#96 © Copyright 2003, all rights reserved worldwide Gambling and the Law® is a registered trademark of Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA

Tribal sovereign immunity is the doctrine that says that a tribe cannot be sued unless Congress acts or the tribe itself consents.

The United States Supreme Court hates tribal sovereign immunity, and has told Congress and other courts to get rid of it. Gaming tribes have become big political players, and Congress is not about to bite the hands that are feeding it large campaign contributions. But lower federal and state courts have gotten the message, and are reviewing documents and laws with microscopes, looking for accidental waivers.

Prior to the introduction of Indian gaming, the question of whether tribes could be sued was not of great interest to the general population. But when bingo and then casinos came to reservations, so did everything else connected with legal gaming, including contracts for constructing buildings and managing operations, labor and supplier disputes, and hundreds of thousands of visitors.

Until a few years ago, we thought we knew where the doctrine of tribal sovereignty came from, its general limits, and what had to be done for that immunity to be waived, particularly when it came to Indian gaming.

It started, we thought, in the 1830s, when Chief Justice John Marshall wrote U.S. Supreme Court opinions declaring tribes to be “domestic dependent nations.” He based this on American history and the U.S. Constitution.

During the period of European conquests, tribes were not just unorganized groups of individuals. Marshall saw them as similar to nations that had been defeated at war and forced to sign peace treaties allowing them to continue to occupy and govern their former land, under the sovereign power of the conquering nation.

The policy of the federal government has shifted radically over the years, from war, even genocide, to the paternalism seen in the Marshall opinions, to assimilation, to efforts to strengthen tribal governments. But in all cases, tribes were clearly considered to be sovereigns of some sort, governments with power over their lands and peoples, and immune from the regulations of states, counties and cities.

Modern Indian gaming exists today due to the idea that tribes are sovereigns.

Congress had passed Public Law 280 giving states some power over tribes. But the U.S. Supreme Court held, in the Cabazon case, that a state could prohibit gambling in Indian Country only if the state had prohibited gambling itself. Congress wrote this into statutes by passing the Indian Gaming Regulatory Act (“IGRA”).

In the Kiowa case in 1998, the U.S. Supreme Court told us we had it all wrong. The Court made the startling announcement that tribes are more powerful, in some ways, than foreign nations — and yet, at the same time, more subject to the whims of Congress. Under the “act of state” doctrine, a foreign country can be sued if it is merely acting like a business, say growing and shipping sugar. The Court held tribes cannot be sued even when the dispute is merely a business deal unrelated to the tribe’s land and government.

The Court then declared that tribal sovereign immunity had nothing to do with the tribes as sovereign governments dating back hundreds of years. Rather, everyone had been misreading a case decided in 1919..

The tribes have no friends in this Court – the majority thought Congress should abolish all tribal sovereign immunity, while the dissent said that the concept did not even exist. The idea of “domestic nations” was more than overturned; it was ignored.

This was also a wake-up call for courts. Because it appears that tribal corporations and other business entities involved in Indian gaming share a tribe’s nearly absolute immunity, it was inevitable that courts would find ways of eliminating it, whenever they could.

The easiest way for a tribe to lose its sovereign immunity is to waive it. In the 2001 C & L Enterprises case, the U.S. Supreme Court found a way to loosen the test for waiver, aided by somewhat sloppy work by tribal lawyers.

C & L, a construction company, and the Citizen Band Potowatomi Tribe entered into a contract to install a roof on a commercial building owned by the Tribe outside the reservation. The lawyers used standard forms, as is done with most construction contracts.

After the form contracts had been signed, but before work could begin, the Tribe changed its mind and entered into a contract with a different company to do the same job. C & L filed a demand for arbitration, pursuant to its contract. The Tribe refused to directly participate in the arbitration, asserting sovereign immunity.

The Supreme Court issued an unanimous opinion, holding that the Tribe had waived its sovereign immunity by agreeing to abide by the Rules of the American Arbitration Association and Oklahoma state law. In a careful reading of those Rules and law, the Court found phrases saying that arbitration awards can be enforced in state court. So, the Tribe had “clearly” agreed that it could be sued in state court.

Other courts have now reached similar conclusions from language buried deep in form contracts.

The United States Supreme Court is openly antagonistic toward claims of tribal sovereign immunity. It has declared that tribes, unlike foreign nations, cannot be sued for purely commercial activities. But this declaration was designed to tell Congress to abolish this doctrine. It also sends a message to lower courts that they should find ways to declare that Congress or the tribe itself has waived the tribe’s immunity. To make sure other courts got the message, the nation’s highest Court has declared that mistakes count: If a tribe signs a contract incorporating a state’s laws or the rules of the American Arbitration Association, the court should find that the tribe has “clearly” waived its immunity. Even if that was not the intent of the tribe’s lawyers.

The lesson for practicing lawyers is clear: Never use a form without reading it, and never accept by reference another document or body of law without knowing what you are accepting.

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© Copyright 2005. Professor I Nelson Rose is recognized as one of the world’s leading authorities on gambling law. His latest books, Gaming Law: Cases and Materials and Internet Gaming Law, are available through his website, www.GamblingAndTheLaw.com