cause and a temporary restraining order.
“First, the order to show cause was asking why we shouldn’t be held in contempt of court for continuing to possess and sell unstamped cigarettes and, second, was a request for an injunction prohibiting us from continuing to possess and sell unstamped cigarettes,” Cayuga attorney Lee Alcott said.
Wouldn’t that mean they were asking the judge who signed the original search warrants that allowed the county to raid the stores and issued the first ruling of tax evasion to disregard the Appellate Court’s preliminary injunction?
“That’s the way we think of it. Their view is that the appellate decision did not directly overturn (Fisher’s) prior decision, because the lower court was a declaratory judgment that Section 471 of the tax law applies and that we can’t get our cigarettes back. The Appellate Court simply said, ‘You (the county officials) are enjoined or prevented from prosecuting them under that section or any other section of the tax law, and (to us) go get your cigarettes back.’”
Although the judge did not grant the temporary restraining order, he did sign the order to show cause. He heard arguments this month on the show cause order and on the nation’s request to have the confiscated cigarettes, computers and records returned.
Cayuga County District Attorney Jon Budelman did not return a call seeking comment by press time.
Meanwhile, most of the employees who had been laid off when the Lakeside Trading stores shut down have been called back to work, said B.J. Radford, chief operating officer for Lakeside Enterprises, the Cayuga Nation’s business arm.
“We laid off 30 people when the stores shut and we called the majority of them back. I think 25 are back at this point. These are good jobs. I’ve worked in this industry in the non-Native and Native side. These jobs in the non-Native world are not great jobs. They’re minimum wage and no benefits. Our employees get a higher salary than minimum wage and the employer pays a larger portion of their health insurance. They get paid time off, a 401K plan, employer managed; these are very good jobs, particularly for unskilled people.”
There has been a rash of legal actions against Indian nations in the state.
The Unkechaug Nation has been the target of three separate lawsuits, including a 2006 claim by New York tycoon John A. Catsimatidis, a businessman and politician who claims that tax-free cigarette sales at the Unkechaug and Shinnecock tribes’ reservations on Long Island undermines profits at his supermarket empire of more than 50 Gristedes stores – even though Gristedes maintains no retail stores in Suffolk County, where the Poospatuck Reservation is.
In September, New York City Mayor Michael Bloomberg filed a federal lawsuit accusing eight Unkechaug Reservation smoke shops of breaking state and federal laws by selling cigarettes in bulk to bootleggers who resell them in the city. The Suffolk County Legislature voted in December to join Bloomberg’s lawsuit. During their debate over whether to sue the tribe, the legislators discussed the November raid and seizure of cigarettes at the Cayuga stores.
Wallace said he understands the tough economic times, but said the burden should not be placed on the nations.
“Although we are sympathetic to New York City’s and the state’s economic woes, it is wrong to pin them on Indians and dispute our sovereignty. The Unkechaug Indian Nation is recognized as a sovereign nation under the provisions set forth in the New York State constitution. Only a mutually agreed resolution will end this impasse.”