Muscogee (Creek) Nation v. Pruitt
2012 U.S. App. LEXIS 4022
| 10th Cir. | 2012Background
- Oklahoma taxes cigarettes and tobacco products in Indian country; sales to tribal members are tax-exempt for certain tribes.
- OTC uses tax-free stamps and a probable-demand system to implement the Excise Tax Statute for noncompacting tribes.
- MSA requires manufacturers to join the settlement or fund an escrow; Complementary Act certifies compliance and bans non-listed brands as contraband.
- MCN, a federally recognized tribe, operates a tobacco wholesale business and sells to tribally licensed retailers in MCN’s Indian country without OTC licensing.
- MCN sued OTC, its three commissioners, and the Attorney General seeking declaratory and injunctive relief challenging the Excise Tax Statute, Escrow Statute, and Complementary Act.
- District court dismissed under Eleventh Amendment immunity or failure to state a claim; the issue on appeal centers on Ex parte Young and state preemption/self-governance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Preemption vs. self-governance | MCN argues federal law preempts state statutes and infringes tribal sovereignty. | State statutes regulate non-Indians and pursue legitimate revenue/self-governance interests, with minimal tribal burden. | Excise Tax Statute not preempted; does not infringe tribal self-governance. |
| Ex parte Young jurisdiction | MCN seeks prospective relief against state officers for ongoing federal-law violations. | District court required plausibility under 12(b)(6) to apply Ex parte Young; improper here. | District court erred: Ex parte Young applies to MCN’s claims against state officials. |
| Escrow Statute and Complementary Act preemption | Escrow/Complementary Act unlawfully regulate MCN and interfere with tribal authority. | Laws are non-discriminatory, general, and do not directly regulate MCN or its members. | Escrow Statute and Complementary Act not preempted; no tribal sovereignty infringement. |
| Seizures and off-reservation enforcement | Seizures of unstamped cigarettes outside Indian country burden MCN and tribal self-government. | Off-reservation seizures to enforce valid taxes are permissible and do not violate sovereignty. | Off-reservation seizures do not violate tribal sovereignty; no state-law preemption issue. |
Key Cases Cited
- Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463 (U.S. 1976) (state may require tribal retailers to collect tax on sales to non-Indians; minimal burden)
- Colville Confederated Tribes v. Dep’t of Revenue, 447 U.S. 153 (U.S. 1980) (upheld non-tribal burden for tax collection; records/receipts permissible)
- Milehelm Attea & Bros., Inc. v. Department of Taxation, 512 U.S. 61 (U.S. 1994) (upheld Indian Trader Statutes do not preempt state cigarette tax; particularized inquiry)
- Wagnon v. Prairie Band Potawatomi Nation, 546 U.S. 95 (U.S. 2005) (off-reservation consequences of nondiscriminatory taxes do not trigger Bracker preemption)
- Sac & Fox Nation of Missouri v. Pierce, 213 F.3d 566 (10th Cir. 2000) (tribal field preemption not established; state tax burden permissible when indirect)
- Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134 (U.S. 1980) (upheld state tax on non-Indians in Indian country; minimal burdens on tribal commerce)
- Muscogee (Creek) Nation v. Oklahoma Tax Comm’n, 611 F.3d 1222 (10th Cir. 2010) (preemption and sovereignty considerations in state taxation within Indian country)