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Navajo Nation v. Dalley

United States Court of Appeals, Tenth Circuit

July 24, 2018

NAVAJO NATION; NORTHERN EDGE NAVAJO CASINO, Plaintiffs-Appellants,
v.
The Honorable BRADFORD J. DALLEY, District Judge, Eleventh Judicial District, New Mexico, in his official capacity; HAROLD MCNEAL; MICHELLE MCNEAL, Defendants-Appellees, NEW MEXICO TRIAL LAWYERS ASSOCIATION; PUEBLO OF SANTA ANA, Amici Curiae.

          Appeal from the United States District Court for the District of New Mexico (D.C. No. 1:15-CV-00799-MV-KK)

          Patrick T. Mason, Mason & Isaacson, P.A., Gallup, New Mexico, for Plaintiffs-Appellants.

          Nicholas M. Sydow, Office of the New Mexico Attorney General, Santa Fe, New Mexico, for Defendant-Appellee Bradford J. Dalley.

          Daniel M. Rosenfelt, Rios Law Firm, Albuquerque, New Mexico (Linda J. Rios, Rios Law Firm, Albuquerque, New Mexico, with him on the brief), for Defendants-Appellees Harold McNeal and Michelle McNeal.

          Michael B. Browde, Albuquerque, New Mexico (David J. Stout, Albuquerque, New Mexico, with him on the brief), for Amicus Curiae New Mexico Trial Lawyers Association, in support of Defendants-Appellees.

          Richard W. Hughes, Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg & Bienvenu, LLP, Santa Fe, New Mexico (Donna M. Connolly, Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg & Bienvenu, LLP, Santa Fe, New Mexico, with him on the brief), for Amicus Curiae Pueblo of Santa Ana, in support of Plaintiffs-Appellants.

          Before HOLMES, PHILLIPS, and MORITZ, Circuit Judges.

          HOLMES, CIRCUIT JUDGE.

         The Appellants, the Navajo Nation and its wholly-owned government enterprise the Northern Edge Navajo Casino (together, the "Tribe" or "Nation"), entered into a state-tribal gaming compact with New Mexico under the Indian Gaming Regulatory Act ("IGRA"), 25 U.S.C. §§ 2701-2721. The Tribe agreed not only to waive its sovereign immunity for personal-injury lawsuits brought by visitors to its on-reservation gaming facilities, but also to permit state courts to take jurisdiction over such claims. Harold and Michelle McNeal (the "McNeals") are plaintiffs in just such a state-court action against the Tribe. Mr. McNeal allegedly slipped on a wet floor in the Northern Edge Navajo Casino. This slip-and-fall incident constituted the basis for the McNeals' tort claims against the Nation for negligence, res ipsa loquitur, and loss of consortium. Judge Bradford Dalley is a New Mexico state judge who presides over the ongoing state-court proceedings. We refer to the McNeals and Judge Dalley collectively as the Appellees.

         The Tribe moved to dismiss the McNeals' complaint, arguing that the state court lacked jurisdiction because neither IGRA nor Navajo law permits the shifting of jurisdiction to a state court over such personal-injury claims. The state court rejected that motion. In response, the Tribe sought declaratory relief in federal court on the basis of the same arguments. The district court granted summary judgment for the McNeals and Judge Dalley, holding that IGRA permitted tribes and states to agree to shift jurisdiction to the state courts and that Navajo law did not prohibit such an allocation of jurisdiction. The Tribe timely appealed. Prior to oral argument, we ordered the parties to submit supplemental briefs as to whether the district court had jurisdiction.

         Along with the jurisdictional issue, the parties also dispute (1) whether IGRA permits an Indian tribe to allocate jurisdiction over a tort claim arising on Indian land to a state court, and (2) assuming that IGRA does allow for such an allocation, whether the Navajo Nation Council ("NNC") was empowered to shift jurisdiction to the state court under Navajo Law.

         After first concluding that we have jurisdiction to hear this appeal, we determine that IGRA, under its plain terms, does not authorize an allocation of jurisdiction over tort claims of the kind at issue here. Accordingly, we reverse the judgment of the district court and remand with instructions to grant the declaratory relief sought by the Nation.

         I

         A

         In 1987, the Supreme Court decided California v. Cabazon Band of Mission Indians, in which it held that states could not regulate gaming activities on Indian land without Congressional authorization. 480 U.S. 202, 207 (1987) (rejecting California's attempted regulation of bingo and some card games), superseded by statute, Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701-2721, as recognized in Michigan v. Bay Mills Indian Cmty., __U.S.__, 134 S.Ct. 2024 (2014); see New Mexico v. Dep't of Interior ("N.M./DOI"), 854 F.3d 1207, 1211 (10th Cir. 2017) ("In 1987, the Supreme Court [in Cabazon] held that states lack regulatory authority over gaming activities on Indian land except where Congress has expressly provided for such authority."); Kevin K. Washburn, Recurring Problems in Indian Gaming, 1 Wyo. L. Rev. 427, 428 (2001) ("The [Cabazon] Court held that although Congress may have given to the State of California criminal jurisdiction within Indian reservations, Congress had not given the state the lesser power of civil regulatory jurisdiction on reservations.").

         In response to that "bombshell" ruling, Franklin Ducheneaux, The Indian Gaming Regulatory Act: Background and Legislative History, 42 Ariz. St. L.J. 99, 154 (2010), Congress enacted IGRA in 1988 to create a framework for states and Indian tribes to cooperate in regulating on-reservation tribal gaming, see Pueblo of Pojoaque v. New Mexico, 863 F.3d 1226, 1232 (10th Cir. 2017) ("In response to the Supreme Court's holding in [Cabazon], that states lack regulatory authority over Indian gaming on tribal lands absent congressional action, Congress enacted IGRA, 25 U.S.C. §§ 2701-2721, to provide a role for states in regulating Indian gaming activities on tribal lands."); see also Bay Mills, 134 S.Ct. at 2034 ("Everything-literally everything-in IGRA affords tools (for either state or federal officials) to regulate gaming on Indian lands, and nowhere else."); N.M./DOI, 854 F.3d at 1212 (noting that IGRA "gives states a role in the regulation of Indian gaming"); Cohen's Handbook of Federal Indian Law § 12.01, at 876 (Nell Jessup Newton ed., 2012) [hereinafter, "Cohen's Handbook"] ("IGRA accommodated the interests of tribes in pursuing gaming but also set forth a federal regulatory regime, and gave a powerful role to states by providing for significant state involvement in the decision to permit casino-style gaming."). IGRA enables states and tribes to negotiate compacts addressing a range of topics relating to tribal gaming. See 25 U.S.C. § 2710(d).

         Under IGRA, tribes that seek to conduct gaming activities are incentivized to negotiate gaming compacts with states because, absent such compacts, the most "lucrative" form of gaming-Class III gaming-is forbidden. N.M./DOI, 854 F.3d at 1212 ("The present case concerns Class III gaming, which includes the most lucrative forms of gaming."); see § 2710(d)(1); Bay Mills, 134 S.Ct. at 2035 ("[A] tribe cannot conduct class III gaming on its lands without a compact . . . ."); Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 47 (1996) ("The Indian Gaming Regulatory Act provides that an Indian tribe may conduct certain gaming activities only in conformance with a valid compact between the tribe and the State in which the gaming activities are located."). "Class III gaming . . . includes casino games, slot machines, and horse racing." Bay Mills, 134 S.Ct. at 2028; see Washburn, supra, at 429 ("IGRA provides that tribes may engage in Class III casino-style gaming only if they first negotiate 'compacts' with states.").[1]

          Importantly, IGRA expressly prescribes the matters that are permissible subjects of gaming-compact negotiations between tribes and states. § 2710(d)(3)(C). In the tribal-state compact that the Tribe and New Mexico entered into, the Tribe agrees not only to waive its sovereign immunity as to personal-injury claims brought by visitors to its casinos but also to permit such claims to be brought in state court. See Aplt.'s App. at 26 (State-Tribal Compact, dated Nov. 6, 2003).[2] More specifically, the compact permits such state-court litigation, "unless it is finally determined by a state or federal court that IGRA does not permit the shifting of jurisdiction over visitors' personal injury suits to state court." Id.

         B

         The present dispute has its genesis in a slip-and-fall case that the McNeals brought in New Mexico state court. Mr. McNeal allegedly fell on a wet bathroom floor in the Navajo Northern Edge Casino. He and his wife sued the Nation, which owns and operates the casino, claiming negligent maintenance, res ipsa loquitur, and loss of consortium. In a motion to dismiss, the Tribe argued that the state court lacked subject-matter jurisdiction for two reasons. First, it contended that this was so because IGRA does not authorize states and tribes to enter into compacts that shift jurisdiction over tort claims stemming from events on Indian country to state court-viz., IGRA does not contemplate that the shifting of jurisdiction over such claims is a permissible subject of compact negotiations. Second, it argued that NNC was not authorized to shift jurisdiction over tort claims against the Nation, like those of the McNeals, to state court.

         The state court denied the Tribe's motion to dismiss on the basis that the New Mexico Supreme Court, in Doe v. Santa Clara Pueblo, had already decided the issue. 154 P.3d 644, 646 (N.M. 2007) ("We now . . . hold[] that state courts have jurisdiction over personal injury actions filed against [the tribes] arising from negligent acts alleged against casinos owned and operated by the [tribes] and occurring on the [tribes'] lands."). Subsequently, Judge Dalley took over the state court case.

         The Tribe then brought this suit for a declaratory judgment in the U.S. District Court for the District of New Mexico. The Tribe sought a declaratory judgment "that [the] Indian Gaming Regulatory Act does not permit the shifting of jurisdiction from tribal courts to state courts over personal injury lawsuits brought against tribes or tribal gaming enterprises, and that the New Mexico state courts do not have jurisdiction over lawsuits such as the McNeal Lawsuit." Aplt.'s App. at 11-12. (Am. Compl., dated Sept. 21, 2015).

         The Tribe moved for summary judgment, and the district court denied relief. The court first addressed whether the Nation inherently had the authority to permit state court jurisdiction over claims arising in Indian country, and held that it did. It then concluded that NNC was authorized under Navajo law to shift jurisdiction over tort claims against the Nation, like those of the McNeals, to state court. Lastly, the court addressed the IGRA question, holding that IGRA authorized such shifting of jurisdiction as to personal-injury tort claims either under 25 U.S.C. § 2710(d)(3)(C)(i) and (ii), when read together; or under the catch-all provision, § 2710(d)(3)(C)(vii). Concluding thereafter that "there [were] no legal issues remaining to be resolved," the district court dismissed the case. Id. at 163 (Mem. Op. & Order, dated Aug. 3, 2016). The Tribe timely appealed from the district court's judgment.

         II

         We first address our jurisdiction. Because federal courts have limited subject-matter jurisdiction, "we 'may only hear cases when empowered to do so by the Constitution or by act of Congress.'" Gad v. Kan. State Univ., 787 F.3d 1032, 1035 (10th Cir. 2015) (quoting Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th Cir. 2004)). "[W]e always have an independent obligation-no matter the stage of litigation-to consider whether a case creates a live case or controversy and belongs in federal court." Id.; accord Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). We review de novo whether subject-matter jurisdiction is proper. See, e.g., 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d 1044, 1048 (10th Cir. 2006); Austl. Gold, Inc. v. Hatfield, 436 F.3d 1228, 1234 (10th Cir. 2006).

         Consistent with our independent obligation, we ordered the parties to submit briefing regarding, inter alia, whether, under 28 U.S.C. § 1331, the district court had federal jurisdiction over this action when the Tribe was raising what (at first blush) appeared to be federal defenses to pure state-law claims. Since this briefing, that jurisdictional issue has been resolved by a panel of our court in Ute Indian Tribe v. Lawrence, 875 F.3d 539 (10th Cir. 2017), which ruled that federal courts do have jurisdiction in circumstances like those presented here.

         Specifically, in Lawrence, a non-Indian brought a breach-of-contract claim against the Ute Indian tribe in Utah state court. Seeking to halt the state proceeding, the Tribe filed suit in federal district court, "asserting . . . that the state court lacked subject-matter jurisdiction to hear the case." Id. at 540. The district court, in turn, determined that it did not have jurisdiction to consider the Tribe's challenge to the state court's jurisdiction. Id. The Tribe appealed, and we reversed the district court's determination, holding that the Ute Tribe's "claim-that federal law precludes state-court jurisdiction over a claim against Indians arising on the reservation-presents a federal question that sustains federal jurisdiction." Id.

         In reaching that conclusion, the panel first analyzed the "long history of federal law regarding Indian affairs," id. at 541, and observed both that "federal law regulates a tribe's right to exercise jurisdiction over non-Indians," id. at 542, and "that state adjudicative authority over Indians for on-reservation conduct is greatly limited by federal law," id. From those principles, we determined that "federal courts generally have jurisdiction to enjoin the exercise of state regulatory authority (which includes judicial action) contrary to federal law," id. at 543, and reasoned that the tribe's suit arose under federal law because it was "seeking injunctive and declaratory relief against state regulation (the state-court proceeding) that it claims is preempted by federal law," id. at 547.

         Lawrence's analysis is directly applicable here: the Nation here seeks declaratory relief under federal law against state regulation, viz., the state-court proceeding, claiming that federal law preempts it. As such, we properly exercise jurisdiction over this appeal under § 1331.[3]

         III

         Proceeding to the merits, this appeal presents two issues, one of federal law and one of Navajo law. First, the Nation asserts that the district court erred in concluding that IGRA authorizes an Indian tribe to allocate jurisdiction over a tort claim arising on Indian land to a state court. Second, even assuming that IGRA does allow a tribe to allocate jurisdiction of such claims to state courts, the Nation submits that the NNC was not empowered to shift jurisdiction to the state ...


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