Miccosukee Tribe of Indians of Florida v. Billy Cypress
814 F.3d 1202
11th Cir.2015Background
- The Miccosukee Tribe sued former Chairman Billy Cypress, former finance officials, several attorneys, and Morgan Stanley alleging a RICO-based scheme that looted >$26 million from the Tribe through ATM withdrawals, unauthorized credit-card charges, inflated attorney billing, and kickbacks.
- Morgan Stanley moved to compel arbitration based on a 2008 account agreement Cypress signed on behalf of the Tribe; the district court compelled arbitration and dismissed Morgan Stanley.
- Defendants argued the federal RICO claims implicated non-justiciable intra-tribal matters (scope of Cypress’s authority under tribal law), so federal courts lacked subject-matter jurisdiction; the district court dismissed some RICO claims on that basis and alternatively for failure to state a claim.
- The Eleventh Circuit held that, on the pleadings before the court, the complaint did not present a genuine, non-frivolous intra-tribal dispute sufficient to defeat federal-question jurisdiction, so jurisdiction existed.
- The panel affirmed arbitration against Morgan Stanley (Cypress had apparent authority; alleged fraud as to the whole contract must be arbitrated per Prima Paint) and affirmed dismissal on the alternative Rule 12(b)(6)/Rule 9(b) grounds because the Tribe failed to plead RICO and predicate-fraud allegations with the required particularity and the Tribe waived challenge to that dismissal by not raising it in its opening brief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitration enforceability | Cypress lacked authority to bind the Tribe to arbitration; arbitration clause invalid in context of fraud | Cypress had actual/apparent authority to bind the Tribe; arbitration clause covers the claims | Court compelled arbitration; Cypress had at least apparent authority; allegations of fraud as to the whole contract must be decided in arbitration (Prima Paint) |
| Federal jurisdiction — intra-tribal dispute doctrine | Federal courts should hear the Tribe's RICO claims; federal-question jurisdiction exists | Resolution of RICO claims requires determining scope of Cypress’s tribal authority, a non-justiciable internal tribal matter | Court held pleadings did not present a genuine, non-frivolous tribal-law dispute; federal jurisdiction exists on the record presented |
| Pleading sufficiency for RICO and fraud predicates (Rule 12(b)(6) and Rule 9(b)) | Complaint and voluminous exhibits supplied adequate detail to state RICO and predicate frauds | Complaint lacked particularized allegations (who made what misrepresentations, when, how defendants conspired, what invoices/services were fraudulent) | Court affirmed dismissal: pleadings failed Twombly/Iqbal plausibility and Rule 9(b) particularity for RICO predicates |
| Appellate waiver of alternative basis for dismissal | Tribe argued sufficiency only in reply; failed to raise Rule 12(b)(6)/9(b) in opening brief | Defendants relied on waiver rule; judgment should be affirmed on alternative pleading-ground | Court enforced Eleventh Circuit waiver rule: Tribe waived appellate challenge by not raising the issue in opening brief; affirmed judgment on that independent ground |
Key Cases Cited
- Doe v. Princess Cruise Lines, Ltd., 657 F.3d 1204 (11th Cir. 2011) (standard of review for arbitration orders)
- Bd. of Trs. v. Citigroup Glob. Mkts., Inc., 622 F.3d 1335 (11th Cir. 2010) (agency authority can bind principal to arbitration)
- Prima Paint Corp. v. Flood & Conklin Mfg., 388 U.S. 395 (1967) (fraud-in-the-inducement of entire contract is for arbitrator; fraud specifically attacking arbitration clause is for court)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (distinguishes who decides arbitrability when parties delegate that question)
- Santa Clara Pueblo v. Martinez, 436 U.S. 49 (1978) (tribal sovereignty and courts’ restraint regarding internal tribal matters)
- Montana v. United States, 450 U.S. 544 (1981) (scope of tribal retained powers and self-government)
- Tamiami Partners, Ltd. v. Miccosukee Tribe of Indians of Fla., 177 F.3d 1212 (11th Cir. 1999) (tribal sovereign immunity and scope-of-authority principles for tribal officers)
- Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309 (11th Cir. 2007) (Rule 9(b) particularity applies to RICO claims grounded in fraud)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must contain factual allegations that make claim plausible)
- Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678 (11th Cir. 2014) (appellant must challenge every independent ground of district court judgment to obtain reversal)
- United States v. Durham, 795 F.3d 1329 (11th Cir. 2015) (narrowed but largely preserved the rule requiring issues to be raised in opening brief on appeal)