Michigan v. Bay Mills Indian Community

Facts

Casino-style, or Class III, gaming is lawful on Indian lands under the Indian Gaming Regulatory Act (“IGRA”) if certain requirements are met. To conduct Class III gaming, an Indian tribe must adopt a gaming ordinance, which must be approved by the Chairman of the National Indian Gaming Commission, an independent federal agency. Additionally, the tribe must consult with the state in which the gaming is located, and enter into a Tribal-State compact that governs the gaming.

Respondent Bay Mills is a federally recognized Indian tribe with a reservation in Michigan’s Upper Peninsula. Bay Mills operates one casino on its reservation and another in Vanderbilt, Michigan on the Lower Peninsula. In 1997, Congress passed the Michigan Indian Land Claims Settlement Act (“Settlement Act”) to allocate funds to Bay Mills and other Michigan tribes to satisfy judgments resulting from lost territory and broken treaties. The Settlement Act directed Bay Mills to use a portion of the settlement funds to establish a land trust, with the earnings from the trust to be used to improve tribal lands or to acquire land. Any acquired land would be held as Indian lands. In 2010, Bay Mills used land trust earnings to purchase property in Vanderbilt, Michigan, which is more than 100 miles from the tribe’s reservation. On November 3, 2010, Bay Mills opened a small casino on the property.

Michigan sued Bay Mills in federal court to enjoin the gambling activity at the Vanderbilt casino, which Michigan argues is not operated on Indian lands and, therefore, violates the IGRA. The Little Traverse Bay Bands of Odawa Indians (“Little Traverse”), another federally recognized Indian tribe, also sued Bay Mills alleging that the Vanderbilt casino caused its casino, located approximately 45 miles away, to lose revenue. Soon after, the National Indian Gaming Commission—an independent federal agency that regulates and oversees gaming activities on Indian lands—issued an informal opinion stating that the Vanderbilt Casino is not located on Indian lands within the meaning of the IGRA.

The United States District Court for the Western District of Michigan enjoined the Vanderbilt casino’s gambling activities, but the United States Court of Appeals for the Sixth Circuit reversed. First, the Sixth Circuit held that Michigan and Little Traverse could not establish federal jurisdiction through IGRA because IGRA only permits lawsuits involving gaming conducted on Indian lands. However, the court held that Michigan could still establish jurisdiction in federal court based on federal question jurisdiction, because Michigan’s claims implicate significant federal issues implicit in state and Indian relations. Second, the Sixth Circuit held that Bay Mills was immune from suit even though the gaming activities did not occur on tribal land because Congress did not authorize such suits and Bay Mills did not waive its immunity. Michigan alone petitioned for certiorari to address the issues of federal jurisdiction and tribal sovereign immunity, and the Supreme Court granted certiorari on June 24, 2013.

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Discussion

Bay Mills argues that this case does not fall within the IGRA, and therefore the suit is barred by tribal immunity, which exists because Congress has not explicitly abrogated immunity nor has the tribe waived it. Michigan argues that tribal immunity does not bar states from pursuing prospective relief, such as injunctions, in federal court, to stop gaming when tribal casinos are not located on Indian lands.

EFFECTS OF THE PROLIFERATION OF GAMBLING

Michigan warns that if tribal immunity blocks this action, casinos off Indian lands will proliferate. Michigan asserts that casinos have negative economic and social impacts, such as enabling organized crime, increasing crime rates, and growing rates of alcoholism and unemployment due to gambling addiction.

Bay Mills responds that Michigan’s assertion is disingenuous because Michigan itself proliferates organized gambling. Bay Mills notes that there are four race tracks operating in the state and the city of Detroit has become increasingly dependent on casino revenues. Bay Mills suggests that states have often hidden behind rationales like the prevention of organized crime, but that historically states’ true interest in opposing Indian gaming has been to stifle the competition Indian gaming poses to a state’s own gaming enterprises.

AVAILABLE METHODS TO REGULATE GAMBLING

Michigan argues that if it cannot get into federal court to enjoin gambling occurring off Indian lands, then it will have to send in law enforcement to seize equipment and arrest tribal employees, which would create the type of inter-sovereign friction the IGRA seeks to avoid.

Conversely, Bay Mills contends that such extreme action is unnecessary because under Bay Mills and Michigan’s Tribal-State compact the proper resolution is arbitration. The United States, which filed an amicus brief in support of Bay Mills, adds that other avenues of relief are available. For example, the U.S. contends that (1) Bay Mills could waive immunity so that the federal court could determine the status of the land, (2) Michigan could pursue injunctions against individual tribal officials, or (3) Michigan could pursue state law claims against individuals directly conducting the gaming.

THE PURPOSE OF TRIBAL SOVEREIGN IMMUNITY

Several states supporting Michigan argue that while tribal immunity may be justified in suits where conservation of tribal resources is a concern, this rationale does not extend to injunctive relief because the tribe need not pay money damages to the state. Additionally, these states argue that a second rationale for immunity, inherent tribal sovereignty, should not block this suit because tribes are dependent sovereigns and federal courts, like Congress, should have the authority to coerce a tribe’s obedience. Oklahoma contends that the current doctrine of tribal immunity is not well suited to modern tribal activity, and that the rapid expansion of tribes’ commercial activity warrants narrowing the scope of tribal immunity so that commercial activity taking place off Indian lands is not immune.

Bay Mills points to the deeply rooted tradition of tribal sovereignty, which prevents a state from applying its laws to the tribes within the state, absent congressional directive. Bay Mills argues that granting Michigan injunctive relief would thwart a basic principle of tribal sovereign immunity: to protect tribes from the states. Bay Mills continues that recognizing tribal immunity is especially important because one of its basic purposes is to encourage tribal self-sufficiency and economic development. Moreover, Bay Mills argues that distinguishing between commercial and other governmental activity is unwarranted because, unlike states, tribes do not have large tax bases to fund governmental functions, and tribes are largely economically dependent on revenues from gaming. Lastly, the National Congress of American Indians contends that basing immunity on an on/off reservation dichotomy would discourage tribes—who would fear crushing liability—from continuing to cooperate with state and federal governments on projects such as fish hatchery conversation and enforcing hunting and fishing licenses.

The Court’s decision in this case implicates the operation of Indian casinos, economic development on Indian lands, and the larger tensions between states and Indian tribes.

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Analysis

At the outset, the Court must determine whether it has jurisdiction to enjoin an activity that violates the IGRA and takes place outside of Indian lands. . If the Court determines that it has jurisdiction, the Court will determine whether tribal sovereign immunity bars the Michigan lawsuit.

Under the IGRA, codified at 25 U.S.C. § 2710(d)(7)(A)(ii), a federal court can enjoin any Class III gaming activity that is located on Indian lands. Michigan argues that the statute provides a clear grant of federal jurisdiction over the lawsuit. In Michigan’s view, even though the physical casino is not located on the Bay Mills reservation, Bay Mills’ acts of licensing and facilitating the operation of the casino occurred on the Bay Mills reservation, and thus the casino satisfies the “on Indian lands” requirement. Michigan argues further that the IGRA abrogates tribal sovereign immunity and thus Bay Mills’ sovereign immunity does not bar this suit. Bay Mills counters that the Court should squarely reject Michigan’s suit on the basis of tribal sovereign immunity, and that it is Congress’s prerogative to change the doctrine of tribal sovereign immunity, not the courts’.

DOES THE COURT HAVE JURISDICTION UNDER THE IGRA?

Michigan argues that the IGRA provides the federal courts with jurisdiction over this case. Michigan contends that under 25 U.S.C. § 2703(4) a reservation is “Indian land.” In turn, because Bay Mills’ authorization, licensing and operation of the casino occurred on the reservation, Michigan argues that the “on Indian lands” requirement of § 2710 is satisfied and federal jurisdiction is appropriate. Michigan argues that Congress could not have meant to limit federal court authority to enjoining only gaming itself, and therefore authorizing, licensing, and operating a Class III gaming facility are encompassed in the definition of “class III gaming activities” under § 2710. Michigan argues that this conclusion is also consistent with the express language of the IGRA and Congress’s intent in enacting the statute: to allow states to challenge violations of Tribal-State gaming compacts. Additionally, Michigan warns that concluding there is no jurisdiction over this suit would effectively circumvent Congress’s intent to provide federal court jurisdiction.

Bay Mills counters that its tribal sovereign immunity resolves this case, and thus the question of jurisdiction is immaterial. According to Bay Mills, Michigan cannot bring this suit under § 2710 because “class III gaming activities” refers only to gaming itself and not to licensing and operation. Thus, Bay Mills argues, because the gaming facility is not located on Indian land, there is no federal court jurisdiction under § 2710. Bay Mills further contends that to abrogate tribal sovereign immunity, “Congress must unequivocally express that purpose.” To the contrary, Bay Mills argues that the language of § 2710 cannot be read broadly as to authorize a suit anytime there is a gaming conflict between a tribe and a state. Rather, Bay Mills argues that § 2710 narrowly focuses on Indian lands, and thus Michigan’s claim does not fall within the plain language of the statute. Bay Mills further claims that the IGRA was intended to promote tribal economic welfare and self-determination by allowing gaming within Indian country, and thus the Act did not intend to impose special obstacles to gaming outside of Indian country.

DOES THE COURT HAVE FEDERAL QUESTION JURISDICTION?

Michigan argues that even if § 2710 is found inapplicable here, the state is still entitled to an injunction because federal courts have federal question jurisdiction under 28 U.S.C. § 1331. According to Michigan, federal question jurisdiction exists here because § 1331 clearly provides federal court jurisdiction over all civil actions arising under federal law, and the IGRA is a federal law. Michigan argues that nothing in the plain language of § 2710 suggests that Congress meant to deny federal courts § 1331 jurisdiction for IGRA violations.

Bay Mills counters that although jurisdiction may be warranted under § 1331, the suit is still barred by Bay Mills’ sovereign immunity. Specifically, Bay Mills argues that but for its categorical sovereign immunity, federal courts would have federal question jurisdiction over some of Michigan’s claims. Thus, Bay Mills emphasizes that this case really hinges on sovereign immunity and not on federal jurisdiction.

DOES TRIBAL SOVEREIGN IMMUNITY BAR THIS SUIT?

Bay Mills argues that there are only two exceptions to the broad rule of tribal sovereign immunity, and that neither exception applies here. In Kiowa v. Mfg. Techs, Bay Mills argues thatthe Supreme Court outlined the two exceptions: a tribe can waive sovereign immunity or Congress can abrogate a tribe’s immunity from suit, but barring these two exceptions, immunity remains intact. Thus, Bay Mills asserts that without a clear indication to the contrary, it retains immunity from suits that are outside the narrow scope of § 2710. Moreover, Bay Mills contends that the Court should not broadly read 18 U.S.C § 1166, which states, “for purposes of federal law all state law pertaining to licensing, regulation or prohibition of gambling…shall apply in Indian country… .” Bay Mills warns that reading this as a sweeping extension of state civil jurisdiction would disrupt the IGRA’s allocation of jurisdiction among tribal, federal, and state governments. Specifically, Bay Mills asserts that the IGRA says nothing about gaming activity outside of Indian lands, and it is not the Court’s role to speculate on congressional intent, especially when sovereign immunity is at stake.

Michigan argues that Bay Mills does not have sovereign immunity from a suit seeking to enjoin it from operating an illegal gaming facility on lands subject to Michigan’s jurisdiction. Michigan contends that the IGRA was enacted with the clear expectation that states would be able to enforce state law in federal court against tribes that engaged in unlawful off-reservation gaming. Michigan asserts that by enacting 18 U.S.C § 1166, Congress could not have intended to allow states to invoke § 1166 to enforce anti-gambling law in Indian country but not on state lands. Michigan argues that it does not make sense to read the phrase “Indian lands” as a limitation on suits in federal courts when the gaming is occurring outside of Indian lands.Further, Michigan asserts that it is highly unlikely that Congress intended to give states more power to address unlawful Indian gaming on Indian lands than on land subject to state jurisdiction.

Michigan further argues that Bay Mills misreads the holding in Kiowa v. Mfg. Techs—that tribal immunity extends to off-reservation commercial contracts. Michigan claims that the Kiowa holding is narrow and only applicable to contract-based suits, and therefore does not resolve the immunity question here. Michigan posits that the holding in Kiowa can be read in two ways. First, that sovereign immunity extends to off-reservation commercial activities; second, that it remains an open question.Michigan argues that regardless of what the Court intended to say in Kiowa, there are several important reasons why the Court should use this case to expressly hold that tribes do not have sovereign immunity for suits based on “illegal, off-reservation, commercial conduct.” Michigan contends that gaming tribes no longer have unstable tribal governments that need protection from state encroachment, which was the case 15 years ago when Kiowa was decided, and tribal gaming now presents a serious challenge to other private commercial enterprises.

Bay Mills argues that Michigan’s request to abrogate sovereign immunity asks the Court to reject long-settled precedent in order to create an exception to the rule of tribal sovereign immunity. Moreover, Bay Mills contends that the Court has already rejected the limitations on sovereign immunity that Michigan proposes. In Kiowa, Bay Mills explains that the respondent argued that tribal immunity should be “confined to reservation or to noncommercial activities,” and the court disagreed stating that it must defer to Congress to make this important determination. Thus, Bay Mills asserts that even if the Kiowa holding is limited to contract-based cases, it applies here because a Tribal-State gaming compact is a contract. Additionally, Bay Mills contends that in Puyallup Tribe, Inc. v. Department of Gaming of Washington, the Court applied tribal sovereign immunity to a non-contract suit involving off-reservation commercial activity; thus, in Bay Mills’ view, the Kiowa holding should not be limited to contract-based suits.

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Conclusion

The Supreme Court has the opportunity to decide whether federal court jurisdiction exists when a state seeks to enjoin an Indian casino located off Indian land. The Court may also decide whether tribal sovereign immunity exists in such lawsuits, whether the IGRA abrogates immunity, or, alternatively, that no tribal immunity exists for illegal commercial activity that takes place off-reservation. The Court may reinterpret or overrule long-standing precedent concerning the scope of tribal sovereign immunity. Accordingly, the Court’s decision will impact the legal relationship between states and Indian tribes in the area of commercial gaming and may affect state-tribal relations generally. The decision will likely affect the methods that tribes use to further economic development in their communities.

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