Seattle Tribal Lawyers Galanda & Dreveskracht Publish "Tribal Court Litigation" Deskbook Chapter

This month, a chapter on "Tribal Court Litigation" co-authored by Gabe Galanda and Ryan Dreveskracht for an authoritative commercial litigation handbook, was published by the American Bar Association Business Law Section. The chapter appears in the 2012 edition of Annual Review of Developments in Business and Corporate Litigation. The breadth of the very complex Indian law issues covered by the chapter is suggested by its Table of Contents:

§ 27.1 Introduction to Transacting in Indian Country § 27.2 The Third Sovereign § 27.2.1 The Modern Erosion of Tribal Sovereignty § 27.2.2 State Regulation and Taxation, and Federal Indian Preemption § 27.3 Tribal Sovereign Immunity § 27.3.2.1 Scope of Tribal Immunity § 27.3.2.2 Waiver of Tribal Immunity § 27.4 Tribal Structures § 27.4.1 Tribal Corporations § 27.4.2 Tribal Courts § 27.5 Tribal Assets and Federal Approval § 27.4.1 Fee-to-Trust and Carcieri § 27.4.2 Federal Approvals § 27.6 Tribal Labor and Employment § 27.7 Federal Laws of General Applicability § 27.8 Federal Court Jurisdiction § 27.9 Tribal Court Jurisdiction § 27.9.1 Tribal Authority Vis-à-vis State Authority § 27.9.2 Tribal Exhaustion Doctrine § 27.9.2.1 National Farmers Union § 27.9.2.2 Exceptions to the Exhaustion Doctrine § 27.10 Conclusion

Consider the conclusion to the chapter:

Economic growth and development throughout Indian country have spurred many businesses to engage in business dealings with tribes and tribal entities. Confusion may arise during these transactions because of the unique sovereign and jurisdictional characteristics attendant to business transactions in Indian Country. As a result, these transactions have prompted increased litigation in tribal and nontribal forums. Accordingly, counsel assisting in these transactions, or any subsequent litigation, should conduct certain due diligence with respect to the pertinent tribal organizational documents and governing laws that may collectively dictate and control the business relationship.

To maximize the client’s chances of a successful partnership with tribes and tribal entities, counsel should ensure that the transactional documents contain clear and unambiguous contractual provisions that address all rights, obligations, and remedies of the parties. Therefore, even if the deal fails, careful negotiation and drafting, and in turn thoughtful procedural and jurisdictional litigation practice, will allow the parties to more expeditiously litigate the merits of any dispute in the event that the deal fails, without jurisdictional confusion. As business between tribes and nontribal parties continues to grow, ensuring that both sides of the transaction fully understand and respect the deal will lead to a long-lasting and beneficial business relationship for all.

Gabe served as the Editor-in-Chief of Annual Review for the 2007 through 2010 editions, and has co-authored the Tribal Court Litigation chapter each year since 2006. This is Ryan's first year co-authoring the chapter.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Ryan Dreveskracht is an associate with Galanda Broadman. Gabe and Ryan litigate various critical matters on behalf of tribal governments and businesses and individual Indians, in tribal, state and federal court.

Indian Gaming and the New York Times' Crystal Ball

Today the New York Times tells a fascinating story about the plight of the world's largest casino, Foxwoods Resort Casino. For gaming tribes, the story should serve as yet another loud and clear wake up call that Indian gaming, as we currently know it, will not last forever. Consider these passages from the ominously titled story, "Foxwoods Casino is Fighting for Its Life":

[H]ow the casino reached this point, and the challenges its owners and operators now confront, is part of a much larger story — one involving the gradual relaxation of moral prohibitions against gambling, a desperate search for new revenue by state governments and the proliferation of new casinos across America. Casino gambling has become a commodity, available within a day’s drive to the vast majority of U.S. residents. Some in the industry talk of there being an oversupply, as if their product were lumber or soybeans.

Yes, the casino gambling market is saturated, and it will only continue to saturate.

In October, a casino opened at the Aqueduct racetrack in Queens with 4,500 slot machines, and Gov. Andrew Cuomo is pushing an expansion plan for the site that includes a hotel and what would be the nation’s largest convention center. And lawmakers in Massachusetts recently voted to issue licenses for a slots parlor and three full resort casinos — an especially ominous development for the Connecticut casinos, which draw about 30 percent of their clientele from Massachusetts, because many gamblers are ruled by what is known in the business as the law of gravity. They stop where the pull is the strongest, which is usually the nearest casino.

Yes, new non-tribal, brick-and-mortar casinos and racinos are coming to a state near you; perhaps even a neighboring state that does not run afoul of tribal Class III gaming exclusivity.

Resistance to gambling, however, has been overwhelmed by the need for new sources of public revenue in an era when it has become nearly impossible, at any level of government, to raise taxes or even to let temporary tax cuts expire. A kind of self-perpetuating momentum fuels gambling’s growth: the more states that legalize it, the more politicians in states that haven’t done so argue that if their citizens are going to throw money into slot machines, they might as well do it at home.

Yes, while states cannot effectively raises taxes in today's political climate, they can and will create new taxing objects, namely commercial gaming.

Foxwoods had been an early mover, built to stand astride a huge geographic area — much like the Pequot tribe once dominated a big swath of New England. But as the casino business in America has expanded, Foxwoods’s piece of it has become smaller and will continue to shrink.

Indeed, other successful gaming tribes and early movers, also built to stand astride huge, exclusive geographic areas, very well may, as the casino business in American continues to expand, also begin to shrink. If or when that day comes, those tribes must be prepared to fill the void of gaming revenues with other profit streams.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe helps tribes and Indian small businesses with economic diversification efforts, with an emphasis on minimizing state interference or taxation. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

Indian Country Must Stop the STOP Act!

Indian tribes are not engaged in illegal smuggling of tobacco.  Indian tribes oppose the STOP Act because it interferes with completely legal tobacco sales on Indian reservations, and with tribal government collection of tobacco taxes that fund critical governmental services. Tribal entrepreneurs, regulated and taxed by tribal governments, are able to sell their products at below-market prices because they are not part of the Big Tobacco market.  Big Tobacco has sought to monopolize and price-fix through state taxation and regulation, particularly through those provisions of state law that implement the Master Settlement Agreement.  The STOP Act would tip the scales towards Big Tobacco, via the states, through state tax collection and the standardization of tobacco prices before tobacco products ever reach Indian Reservations.  These revenue-controlling provisions of the STOP Act have nothing to do with public health or child welfare.

Further, the STOP Act will very likely violate U.S. Constitutionally protected Indian Treaties and upset tribal-state tax compacts; undermine the legal tribal manufacture of tobacco; and impermissibly sanction tribal commerce – exchange that is protected by the federal Constitution’s mandate that Congress regulate commerce “among the several states, and with the Indian tribes.”   It is time for Congress to stand up to its responsibilities and fully include Indian tribal regulatory and taxing authority in the laws that regulate commerce in tobacco.

Section 103(a) would require that every manufacturer or importer (including tribal governments) stamp each tobacco package with a “unique identification marker.”  Although 103(b) requires that the “unique identification marker” “not interfere” with state, local or Indian tax stamps, the marker would be designed to “facilitate collection of” all currently applicable state and federal taxes and to “facilitate the enforcement” of other federal laws against tribal manufacturers, wholesalers or distributors, such as the PACT Act.  The marker must provide the “value” of the marker, a tracking code, the name and address of the stamper, the date that it was stamped, and the name and address of the “first unrelated person purchasing or otherwise receiving” the product.  Although the “marker” is couched as a tracking device, rather than a tax stamp, the statute arguably leaves room for all forms taxation at the manufacturer level.  The fact that the stamp has a “value” is especially telling.

Section 105(a) would require that every tribal manufacturer, wholesaler or importer of tobacco obtain a permit from the Secretary of Treasury (presumably).  In order to obtain the permit, the applicant must be in compliance with the PACT Act, the Jenkins Act, and numerous other tobacco-specific laws and regulations.  The applicant must also be in compliance with “all other Federal, State, and Indian tribal laws relating to the taxation, manufacture, importation, exportation, distribution, marketing, sale, or transportation of tobacco products . . . .”  In other words, it forces tribal manufacturers, wholesalers, and importers to comply with state laws (even if not expressly subject to state taxation per Section 301).  Importantly, it also forces tribal manufacturers to comply with state laws that implement the Master Settlement Agreement, something that tribes had nothing to do with.

Section 108(b) would make it illegal to ship, transport, deliver, or receive any tobacco products that are unstamped.  It also makes it illegal to sell more than 3,000 cigarettes in a single transaction or a series of related transactions.  Considering how the Department of Justice has to date construed the PACT Act and its definitions of “inter-state commerce” and “delivery seller,” Section 108(b) likely interferes with certain Indian Treaty rights to travel for purpose of commerce, including tobacco commerce, unfettered from state and federal limitations.  See, e.g., The Treaty With the Yakama, 12 Stat. 951, Art. III (1859).

Section 301 says that “[n]othing in this Act or the amendments made by this Act shall be construed to amend, modify, or otherwise affect . . . any agreements, compacts, or other intergovernmental agreements . . . relating to the collection of taxes on tobacco products sold in Indian country.”  Of course, these agreements and compacts arose in a different climate, one where federal law did not sanction the collection of state taxes and otherwise subjecting tribal governments to local restrictions.  Under the STOP Act, states no longer have an incentive to stay in compliance with these agreements because the execution of otherwise non-enforceable state regulations can now be facilitated in Indian Country by the United States and its Treasury and Justice Departments.

Section 301 does contain the following disclaimer:

Nothing in this Act or the amendments made by this Act shall be construed to amend, modify, or otherwise affect . . . any limitations under Federal or State law, including Federal common law and treaties, on State, local, and tribal tax and regulatory authority with respect to the sale, use, or distribution of tobacco products or processed tobacco by or to Indian tribes, tribal members, tribal enterprises, or in Indian country; . . . any Federal law, including Federal common law and treaties, regarding State jurisdiction, or lack thereof, over any Indian tribe, tribal member, tribal enterprise, Indian reservations, or other land held by the United States in trust for one or more Indian tribes; or . . . any State or local government authority to bring enforcement actions against persons located in Indian country.

This savings clause is similar to that of Section 5 the PACT Act.  However, as we have seen with the PACT Act, such provisions are not enough to deter states and Big Tobacco from seeking to destroy inter-tribal tobacco commerce via state regulation and taxation and federal enforcement.  In order to be effective, the savings clause should specifically integrate tribal governments as appropriate regulatory and tax collection entities on the same basis as state governments, as well disclaim any application of state regulations to tribal tobacco businesses acting in Indian Country, especially in inter-tribal or reservation-to-reservation commerce.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe helps tribes and Indian small businesses with economic diversification efforts, with an emphasis on minimizing state interference or taxation. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

AUTO v. Washington: Looking Into The Crystal Ball

When the Washington State Supreme Court ruled last month that states lack jurisdiction to prosecute tribal members for crimes on federal land that has been set aside for the exercise of treaty fishing rights, the court revealed more about its makeup and how we can expect future Indian law cases to be decided in Washington.  See State v. Jim, No. 84716-9, 2012 WL 402051 (Wash. Feb. 9, 2012) (en banc). Summaries based on voting records are necessarily binary.  However, if we treat them as one court-watching tool, and understand that every case is different, looking at how the Justices vote can be valuable – especially as we approach the day when AUTO v. Washington will be heard.  Consider the current Justices’ voting patterns in recent Indian law cases:

Case	Tribal Interests Prevail	Tribal Interests Fail
Wright v. CTEC	MadsenOwens Fairhurst	ChambersC. Johnson J. Johnson
State v. Eriksen	OwensC. Johnson Chambers	StephensWiggins Fairhurst Madsen J. Johnson
State v. Jim	OwensC. Johnson Alexander Stephens Fairhurst Chambers	WigginsJ. Johnson Madsen

Of the Justices who took part in all three cases, the common anti-tribal denominator is Justice Jim Johnson.  He has sided with the anti-tribal interests in each of the three cases we use as indicators.  Justice Wiggins was not on the Court for Wright, but he too has sided against tribal interests in Eriksen and Jim.  While Justice Madsen authored a concurrence in Wright, which affirmed tribal sovereign immunity for tribes’ commercial activities, she has recently joined Justices Jim Johnson and Wiggins in dissent against tribal interests in both Eriksen and Jim.

AUTO will provide a very telling fourth data set, with many of the same justices as well as newly appointed Justice Steven Gonzalez taking part.

Anthony Broadman is a partner at Galanda Broadman PLLC.  He can be reached at 206.321.2672, anthony@galandabroadman.com, or via www.galandabroadman.com.