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Ute Indian Tribe of Uintah and Ouray Reservation v. Lawrence

United States District Court, D. Utah, Central Division

April 30, 2018

UTE INDIAN TRIBE OF THE UINTAH AND OURAY RESERVATION, et al., Plaintiffs,
v.
HONORABLE BARRY G. LAWRENCE, District Judge, Utah Third Judicial District, and LYNN D. BECKER, Defendants.

          MEMORANDUM DECISION AND ORDER DENYING PRELIMINARY INJUNCTION

          Clark Waddoups United States District Judge

         TABLE OF CONTENTS

         Introduction ...................................................................................................................................... 3

         Procedural Background .................................................................................................................... 5

         Preliminary Injunction Standard ...................................................................................................... 8

         I. Substantial Likelihood of Success ............................................................................................... 9

         A. State Court Subject Matter Jurisdiction .................................................................................. 9

         1. The Tribe Is Not Required to Hold a Special Election to Selectively Consent ................ 15

         2. Becker's Independent Contractor Agreement Did Not Involve Trust Property ............... 25

         B. February 28, 2018 Tribal Court Decision ............................................................................. 26

         1. Background ....................................................................................................................... 26

         2. The Tribal Court's February 28 Opinion Does Not Have Preclusive Effect .................... 32

         C. Becker's Independent Contractor Agreement Is Valid ......................................................... 39

         1. The Proceeds to be Distributed to Becker Are Not Trust Property Under Federal Law ................ 45

         a. Provision 1 of the Participation Plan Does Not Involve Trust Interests ...................... 48

         • Original Operating Agreement ........................................................................... 50

         • Amended and Restated Operating Agreement ................................................... 52

         • Exploration and Development Agreements ....................................................... 56

         • Liquidation and the Second Amended and Restated Operating Agreement ........ 57

         b. Provisions 2, 3, & 4 of the Participation Plan Do Not Involve Trust Interests ........... 59

         • Tribal Court Decision ......................................................................................... 61

         c. State Court Jurisdiction Is Not Preempted Because Contract Revenue Is Not Trust Property Under Federal Law .... 62

         2. Becker's Independent Contractor Agreement Is Valid Under Tribal Law ...................... 62

         a. The Tribe Validly Waived Sovereign Immunity Under Tribal Law ............................ 63

         • First Tribal Court Order ...................................................................................... 70

         • Second Tribal Court Decision ............................................................................. 71

         b. The Ute Business Committee's Pattern and Practice Affirmed the Validity of the Waiver .............. 73

         c. Contract Is Valid Under Other Tribal Law ................................................................. 77

         d. The Tribe Has Waived the Exhaustion Requirement .................................................. 79

         II. Conclusion ................................................................................................................................ 81

         INTRODUCTION

         This case arises from the uncertainty inherent in the overlapping jurisdictional reach of the Utah state courts and the Ute tribal courts when a dispute arises between the Tribe and a non-Indian under a series of complex commercial contracts that create an issue of whether there is an enforceable waiver of sovereign immunity. The case puts at issue the interests of three sovereigns: the United States, the state of Utah, and the Ute Tribe. It is undisputed that Congress, exercising its power as the sovereign, has and may grant-as well as limit-the authority of both the state and the Tribe to exercise their separate jurisdictional authority. And the boundaries of that authority have and continue to evolve.

         Traditionally, state courts have general subject matter jurisdiction to resolve disputes that arise within the state's boundaries. When Congress, as the sovereign, has not waived immunity or reserved to the federal courts exclusive jurisdiction in certain areas, the state court's jurisdiction extends to disputes arising within the state's geographic boundaries. Similarly, the doctrine of tribal immunity preempts state court jurisdiction for disputes arising within tribal boundaries. The scope and breadth of tribal immunity and preemption have evolved and continue to evolve, both by congressional action and court decisions. This case requires the court to determine the circumstances under which such tribal sovereign immunity preempting state court jurisdiction may be waived.

         Inherent in the recognition of tribal sovereign immunity is the goal of supporting tribal self-governance and control over the Tribe's property, assets, and the management of tribal affairs. The tribal lands have been held in trust by the federal government for the benefit of the tribal members. To avoid misappropriation and abuse, the federal government, as the guardian for the tribal members, has been required to approve alienation of trust assets. As valuable resources have been found on tribal lands, the motivation for non-Indians to engage in corruption and deceit to deprive tribal members of the value of these resources has often been astounding and a sad commentary on the development of the West's natural resources.[1]

         The natural and appropriate response by the tribes has been to be increasingly vigilant and zealous in asserting and protecting their right to control their own affairs. The principal legal mechanism has been for the tribes to assert their rights to sovereign immunity, arguing that disputes over trust assets must be resolved in tribal courts. The tribes, however, have also recognized the value of participating in the commercial development of their resources. These commercial transactions by their very nature are often complex and require significant capital contribution from non-Indian entities. These commercial arrangements, as is customary in all similar complex transactions, require agreements between the parties on how disputes will be resolved, and by which courts. In this case, the agreements have ripened the uncertainty about the overlapping jurisdiction of the state and tribal courts, and about when and under what circumstances tribal sovereign immunity comes into play. The very nature of the agreements themselves requires the parties to determine whether sovereign immunity has been waived and the jurisdiction of the state courts recognized.

         The Indian tribes rightly are strongly motivated to enjoy the fullest protection possible to control the resolution of such disputes. Similarly, non-Indians are also appropriately motivated to protect the value of their capital and labor investments. The motivations and intentions of both sides are understandable and cannot be faulted. This case requires the court to resolve how those interests, in compliance with existing law, statutes, and agreements, should be resolved.

         For the reasons stated below, the court concludes that this contract dispute should be resolved in Utah state court and the pending action in the Ute Tribal Court enjoined. The court reaches this conclusion after reviewing hundreds of pages of briefing, considering extensive oral argument, and conducting a careful analysis of a record of more than 5, 000 pages. The transaction is complex and the parties' attempts to simplify in order to support their positions have sometimes missed the essential facts and terms upon which the decision must be based.

         To address these issues, the court has been required to provide detail and analysis beyond what would be typical or even desired on a motion for preliminary injunction. The detailed analysis has been necessary, however, to fairly and adequately address the facts and legal issues raised. Because of the complexity of the agreements, laws, and issues, the court provided the parties with a draft copy of this memorandum decision as a tentative ruling and held an additional hearing on Friday, April 13, 2018, for the parties to address any errors or misunderstanding in the draft decision. The final decision incorporates relevant issues raised by the parties.

         PROCEDURAL BACKGROUND

         This action is before the court on the tribal parties' motion for a preliminary and/or permanent injunction against Mr. Lynn Becker and Judge Barry G. Lawrence proceeding in the matter of Becker v. Ute Indian Tribe et al, No. 140908394, Third Judicial District Court, Salt Lake County.[2] (ECF No. 54.) A brief history of how this court came to consider this motion is set forth in the Memorandum Decision and Order Granting Temporary Restraining Order dated February 17, 2018.[3] (ECF No. 85.) The motion concerns the provisions of Article 23 of Becker's Independent Contractor Agreement and its implications for the jurisdictional conflict and the issue of tribal exhaustion. In its entirety, Article 23 states:

Article 23. Limited Waiver of Sovereign Immunity; Submission to Jurisdiction.

         If any Legal Proceeding (definition follows) should arise between the Parties hereto, the Tribe agrees to a limited waiver of the defense of sovereign immunity, to the extent such defense may be available, in order that such legal proceeding be heard and decided in accordance with the terms of this Agreement. For purposes of this Agreement, a “Legal Proceeding” means any judicial, administrative, or arbitration proceeding conducted pursuant to this Agreement and relating to the interpretation, breach, or enforcement of this Agreement. To the extent the course of dealing between the Parties might be interpreted to have modified or extended the terms of this Agreement, the limited waiver of sovereign immunity shall apply to such modification or extension. A Legal Proceeding shall not include proceedings related to royalty or similar interests in lands held by the Tribe that are not expressly subject to the terms of this Agreement.

Each Party hereto consents to service of processing [sic] for any such Legal Proceeding filed in the court or courts so designated. The Tribe's limited waiver of sovereign immunity and submission to jurisdiction also extends to any arbitration and all review and enforcement of any decision or award of the panel so convened in the court or courts so designated. The Tribe's limited waiver of sovereign immunity shall be further evidenced by a Tribal Resolution delivered at the time of execution of this Agreement in accordance with Tribal Laws, that expressly authorizes the foregoing submission to jurisdiction of the courts so designated and the execution of this Agreement.

(App'x 98-99, ECF No. 55-1.)

         The Temporary Restraining Order was scheduled to expire on March 3, 2018. Thus, the court held an evidentiary hearing on the tribal parties' motion on February 28, 2018, during which no party objected to the court extending the Temporary Restraining Order enjoining the state court action until the court could issue its written opinion. (ECF No. 106.) At the hearing, the court also took evidence and clarified the purpose for which all evidence would be considered. The court further stated that in deciding this motion, it should consider all documents and exhibits on record in this case as well as in the record of companion case Becker v. Ute Indian Tribe et al, No. 2:16-cv-958, United States District Court for the Central Division of Utah.[4] The parties did not object to this statement. (Feb. 28 Hrg. Tr. 154, 161; ECF No. 111.) The court therefore DENIES as MOOT the tribal parties' motions in limine seeking to limit the evidence the court should consider. (ECF Nos. 97, 98, & 99.)[5] At the hearing, the court also authorized Mr. Becker to submit additional authority for the court's consideration, (ECF No. 106), which he has now done, (ECF No. 109).

         On February 28, 2018, the Ute Indian Tribal Court issued an opinion (February 28 Opinion) granting the tribal parties' Motion for Summary Judgment on Grounds of Illegality Under Federal and Tribal Law. (ECF No. 108-1.) On March 1, 2018, the day after the hearing in this court on the tribal parties' motion for preliminary injunction, the tribal parties filed a notice of the February 28 Opinion. (ECF No. 108.) The tribal parties subsequently moved this court to give preclusive effect to the Tribal Court's February 28 Opinion and to consolidate and advance the court's consideration and ruling on the questions of preliminary and permanent injunctive relief as set forth in the tribal parties' motions for summary judgment and/or preliminary and permanent injunctive relief. (ECF No. 110.) Becker has objected to their motion. (ECF No. 115).[6] For the reasons stated below, the court DENIES the tribal parties' motion to give preclusive effect to the February 28 Opinion and to consolidate and advance consideration of their other motions. (ECF No. 110.) Based on the court's review of the evidence, the arguments, the briefing, and relevant case law, the court DENIES the tribal parties' motions for preliminary injunction. (ECF No. 54 and the injunction portions of ECF Nos. 52 & 53.)

         PRELIMINARY INJUNCTION STANDARD

         Because this court has previously set forth the factual background in this matter in its January 31, 2018 Memorandum Decision, (ECF No. 78), the court begins here with the legal standard it must follow when ruling on a preliminary injunction. The court may grant a preliminary injunction, in its sound discretion, if the movant shows a substantial likelihood of success on the merits of the relief sought, irreparable harm to the moving party absent an injunction issuing, that the damage an injunction will cause to the non-moving party is outweighed by the threatened injury to the moving party, and that if issued, an injunction will not be adverse to the public interest. Kiowa Indian Tribe of Okla. v. Hoover, 150 F.3d 1163, 1171 (10th Cir. 1995). The court first addresses the most disputed-and dispositive-element of the standard in this case: whether the tribal parties have met their burden to show a substantial likelihood of success on the merits.

         I. SUBSTANTIAL LIKELIHOOD OF SUCCESS

         A. The State Court Has Subject Matter Jurisdiction.

         The tribal parties first seek to enjoin the Utah state court from proceeding, arguing that it lacks subject matter jurisdiction over Becker's contract claims against the tribal parties. Citing case law from as early as 1832, the tribal parties argue that it is a fundamental tenet of federal law that states lack jurisdiction over Indians for conduct occurring within Indian country.[7] See Worcester v. Georgia, 31 U.S. 515, 561-63 (1832) (concluding that the 1791 treaty of Holston between the United States and the Cherokee nation precluded the state of Georgia from criminally adjudicating non-Indians for actions that occurred on tribal land). While the tribal parties' initial premise is generally correct, it is not an unequivocal statement of the law, nor does it apply without further analysis in this case. See White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 142 (1980) (“Long ago the Court departed from Mr. Chief Justice Marshall's view that ‘the laws of [a State] can have no force' within reservation boundaries” (alteration in original (quoting Worcester, 31 U.S. at 561))). Worcester addressed a state criminal adjudication against non-Indians for actions occurring on tribal land, and the opinion is “perhaps the most expansive declaration of Indian independence from state regulation ever uttered by this Court, pertain[ing] to one of the original 13 States, unbound by any Enabling Act whatsoever.” Ariz. v. San Carlos Apache Tribe, 463 U.S. 545, 563 (1983). Because a state's jurisdiction may be bound by its Enabling Act, the court begins its analysis of state court subject matter jurisdiction with Utah's Enabling Act.

         In 1894, Utah adopted “[a]n Act to enable the people of Utah to form a constitution and State government, and to be admitted into the Union on an equal footing with the original states.” 28 Stat. 107. Known as the Utah Enabling Act, it contains a disclaimer of Indian lands and jurisdiction over those lands as a condition of statehood:

That the people inhabiting said proposed State do agree and declare that they forever disclaim all right and title to the unappropriated public lands lying within the boundaries thereof; and to all lands lying within said limits owned or held by any Indian or Indian tribes; and that until the title thereto shall have been extinguished by the United States, the same shall be and remain subject to the disposition of the United States, and said Indian lands shall remain under the absolute jurisdiction and control of the Congress of the United States . . . .

28 Stat. 107, Sec. 3 (Second) (emphasis added). Article III, Sec. 2 of the Constitution of Utah repeats this disclaimer verbatim. The tribal parties argue that the jurisdictional disclaimer contained in these founding documents means that the state of Utah has no subject matter jurisdiction over “Indian lands and Indian people on Indian lands in Utah” and that only the United States Congress can grant such jurisdiction. (Pl.'s Reply 11, ECF No. 101.)[8] The tribal parties acknowledge that where Congress has provided “clear federal authorization, ” (Pl.'s Emerg. Mot. 18, ECF No. 54 (citing Cohen's Handbook of Federal Indian Law § 7.03(1)(a)(ii), p. 608 (2012 ed.))), and when “Congress has expressly so provided, ” Cal. v. Cabazon Band of Indians, 480 U.S. 202, 207 (1987), state courts have jurisdiction over “actions against Indians arising within Indian country, ” (Pl.'s Emerg. Mot. 18, ECF No. 54). Indeed, since Worcester, Congress has authorized state jurisdiction over a number of types of actions involving Indian parties on Indian lands, and even over Indian water rights in state courts. See, e.g., San Carlos Apache Tribe, 463 U.S. at 570 (stating that “we must conclude that the District Courts were correct in deferring to the state proceedings”).

         Nonetheless, the tribal parties argue here that Congress has not spoken and that there is not “a single act of Congress that empowers the State of Utah to exercise adjudicatory jurisdiction over the Ute Indian Tribe for actions undertaken by the Tribe within the exterior boundaries of its reservation.” (Pl.'s Reply 12, ECF No. 101.) Without such authorization, they argue, the Tribe's alleged contractual waiver of sovereign immunity is ineffective because, even if Becker's Independent Contractor Agreement is valid, Congress has not authorized Utah to exercise subject matter jurisdiction over this civil action. But the tribal parties are incorrect. The Indian Civil Rights Act of 1968, codified in 25 U.S.C. § 1321 et seq., addresses congressional grants of authority for states to exercise jurisdiction over criminal and civil actions involving Indians. Because Becker's action is a civil action, § 1322 governs. It states:

Consent of the United States; force and effect of civil laws. The consent of the United States is hereby given to any State not having jurisdiction over civil causes of action between Indians or to which Indians are parties which arise in the areas of Indian country situated within such State to assume, with the consent of the tribe occupying the particular Indian country or part thereof which would be affected by such assumption, such measure of jurisdiction over any or all such civil causes of action arising within such Indian country or any part thereof as may be determined by such State to the same extent that such State has jurisdiction over other civil causes of action, and those civil laws of such State that are of general application to private persons or private property shall have the same force and effect within such Indian country or part thereof as they have elsewhere within that State.

25 U.S.C. § 1322(a) (emphases added). By its plain language, section (a) of this statute is express federal consent and authorization for the Utah state court-which otherwise has general jurisdiction over civil matters under Utah Code Ann. § 78A-5-102-to exercise territorial subject matter jurisdiction over “civil causes of action between Indians or to which Indians are parties, ” including those “which arise in the areas of Indian country situated within such State, ” as long as the state has the “consent of the tribe.” 25 U.S.C. § 1322(a). Then, § 1324 authorized states to amend their constitutions, Enabling Acts, or existing statutes to remove legal impediments to the exercise of congressionally authorized subject matter jurisdiction over tribal matters.[9] 25 U.S.C. § 1324. Utah did so via statute. In Utah Code Ann. § 9-9-201, Utah accepted the jurisdiction, granted by Congress, to preside over civil matters involving Indians.[10] Thus, pursuant to 25 U.S.C. § 1322(a), assuming that the Tribe has consented and the issue does not involve trust property (both of which will be discussed infra), Congress has otherwise authorized the Utah state court to be a court of competent subject matter jurisdiction over this action.[11]

         The tribal parties argue that Ute Tribe v. Utah, 521 F.Supp. 1072, 1157 (D. Utah 1981) (Ute I), aff'd in part, rev'd in part on other grounds, 773 F.3d 1087 (10th Cir. 1985) (Ute III) (en banc), “holds that the State of Utah lacks jurisdiction over the Ute Tribe for actions undertaken by the Tribe inside the exterior boundaries of its reservation.” They further argue that the decision is binding upon Judge Lawrence in state court under the doctrine of res judicata, upon Becker under the doctrine of collateral estoppel, and upon this court under the doctrine of stare decisis. (See Pl.'s Reply 12, ECF No. 101.) The argument overstates the holding of the case. They more correctly state the holding of these related cases by quoting Ute Indian Tribe v. Utah, 114 F.3d 1513, 1530 (10th Cir. 1997) (“Ute V”):

the Tribe and the federal government retain jurisdiction over all trust lands, the National Forest Lands, the Uncompahgre Reservation, and the three categories of non-trust lands that remain within the boundaries of the Uintah Valley Reservation. The state and local defendants have jurisdiction over the fee lands removed from the Reservation under the 1902-1905 allotment legislation.

Id. (See Pl.'s Expedited Mot. 29, ECF No. 52 (emphasis added).) In other words, as to criminal adjudications in Indian country as defined by 18 U.S.C. § 1151, these opinions clarify the geographic boundaries over which the state of Utah has original criminal jurisdiction versus the boundaries over which the Tribe and the federal government retain original criminal jurisdiction as Congress has divided between them. The Tenth Circuit has further clarified that 18 U.S.C. § 1151 defines Indian country as to both criminal and civil jurisdiction. Pittsburg & Midway Coal Mining Co. v. Watchman, 52 F.3d 1531, 1540 (10th Cir. 1995). The tribal parties' argument that these cases mean that Utah state courts have no civil subject matter jurisdiction over suits involving tribal parties inside reservation boundaries fails to acknowledge that the federal government can-and here has via 25 U.S.C. § 1322(a)-consented to the state's acceptance of the federal court's civil jurisdiction over Indian country up to the extent of the state's general civil jurisdiction, which Utah accepted in Utah Code Ann. § 9-9-201.[12] Thus, Utah state courts have underlying subject matter jurisdiction over this matter, but only, as discussed below, if the Tribe has consented and if the matter does not involve trust property pursuant to 25 U.S.C. § 1322(b).

         1. The Tribe Is Not Required to Hold a Special Election to Selectively Consent.

         At oral argument, the tribal parties asserted that the congressional authorization of state court jurisdiction over civil matters in 25 U.S.C. § 1322(a) is effective only if the Tribe consents pursuant to 25 U.S.C. § 1326, which requires a special election as follows:

State jurisdiction acquired pursuant to this title [25 USCS §§ 1321 et seq.] with respect to criminal offenses or civil causes of action, or with respect to both, shall be applicable in Indian country only where the enrolled Indians within the affected area of such Indian country accept such jurisdiction by a majority vote of the adult Indians voting at a special election held for that purpose. The Secretary of the Interior shall call such special election under such rules and regulations as he may prescribe, when requested to do so by the tribal council or other governing body, or by 20 per centum of such enrolled adults.

Id. (emphasis added). The court disagrees that a tribe's consent by majority vote is required for a state to accept the federal government's grant of civil jurisdiction over tribal matters. Instead, § 1326 relates to a tribe's ability to independently relinquish to a state the tribe's jurisdiction over tribal matters, whether or not the state has accepted the federal government's jurisdiction. In other words, the court interprets §§ 1321-1326 et seq. as (1) requiring a formal election under § 1326 if a tribe intends to surrender all of its own jurisdiction over tribal matters to a state that either has or has not yet accepted the federal government's civil or criminal jurisdiction or (2) allowing a tribe's waiver of its sovereign immunity over selected matters if a state has previously accepted the federal government's jurisdiction by complying with § 1324.

         The Act of August 15, 1953, is the relevant statute in which five states (California, Minnesota, Nebraska, Oregon, and Washington) were given mandatory jurisdiction to the extent of each state's jurisdiction elsewhere in the state and in which Congress authorized all remaining states to “assume jurisdiction over reservation Indians if the State Legislature or the people vote affirmatively to accept such responsibility.” Williams v. Lee, 358 U.S. 217, 222 (1959). See Act. of Aug. 15, 1953, c. 505, §§ 2, 4, 6-7; 67 Stat. 590 (hereinafter Public Law 280, or PL-280). The policy surrounding Public Law 280 in The Act of 1953 and its amendments in The Indian Civil Rights Act of 1968 reflect congressional intent to balance-without itself compelling the states-the federal government's relinquishment of jurisdiction over tribal matters to states on the one hand with the ability for Indians, on the other hand, to exercise independent judgment over when and how much of their own sovereign immunity to surrender to the states in whose geographic boundaries they otherwise reside. See Kennerly v. Dist. Court of Ninth Judicial Dist., 400 U.S. 423, 426-29 (1971). The purpose of this policy was to facilitate Indians' greater participation in American society on similar terms as other citizens of the United States and its component states. See Williams 358 U.S. at 220-21. Additionally, Supreme Court precedent cited by the tribal parties supports this interpretation.

         To begin with, in Williams, a non-Indian attempted to sue Indians in Arizona state court for actions that took place on a reservation. 358 U.S. 217. In 1959, PL-280 provided the only clear federal authorization for states to exercise civil or criminal jurisdiction over Indians. Consent by the Indians themselves was not required. In Williams, the Supreme Court reversed the Arizona state court judgment against the Indian parties because Arizona had failed to accept the federal government's jurisdiction over Indians by 1959, and moreover, its Enabling Act still expressly disclaimed jurisdiction over Indian lands. 358 U.S. at 222 n.10, 233.

         The discussion of the procedural election requirements of 25 U.S.C. § 1326 in Kennerly is especially instructive as to this court's interpretation. 400 U.S. 423 (1971). By 1971, Congress had amended the Act of August 15, 1953, with Title IV of the Civil Rights Act of 1968, 82 Stat. 78, 25 U.S.C. §§ 1321-1326 (1964 ed., Supp. V). Section 403(b) of the 1968 Act repealed § 7 of the Act of 1953, which had authorized states to unilaterally accept the federal government's grant of its jurisdiction over civil and criminal offenses in Indian country. Section 402(a) of the 1968 Act reaffirmed congressional willingness to offer that states assume its civil jurisdiction as before, but this time stated a requirement that such assumption was subject to “the consent of the tribe . . . which would be affected by such assumption.” Id. Kennerly went on to explore the balancing that these provisions require.

         In Kennerly, Montana had taken no affirmative action to accept civil or criminal jurisdiction over the Blackfeet Reservation pursuant to the Act of 1953. 400 U.S. at 425. Similarly, after the 1968 Act, Montana failed to legislatively accept civil or criminal jurisdiction over the Blackfeet tribe by amending its Enabling Act or other statutes as § 1324 required. See id. at 427. Nevertheless, the Montana state court exercised jurisdiction over a civil action involving Indians within the exterior boundaries of the Blackfeet Reservation. Id. at 424. The basis for Montana's assertion of civil jurisdiction was that the Blackfeet Tribal Council had adopted Chapter 2, Civil Action, § 1 as part of the Blackfeet Tribal Law and Order Code on November 20, 1967, which stated:

The Tribal Court and the State shall have concurrent and not exclusive jurisdiction of all suits wherein the defendant is a member of the Tribe which is brought before the Courts . . . .

Id. at 425. By 1971, the Court could have considered evidence of this unilateral tribal action amending the tribe's Law and Order Code as consent to globally waive the tribe's sovereign immunity had Montana previously accepted either Congress' 1953 or 1968 offer of jurisdiction. See Id. at 428 (examining first whether Montana had assumed “such measure of jurisdiction over any or all such civil causes of action arising within Indian country”). But according to Kennerly, after the 1968 Act, even if Montana had accepted jurisdiction under the Act, tribal council legislation is an insufficient prerequisite to manifest the tribe's consent to permanently authorize the state to assume global jurisdiction over a tribe. Id. at 426-30. For that, strict compliance with the election provisions of 25 U.S.C. § 1326 was required.[13] Id. at 429.

         Dueling footnotes in Kennerly between the majority and dissenting justices support this interpretation. The dissenting justices challenged the majority view because they believed that the Court's requirement for a special election in Kennerly required the tribe to “choose between exclusive tribal court jurisdiction on the one hand and permanent, irrevocable state jurisdiction on the other.” Id. at 431 n* (Stewart, J., dissenting). The majority expressly stated that this view “is incorrect.” Id. at 430. Instead, the majority stated that 25 U.S.C. § 1322(a) “obviously” does not compel the inference that Congress intended to foreclose “selective tribal consent to state exercise of jurisdiction.” Id. at n.6. Rather, the majority holding is more specific. It states that before a court can conclude that a tribe has irrevocably and permanently ceded its tribal sovereignty and/or consented to share it with a state, the tribe must comply with the procedural election procedures of § 1326. Id. Kennerly says nothing, therefore, about whether the procedural election requirements of § 1326 are required before the state can accept the federal government's grant of jurisdiction. In fact, the state's requirements are set forth in § 1324. Kennerly's holding is squarely focused on the actions a tribe must take to permanently and globally cede tribal jurisdiction to the state. It expressly leaves open the option for a tribe to selectively consent, via selective waivers of tribal sovereign immunity, to a state's exercise of the jurisdiction ceded to the state by the federal government. 400 U.S. at 428 (quoting § 402(a) of the Act, 25 U.S.C. § 1322(a) (1964 ed., Supp. V), which grants the United States' consent for states to assume “such measure of jurisdiction over any or all such civil causes of action arising within such Indian country or any part thereof as may be determined by such State” (emphasis added)).

         The tribal parties' contrary interpretation of the consent requirement in § 1322(a) relies heavily on “the idea of inherent Indian sovereignty as a bar to state jurisdiction.” McLanahan v. Ariz. Tax Comm'n, 411 U.S. 164, 172 (1973). The trend, according to the Supreme Court in 1973, had been away from that idea and toward the treaties and statutes that define the limits of state power. Id.[14] Thus, in McClanahan, where Arizona had never accepted civil jurisdiction over Indians pursuant to § 1324 and the tribe had not consented to the imposition of state tax on Indians on the Navajo Reservation, Arizona's state tax could not be imposed on reservation Indians nor collected or enforced in Arizona state courts. Id. at 177-78.[15]

         The Supreme Court further clarified the relationship between subject matter jurisdiction and tribal sovereign immunity in Kiowa Tribe v. Manufacturing Technologies, Inc. 523 U.S. 751 (1998). Kiowa essentially expanded tribal sovereignty to include the commercial activities of a tribe conducted off a reservation. In the process, the Court continued its trend against analyzing the existence of state jurisdiction based on inherent Indian sovereignty and instead “toward reliance on federal pre-emption.” McLanahan, 411 U.S. at 172. In doing so, the Kiowa Court stated that “[a]s a matter of federal law, an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity.” 523 U.S. at 754. This distinction suggests that “clear federal authorization, ” (Pl.'s Emergency Mot. 18, ECF No. 54, citing Cohen's Handbook of Federal Indian Law § 7.03(1)(a)(ii), p. 608 (2012 ed.)), is one side of a coin by which subject matter jurisdiction is transferred from the federal government to a state that accepts it. And tribal waiver of sovereign immunity-either globally pursuant to special election via 25 U.S.C. § 1326 or selectively as suggested by Kennerly-is the other side of the same coin. Both are necessary. This view is consistent with the Tenth Circuit's statement in Lawrence that the two concepts are “different animals.” 875 F.3d at 545. In Kiowa, the state of Oklahoma, which is not a PL-280 mandatory jurisdiction state, did not have subject matter jurisdiction over a contract case both because it has not acted to accept civil or criminal jurisdiction under § 1324, see, e.g., Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439 (U.S. App. D.C. 1988); Indian Country, U.S.A. v. Okla., 829 F.2d 967 (10th Cir. 1987), and because the tribe had not waived its immunity. Kiowa, 523 U.S. at 760.

         The Supreme Court confirmed the interpretation that a special election is not required for a tribe to selectively consent to waive sovereign immunity in C & L Enterprises v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 532 U.S. 411 (2001). The case arose in Oklahoma, which has never accepted general civil jurisdiction over Indians pursuant to § 1324. The Supreme Court held that a sufficiently clear contractual waiver of tribal immunity, combined with a state statute accepting jurisdiction over contracts involving arbitration, was sufficient for a state court to exercise civil jurisdiction over an Indian tribe for off-reservation commercial activity.[16] Id. at 418-19. C & L thus means that not only can tribes selectively consent to state jurisdiction as Kennerly suggested, but also that states can selectively assent to accept the federal government's subject matter jurisdiction over tribal matters under § 1324 by enacting statutes that do not disclaim jurisdiction over tribes or tribal parties on that subject. Id. at 419-20 (finding that Okla. Stat., Tit. 15, § 802.B (1993) regarding arbitration agreements vests jurisdiction over such agreements-regardless of the parties-in “any court of competent jurisdiction of this state, ” including the Oklahoma state court).[17]

         Based on this analysis, the court concludes that a special election under 25 U.S.C. § 1326 is not required for the Tribe to selectively consent to suit in a state court where-as in Utah-the state has undisputedly accepted the federal court's jurisdictional authority pursuant to § 1324.[18] Rather, the court concludes that because Utah has unequivocally accepted federal authorization to exercise civil jurisdiction, the tribal parties' likelihood of success on the merits of the state court's jurisdiction under § 1322(a) does not rest on the Tribe never having requested or held a § 1326 special election, but depends solely on whether there is a valid selective waiver of the Tribe's sovereign immunity in the Becker Independent Contractor Agreement, which will be comprehensively analyzed infra.

         This conclusion is also supported by a comparison with jurisdictional and immunity issues in Blatchford v. Native Village of Noahtak, 501 U.S. 775 (1991), which held that the congressional grant of original jurisdiction over civil actions brought by Indian tribes arising under the United States Constitution, laws, or treaties pursuant to 28 U.S.C. § 1362 is not a waiver of a state's Eleventh Amendment immunity defense, id. at 786 n.4. In other words, the congressional grant of jurisdiction in 28 U.S.C. § 1362 is “wholly distinct” from immunity defenses. Id. By analogy to Blatchford, the congressional grant of civil jurisdiction under 25 U.S.C. § 1322(a)-that can be accepted by a state pursuant to 25 U.S.C. § 1324-is a “wholly distinct” issue from whether a tribe has (1) globally waived its sovereign immunity by special election consent under 25 U.S.C. § 1326 or (2) selectively waived its sovereign immunity as in Kennerly and C & L. Existence of subject matter jurisdictional authority is not negated by the existence of immunity; immunity simply limits the exercise of any authorized jurisdiction. Id. at 779.

         Also supporting this reasoning is the Tenth Circuit's discussion of the United States' waiver of sovereign immunity in The Indian Reorganization Act in Wopsock v. Natchees, 279 Fed.Appx. 679 (10th Cir. 2008).[19] In Wopsock, former Ute Business Committee members attempted to sue federal Bureau of Indian Affairs officials for allegedly failing to call a special election to approve two ordinances that amended the Tribe's Constitution. Id. at 686. By enacting The Indian Reorganization Act, Congress established the federal court's subject matter jurisdiction; in addition, the Act contains a congressionally approved waiver of the United States' sovereign immunity for violations of the Act. Id. When discussing whether the court had jurisdiction over the Bureau of Indian Affairs defendants, the Tenth Circuit referred interchangeably to the United States' “consent” to suit and the United States' “waiver of sovereign immunity” and specifically stated that “[i]t is the terms of the United States' consent that define this court's jurisdiction to entertain any suit.” Id. at 685-86. Notably, there was no question that Congress' enactment of The Indian Reorganization Act conferred subject matter jurisdiction on the court. The only question was whether the officials had violated the terms of the Act sufficiently for the Act to trigger the United States' consent, or waiver of its sovereign immunity, and subjected it to suit for redress of those alleged violations. Id. at 685-87; see also Alvarado v. Table Mt. Rancheria, 509 F.3d 1008, 1016 (9th Cir. 2007) (“To confer subject matter jurisdiction in an action against a sovereign, in addition to a waiver of sovereign immunity, there must be statutory authority vesting a district court with subject matter jurisdiction.”); Quality Tooling v. United States, 47 F.3d 1569, 1575 (Fed. Cir. 1995) (“The inquiry, then, is not whether there is the one, jurisdiction, or the other, a waiver of immunity, but whether there is both.”). Likewise, here there is no question that Congress authorized states to accept civil jurisdiction over Indian matters in § 1322(a), which Utah accepted pursuant to § 1324 by enacting Utah Code Ann. § 9-9-201. The only way, then, that the Tribe's consent impacts the state's jurisdictional authority to entertain a suit is if the Tribe has also waived its sovereign immunity. It is undisputed that the Tribe has not requested a special election pursuant to 25 U.S.C. § 1326 to cede all of its sovereign immunity to Utah, but whether the terms of the Becker Independent Contractor Agreement-if the agreement is valid-triggered the Tribe's selective waiver of its sovereign immunity to consent to suit on the agreement is a substantial question.[20]

         2. Becker's Independent Contractor Agreement Did Not Involve Trust Property.

         The court has concluded that the Utah state court has subject matter jurisdiction because Congress authorized Utah to exercise civil jurisdiction over Indian matters in 25 U.S.C. § 1322(a) and because Utah accepted that jurisdiction in Utah Code Ann. § 9-9-201. The next question before the court is whether this action seeks to adjudicate “the ownership or right to possession . . . or any interest therein” of “any real or personal property . . . belonging to any Indian or any Indian tribe . . . that is held in trust by the United States.” 25 U.S.C. § 1322(b);[21] 28 U.S.C. § 1360(b).[22] Both statutes provide that Congress has not conferred on states its subject matter jurisdiction over trust property. Therefore, if the action involves trust property, Utah would be precluded from having subject matter jurisdiction over this action, regardless of its acceptance of § 1322(a) via § 1324 and Utah Code Ann. § 9-9-201.

         At this point, because answers to the questions regarding trust property and selective waiver of the tribe's sovereign immunity dictate the tribal parties' likelihood of success on the merits of their argument that the state court has no jurisdiction over this action, the court must consider in full the validity and terms of the Becker Independent Contractor Agreement at issue. Before doing so, however, the court addresses the tribal parties' motion that the Tribal Court's February 28 Opinion should be given preclusive effect. (ECF No. 110.) This is because the Tribal Court's ruling directly addresses the validity of the contract under federal and tribal law, and if preclusive would dictate the court's evaluation of the tribal parties' likelihood of success on the merits.

         B. February 28, 2018 Tribal Court Decision

         1. Background

         On August 18, 2016, the Ute Indian Tribe, the Uintah and Ouray Tribal Business Committee, and Ute Energy Holdings, LLC, filed a declaratory judgment action against Becker in The Ute Indian Tribal Court of the Uintah and Ouray Reservation. The tribal parties first filed their complaint in Tribal Court three and a half years after Becker initiated federal court action on this contract, (Becker v. Ute Indian Tribe of the Uintah and Ouray Reservation et al, No. 2:13-cv-123 (dismissed for lack of federal question jurisdiction)), twenty months after Becker sued in state court, and two days after this court, Judge Robert J. Shelby presiding, dismissed the instant action for lack of federal court jurisdiction, (ECF No. 40). Becker's companion case seeking to enjoin the tribal parties from pursuing the 2016 Tribal Court action is No. 2:16-cv-958 in this court. (Compl. for Decl. J., ECF No. 2-3, No. 2:16-cv-958.) The Tribal Court issued its February 28 Opinion as a result of the following circumstances.

         On September 14, 2016, this court initially granted Becker's motion for a temporary restraining order enjoining the parties from pursuing the Tribal Court action, and followed that order with a preliminary injunction on September 28, 2016. (ECF No. 50, No. 2:16-cv-958.) The tribal parties had previously filed a motion for summary judgment in Tribal Court on September 12, 2016, two days before this court's temporary restraining order, seeking a ruling that Becker's contract was void as an ultra vires act under tribal law. (App'x 178, ECF No. 122-1, No. 2:16-cv-958.) Becker had filed a motion to dismiss the Tribal Court action on September 14, 2016, on the grounds that the contract validly waived the Tribe's sovereign immunity and exhaustion remedies and that the Tribe had submitted to jurisdiction elsewhere. (App'x 206, ECF No. 122-1, No. 2:16-cv-958.) The tribal parties immediately appealed this court's preliminary injunction, and on December 30, 2016, the Tenth Circuit stayed the preliminary injunction to allow the parties to pursue the Tribal Court action during the appeal.

         After the injunction was stayed, the parties continued litigating in Tribal Court, completing their briefing on the above two motions. On March 9, 2017, the Tribal Court, Judge Pro Tem Thomas Weathers presiding, denied Becker's first motion to dismiss and denied without prejudice the tribal parties' motion for summary judgment.[24] (App'x 4, ECF No. 122-3, No. 2:16-cv-958.) Judge Weathers also ordered the parties to show cause why the Tribal Court “should not dismiss or at least stay this lawsuit pending resolution of the state and federal lawsuits as a matter of comity, preservation of limited judicial resources, and avoidance of conflicting judgments.” (Id. at 7.) Following briefing on the order to show cause, the Tribal Court issued an Order on June 9, 2017, declining to stay or dismiss the case primarily so that it could rule on the tribal law questions. (Id. at 257-58.) Judge Weathers bifurcated the tribal parties' complaint and scheduled discovery to proceed only on issues related to the validity of the contract and its terms under tribal and federal law, including the waiver of sovereign immunity and the need for federal approval of the contract. (ECF No. 70-12, No. 2:16-cv-958.)

         On August 25, 2017, during the discovery period on these issues, the Tenth Circuit reversed this court's preliminary injunction, holding that because Becker had not shown a likelihood of success on the validity of the contract waiving tribal exhaustion, the Tribal Court should address in ...


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