MCI Communications Services, Inc. v. Arizona Telephone Co.
158 F. Supp. 3d 571
N.D. Tex.2015Background
- Plaintiffs (MCI and Verizon) sued hundreds of local exchange carriers (LECs) alleging unlawful access charges for wireless intraMTA calls; three defendants here are tribally owned LECs (Hopi Telecom, San Carlos Apache Telecom Utility, Gila River Telecom).
- The Tribal Defendants are wholly owned, organized under tribal law, governed by their parent tribes, operate exclusively on reservation lands, and do not file tariffs with the Arizona Corporation Commission.
- Tribal Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(1), asserting tribal sovereign immunity and lack of subject-matter jurisdiction; plaintiffs oppose.
- Defendants submitted evidentiary materials showing tribal ownership, governance, boards appointed by tribal governments, tribal regulation, and revenue inuring to the tribes; court treated the motion as a factual jurisdictional attack.
- The court found the LECs function as arms of their tribes and thus share tribal sovereign immunity; plaintiffs had not named tribal officials or tribes as defendants.
- The court granted dismissal for lack of subject-matter jurisdiction but allowed plaintiffs 28 days to replead and sue appropriate tribal officials; the court declined to dismiss on tribal-exhaustion grounds at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of tribal sovereign immunity to tribally owned LECs | LECs are not tribes; immunity shouldn’t extend because entities are commercial and suit won’t harm tribal self-government | LECs are wholly owned, created under tribal law, governed by tribes, and their revenues benefit the tribes — they function as arms of the tribe | Defendants are arms of their tribes; tribal immunity applies and bars suit against them |
| Whether declaratory/injunctive claims can proceed against the Tribal Defendants | Plaintiffs say Fifth Circuit allows declaratory/injunctive relief despite immunity (citing TTEA) | Tribal Defendants argue immunity bars suits against tribes or tribal agencies | Court: Ex parte Young and Bay Mills permit suits for equitable relief only against tribal officials, not against tribes or tribal agencies; plaintiffs sued the entities, not officials, so claims barred |
| Effect of tribal-court exhaustion (La-Plante/National Farmers rule) | Plaintiffs did not raise exhaustion; if required, they should be permitted to replead first | Defendants ask for dismissal or stay until exhaustion in tribal courts | Court: Exhaustion is a comity (not jurisdictional) requirement; defendants cannot win dismissal under Rule 12(b)(1) on exhaustion now; they may renew the argument later against any amended complaint |
| Remedy and further pleading | Plaintiffs seek leave to amend to name tribal officials for equitable relief | Defendants suggest plaintiffs should first litigate in tribal courts and/or exhaust tribal remedies | Court granted leave to replead (28 days) to assert claims against proper tribal officials; defendants may move on exhaustion grounds after amendment |
Key Cases Cited
- Kiowa Tribe of Oklahoma v. Manufacturing Technologies, 523 U.S. 751 (1998) (tribes enjoy sovereign immunity from suit, including commercial activities)
- Bay Mills Indian Community v. Michigan, 134 S. Ct. 2024 (2014) (tribal immunity is settled law; Ex parte Young analog allows suits against tribal officials for injunctive relief)
- TTEA v. Ysleta del Sur Pueblo, 181 F.3d 676 (5th Cir. 1999) (discussion of declaratory/injunctive relief relative to tribal immunity)
- Allen v. Gold Country Casino, 464 F.3d 1044 (9th Cir. 2006) (an entity that functions as an arm of a tribe shares tribal immunity)
- Iowa Mutual Insurance Co. v. La-Plante, 480 U.S. 9 (1987) (tribal-court exhaustion as a comity rule)
- National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845 (1985) (tribal exhaustion and comity principles)