BIG SANDY RANCHERIA ENTERPRISES v. ROB BONTA
No. 19-16777
United States Court of Appeals, Ninth Circuit
Filed June 16, 2021
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BIG SANDY RANCHERIA ENTERPRISES, a federally-chartered corporation,
Plaintiff-Appellant,
v.
ROB BONTA,* in his official capacity as Attorney General of the State of California; NICOLAS MADUROS, in his official capacity as Director of the California Department of Tax and Fee Administration,
Defendants-Appellees.
No. 19-16777
D.C. No. 1:18-cv-00958-DAD-EPG
OPINION
Appeal from the United States District Court for the Eastern District of California
Dale A. Drozd, District Judge, Presiding
Argued and Submitted November 19, 2020
San Francisco, California
Filed June 16, 2021
* Rob Bonta has been substituted for his predecessor, Xavier Becerra, as California Attorney General under Fed. R. App. P 43(c)(2).
2 BIG SANDY RANCHERIA ENTERS. V. BONTA
Before: Sidney R. Thomas, Chief Judge, and Mary M. Schroeder and Marsha S. Berzon, Circuit Judges
SUMMARY**
Indian Tribes
The panel affirmed the district court’s dismissal of an action in which Big Sandy Rancheria Enterprises, a federally chartered tribal corporation wholly owned and controlled by the Big Sandy Rancheria of Western Mono Indians, sought declaratory and injunctive relief against the Attorney
The district court dismissed for lack of subject matter
The Corporation’s fifth cause of action alleged that federal common law and tribal sovereign immunity
** This summary
BIG SANDY RANCHERIA ENTERS. V. BONTA 3
preempted California’s Cigarette Tax Law as applied to the
The Corporation’s remaining causes of action challenged California’s Tobacco Directory Law, which requires the Attorney General to maintain and publish a directory of tobacco product manufacturers and tobacco brand families that have been approved for sale in California, and California’s licensing, reporting, and recordkeeping requirements in connection with cigarette distribution, on two grounds: (1) applying the challenged regulations to the Corporation’s cigarette sales to tribal retailers on other reservations violates “principles of Indian tribal self-governance;” and (ii) federal regulation of “trade with Indians within Indian country” under the Indian Trader Statutes
4 BIG SANDY RANCHERIA ENTERS. V. BONTA
preempts the challenged regulations as applied to the Corporation’s intertribal wholesale cigarette business.
The panel held that the district court properly dismissed both theories for failure to state a claim. The panel concluded that tribal sovereignty principles did not preclude California from regulating the Corporation’s intertribal wholesale cigarette sales under the challenged regulations. The Corporation conceded that it left the Rancheria to sell cigarettes to tribal retailers on other reservations. The Corporation did not allege that the challenged regulations were discriminatory, nor did it plausibly allege that federal law barred the Directory Statute’s application to the Corporation. The Corporation therefore failed to state a claim that the challenged regulations, as applied to its off-reservation conduct, infringed tribal self-governance. The panel joined the Tenth Circuit and Oklahoma Supreme Court in treating tribe-to-tribe sales made outside the tribal enterprise’s reservation as “off reservation” activities subject to non-discriminatory state laws of general application. The panel held that the Corporation also failed to state a claim that the Indian Trader Statutes preempted any of the challenged regulations as applied to its intertribal wholesale cigarette business.
Judge Berzon concurred in part and acquiesced dubitante in part. Judge Berzon joined the majority opinion in affirming the dismissal of the Corporation’s first four claims. She wrote that she differed from the majority in its certainty that the Corporation was not an “Indian tribe or band” for jurisdictional purposes under
BIG SANDY RANCHERIA ENTERS. V. BONTA 5
wrong, she wrote separately, dubitante, as to Part III of the majority’s opinion, which affirmed the dismissal of the Corporation’s fifth cause of action for lack of jurisdiction.
COUNSEL
Tim Hennessy (argued), John M. Peebles, and Michael A. Robinson, Peebles Kidder Bergen & Robinson LLP, Sacramento, California, for Plaintiff-Appellant.
Michael John von Loewenfeldt (argued), Wagstaffe von Loewenfeldt Busch & Radwick LLP, San Francisco, California; James V. Hart (argued) and Peter F. Nascenzi, Deputy Attorneys General; Karen Leaf, Senior Assistant Attorney General; Attorney General’s Office, Sacramento, California; for Defendants-Appellees.
BIG SANDY RANCHERIA ENTERPRISES v. ROB BONTA
No. 19-16777
United States Court of Appeals, Ninth Circuit
Filed June 16, 2021
OPINION
THOMAS, Chief Judge:
This appeal presents the question whether California cigarette tax regulations apply to inter-tribal sales of cigarettes by a federally chartered tribal corporation wholly owned by a federally recognized Indian tribe. We conclude that they do, and we affirm the judgment of the district court. We have jurisdiction under
Specifically, this case involves Big Sandy Rancheria Enterprises (“the Corporation”), a federally chartered tribal corporation wholly owned and controlled by the Big Sandy Rancheria of Western Mono Indians (“the Tribe”). The Corporation sought declaratory and injunctive relief against the Attorney General of California (“Attorney General”) and the Director of the California Department of Tax and Fee Administration (“Director”).
The district court dismissed the Corporation’s challenge to California’s cigarette excise tax as applied to the Corporation’s wholesale cigarette distribution business, for lack of subject matter jurisdiction, and dismissed the Corporation’s remaining challenges to other regulations governing cigarette distribution in California, as applied to the Corporation’s business, for failure to state a claim.
I
A
“Since 1959 California has imposed an excise tax on the distribution of cigarettes.” Cal. State Bd. of Equalization v.
obligations to provide a panoply of benefits and services to the tribe and its members. H.R. Rep. No. 103-781 (1994) (emphasis added); accord Cohen’s Handbook § 3.02[3] at 133.
Although these authorities do not construe “Indian tribe or band” as used in
As the Corporation acknowledges, the Tribe, not the Corporation, appears on the Federally Recognized Indian Tribes List, see
also Washington v. Confederated Tribes of Colville Indian Rsrv., 447 U.S. 134, 152 (1980) (“Colville”) (“The power to tax transactions occurring on trust lands and significantly involving a tribe or its members is a fundamental attribute of sovereignty which the tribes retain unless divested of it by federal law or necessary implication of their dependent status.”).
Section 17 simply does not provide for such recognition. See
Because Congress enacted
2
In addition to being a poor fit with the relevant statutory language, the Corporation’s position is difficult to square
with our mandate to “narrowly construe[]” the
The Corporation maintains that Navajo “is not controlling here” because Navajo “did not involve a section 17 corporation,” and the Corporation’s Board of Directors is identical to the membership of the Tribal Council, whereas the Utility Authority’s leadership was “not synonymous with the Tribal Council.” Id. at 1232. The Corporation accordingly reasons that its decision to challenge California’s tax enforcement scheme is the functional equivalent of the tribal leadership’s decision to do so. These arguments are unavailing. Navajo’s observation that
provision for wholly controlled or owned subordinate economic tribal entities,” id. at 1231, easily extends to the Corporation, regardless of its section 17 status, because the Corporation is an economic entity wholly owned and controlled by the Tribe. See Cohen’s Handbook § 4.04[3][a][ii] at 258 (“Corporations chartered under section 17 must be wholly owned by the tribe.”).
Additionally, we agree with the district court that Navajo’s holding “did not hinge on the overlap of interests between the political and corporate entities.” Big Sandy, 395 F. Supp. 3d at 1325. Indeed, we acknowledged that there may be circumstances in which a tribal corporation’s interests are “identi[cal]” to the tribe’s, but concluded that, even then, “the Tribe itself will be able to protect those interests” if it decides to do so. Navajo, 608 F.2d at 1233; cf. also Agua Caliente Band of Cahuilla Indians v. Hardin, 223 F.3d 1041, 1043, 1046 n.5 (9th Cir. 2000) (noting that the Indian tribes exception to the Tax Injunction Act was satisfied where a section 17 corporation and the governing tribe were co-plaintiffs).
Navajo also requires us to reject the Corporation’s reliance on Mescalero. There, the Mescalero Apache Tribe appealed from unfavorable state rulings regarding its liability for state taxes imposed on an off-reservation ski resort that the tribe owned and operated. Mescalero, 411 U.S. at 146–47. Reversing in part and affirming in part, the Court observed that it was “unclear from the record whether the Tribe has actually incorporated itself as an Indian chartered corporation” under section 17, but remarked that “the question of tax immunity cannot be made to turn on the particular form in which the Tribe chooses to conduct its business.” Id. at 157 n.13. Based on this, the Corporation
argues that “[t]he fact that an Indian tribe has the same federal immunity from state taxes whether acting” as a section 16 or 17 entity is “compelling evidence that”
But Navajo declined to adopt that same reasoning. It explained that Mescalero “does not assist” with the jurisdictional question that arises when a tribal corporation invokes
3
The Corporation’s reliance on Price is likewise misplaced. There, after assuming arguendo that a native Hawaiian tribal group was an “Indian tribe or band,” we focused our analysis on whether the tribe had a “governing body duly recognized by the Secretary.” Price, 764 F.2d
at 626 (quoting
IV
The Corporation’s remaining causes of action challenge the Directory Statute and California’s licensing, reporting, and recordkeeping requirements in connection with cigarette distribution on two grounds: (i) applying the challenged regulations to the Corporation’s cigarette sales to tribal retailers on other reservations violates “principles of Indian tribal self-governance”; and (ii) federal regulation of “trade with Indians within Indian country” under the Indian Trader Statutes, see
A
“Long ago the [Supreme] Court departed from Mr. Chief Justice Marshall’s view that ‘the laws of [a state] can have no force’ within reservation boundaries.” White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 141 (1980) (quoting Worcester v. Georgia, 31 U.S. 515, 520 (1832)). “[T]here is no rigid rule” that resolves “whether a particular state law may be applied to an Indian reservation or to tribal members.” Id. at 142. Rather, there are “two independent but related barriers to the assertion of state regulatory authority over tribal reservations and members.” Id.
The first barrier is that state action may not burden “the right of reservation Indians to make their own laws and
The second barrier is preemption by federal law, as “Congress has broad power to regulate tribal affairs.” Bracker, 448 U.S. at 142–43; see also
encouraging tribal independence.” Bracker, 448 U.S. at 143–44. Thus, “in order to find a particular state law to have been preempted by operation of federal law,” we need not identify “an express congressional statement to that effect.” Id. at 144. Rather, where a state seeks to regulate tribal activity that is already governed by a “comprehensive,” “detailed,” and “pervasive” federal regulatory scheme, this preemption barrier applies. Id. at 145–46, 148. “At the same time any applicable regulatory interest of the State must be given weight.” Id. at 144.
1
Whether state regulation infringes tribal sovereignty depends on who is being regulated—Indians or non-Indians—and where the activity to be regulated takes place—on or off a tribe’s reservation. Wagnon, 546 U.S. at 101. Based on the “who” and “where,” one of three analytical frameworks applies.
First, “[w]hen on-reservation conduct involving only Indians is at issue, state law is generally inapplicable, for the State’s regulatory interest is likely to be minimal and the federal interest in encouraging tribal self-government is at its strongest.” Bracker, 448 U.S. at 144. Applying this rule in Moe, 425 U.S. 463, the Supreme Court invalidated Montana’s “vendor license fee” as “applied to a reservation Indian conducting a cigarette business for the Tribe on reservation land; and [the state’s] cigarette sales tax, as applied to on-reservation sales by Indians to Indians.” Id. at 480–81; see also, e.g., Okla. Tax Comm’n v. Chickasaw Nation, 515 U.S. 450, 454–55 (1995) (invalidating motor fuels tax as applied to tribal retail stores on tribal trust land); McClanahan v. Ariz. Tax Comm’n, 411 U.S. 164, 165–66 (1973) (invalidating a tax
on income earned from reservation sources by tribal members residing on the reservation).
Second, when a state “asserts authority over the conduct of non-Indians engaging in activity on the reservation,” courts must conduct “a particularized inquiry into” and balance the “state, federal, and tribal interests at stake.” Bracker, 448 U.S. at 145 (emphasis added). Under Bracker’s balancing test, “State jurisdiction is preempted by the operation of federal law if it interferes or is incompatible with federal and tribal interests reflected in federal law, unless the state interests at stake are sufficient to justify the assertion of state authority.” New Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 334 (1983). When “a tribe plays an active role in generating activities of value on its reservation” with the aid of non-Indian entities, it has a “strong interest in maintaining those activities free from state interference,” in contrast to when tribes “simply allow the sale of items such as cigarettes to take place on their reservations.” Gila River Indian Cmty. v. Waddell, 967 F.2d 1404, 1410 (9th Cir. 1992).
The Court has “balanced federal, state, and tribal interests in diverse contexts,” including where—as here—the challenged regulations are not themselves taxes. Chickasaw Nation, 515 U.S. at 458. The Court has upheld such regulations where they are “minimal burden[s] designed to avoid the likelihood that in [their] absence non-Indians purchasing from the tribal seller will avoid payment of a concededly lawful tax.” Moe, 425 U.S. at 483. These permissible burdens have included requiring on-reservation tribal retailers to collect and remit cigarette taxes from non-Indian purchasers, id., and requiring such retailers to maintain records regarding tax-exempt sales, see Colville, 447 U.S. at
160 (“[T]he Tribes have failed to demonstrate that [Washington’s] recordkeeping requirements for exempt sales are not reasonably necessary as a means of preventing fraudulent transactions.”).
Third, because “state power over Indian affairs is considerably more expansive” “outside the reservation . . . than it is within reservation boundaries,” id. at 162, when a tribe or tribal members act outside their reservation, they are subject to “non-discriminatory state law otherwise applicable to all citizens of the State,” “[a]bsent express federal law to the contrary.” Mescalero, 411 U.S. at 148–49; see also Bracker, 448 U.S. at 144 n.11 (reaffirming principle). Applying this rule, the Supreme Court has upheld a state’s taxation of income derived from a tribe’s off-reservation ski resort, Mescalero, 411 U.S. at 148–49, and a state cigarette tax on Indian purchasers who were “not members of the Tribe” on whose reservation the sales took place, Colville, 447 U.S. at 161. As to the latter, the Court has explained that taxing such purchasers typically does not “contravene the principle of tribal self-government” because “[f]or most practical purposes those Indians stand on the same footing as non-Indians resident on the reservation.” Id. Absent evidence that such nonmembers “have a say in tribal affairs or significantly share in tribal disbursements,” “the State’s interest in taxing these purchasers outweighs any tribal interest that may exist in preventing the State from imposing its taxes.” Id. The Court has warned that balancing interests under Bracker when the regulated activity is off-reservation is “inconsistent with the special geographic sovereignty concerns that gave rise to that test.” Wagnon, 546 U.S. at 112–13.
2
We next turn to the specific federal law that the Corporation identifies as preempting all the challenged state regulations: the Indian Trader Statutes (the “Statutes”),
Under the Statutes, “the Commissioner has promulgated detailed regulations” regarding “who may qualify to be a trader and how he shall be licensed; penalties for acting as a trader without a license; conditions under which government employees may trade with Indians; articles that cannot be sold to Indians; and conduct forbidden on a licensed trader’s premises.” Warren Trading Post Co. v. Ariz. State Tax
Comm’n, 380 U.S. 685, 689 (1965); see also
On two occasions, the Supreme Court has deemed the Statutes preemptive with respect to state taxation of traders to Indian tribes. In Warren Trading Post, the Court concluded that the Statutes barred Arizona from imposing a gross sales tax on a non-Indian retail trading business “federally licensed” as an “Indian trader with respect to sales made to reservation Indians on the reservation.” 380 U.S. at 691–92. The Court explained that the tax could “disturb and disarrange the statutory plan Congress set up in order to protect Indians against prices deemed unfair or unreasonable by the Indian Commissioner.” Id. at 691. Later, the Court held that Arizona could not tax the gross receipts of a non-tribal corporation’s on-reservation tractor sales to a tribal entity, even though the corporation was not a federally licensed Indian trader. See Cent. Mach., 448 U.S. at 164–65. The Court noted, however, that the Bureau of Indian Affairs had expressly approved the contract for sale and the tribe’s budgetary allocation for the tractor purchases. Id. at 161, 165 n.4. In the Court’s view, it was “irrelevant that [the corporation] was not a licensed Indian trader” because it is “the existence of the Indian trader statutes . . ., and not their administration, that preempts the field of transactions with Indians occurring on reservations.” Id. at 165.
Subsequent Supreme Court cases have taken a narrower view of the Statutes’ preemptive effect. For instance, in upholding Washington’s taxation of non-Indians that purchase cigarettes from on-reservation tribal retailers, the
Court clarified that the Statutes “incorporate a congressional desire comprehensively to regulate businesses selling goods to reservation Indians . . . , but no similar intent is evident with respect to sales by Indians to nonmembers of the Tribe.” Colville, 447 U.S. at 155–56. The Court rejected the notion that the Statutes “go[] so far as to grant tribal enterprises selling goods to nonmembers an artificial competitive advantage over all other businesses in a State.” Id. at 155.
And most recently, as the Corporation acknowledges, the Court retreated from
Applying the reasoning of Moe and Colville, even though those cases “dealt most directly with claims of interference with tribal sovereignty,” id. at 74, the Court upheld the other challenged regulations as “minimal burdens reasonably tailored to the collection of valid taxes from non-Indians,” id. at 73–74, 76. It explained that “[i]t would be anomalous” to permit states, under Moe and Colville, to “impose tax collection and bookkeeping burdens on reservation retailers who are themselves enrolled tribal members,” but to hold that the Statutes bar “similar burdens . . . on wholesalers who often (as in this case) are [non-Indian].” Id. at 74. The Court reasoned that “[j]ust as tribal sovereignty does not completely preclude States from enlisting tribal retailers to assist enforcement of valid state taxes, the Indian Trader Statutes do not bar the States from imposing reasonable regulatory burdens upon Indian traders for the same purpose.” Id.
B
Applying these principles, we affirm the dismissal of the Corporation’s preemption challenges to the Directory Statute and California’s licensing, recordkeeping, and reporting requirements.
1
Tribal sovereignty principles do not preclude California from regulating the Corporation’s intertribal wholesale cigarette sales under the challenged regulations.
The Corporation concedes that it leaves the Rancheria to sell cigarettes to tribal retailers on other reservations. The Corporation does not allege that the challenged regulations are discriminatory nor, for the reasons stated below, does the
Corporation plausibly allege that federal law bars the Directory Statute’s application to the Corporation. See Mescalero, 411 U.S. at 148–49. The Corporation therefore fails to state a claim that the challenged regulations, as applied to its off-reservation conduct, infringe tribal self-governance. See id. at 148, 153 (explaining that “off-reservation activities are within the reach of state law” so long as the state law is not discriminatory and “[a]bsent express federal law to the contrary”); see also King Mountain Tobacco, 768 F.3d at 993 (“Mescalero requires that we determine whether Washington’s
The Corporation does not remain “on reservation” for purposes of the tribal-sovereignty analysis by selling cigarettes on other tribes’ reservations. The Corporation’s contention that it undertakes its sales activities entirely in “Indian country” disregards that “[t]here is a significant geographical component to tribal sovereignty,” Bracker, 448 U.S. at 151, and that “Indian tribes are unique aggregations possessing attributes of sovereignty over both their members and their territory.” United States v. Mazurie, 419 U.S. 544, 557 (1975) (emphasis added). The Corporation fails to plausibly allege that California hinders the Tribe’s ability to govern its territory and members by prohibiting the Corporation, an unlicensed distributor, from selling off-directory cigarettes outside the Rancheria. See Mescalero, 411 U.S. at 157 (explaining that a tribe does not have “expansive immunity from ordinary” regulation that applies to “businesses throughout the State” when that tribe travels “beyond its reservation borders for the purpose of carrying on a business enterprise” (emphasis added)).
We therefore join the Tenth Circuit and Oklahoma Supreme Court in treating tribe-to-tribe sales made outside the tribal enterprise’s reservation as “off reservation” activity subject to non-discriminatory state laws of general application. See Muscogee (Creek) Nation v. Pruitt, 669 F.3d 1159, 1172 (10th Cir. 2012) (“[W]hen Indians . . . act outside of their own Indian country . . ., including within the Indian country of another tribe, they are subject to non-discriminatory state laws otherwise applicable to all citizens of the state.” (emphasis added));10 Edmondson v. Native Wholesale Supply, 237 P.3d 199, 215–16 (Okla. 2010) (concluding that “tribal to tribal transactions” that “extend[ed] beyond the boundaries of any single ‘reservation’” constituted “off-reservation conduct”), cert. denied, 563 U.S. 960 (2011), abrogated on other grounds by Bristol-Meyers Squibb Co. v. Super. Ct., 137 S. Ct. 1773 (2017).
In these circumstances, the district court properly declined to balance federal, state, and tribal interests under Bracker. See Big Sandy, 395 F. Supp. 3d at 1328–30. Bracker balancing is appropriate when a tribe or tribal entity challenges a state’s regulation of transactions between the tribe and nonmembers on the tribe’s reservation. See, e.g., Bracker, 448 U.S. at 141 (balancing interests where a tribe
intervened as a plaintiff to challenge Arizona’s taxation of a non-Indian company that provided the tribe logging services on the tribe’s reservation); California v. Cabazon Band of Mission Indians, 480 U.S. 202, 216 (1987) (balancing interests where tribes challenged California’s attempt to prohibit them from offering non-Indians high stakes bingo games on their reservations); Gila River Indian Cmty., 967 F.2d at 1407, 1410–11 (balancing interests
Here, the Corporation does not allege that California seeks to regulate its transactions with non-Indians or nonmembers on the Rancheria in a way that infringes on the Tribe’s self-governance. Rather, the Corporation claims that the Directory Statute, as applied to the Corporation’s sales activities off the Rancheria, infringes the Tribe’s self-governance. For the reasons already stated, this claim is not cognizable under Mescalero, 411 U.S. at 148–49.
2
The Corporation has likewise failed to state a claim that the Indian Trader Statutes preempt any of the challenged regulations as applied to its intertribal wholesale cigarette business.
a
As a preliminary matter, the complaint is devoid of any allegations that the federal government has exercised any shred of oversight—still less “comprehensive,” “detailed,” or “pervasive” oversight—with respect to the Corporation’s alleged Indian trading. Bracker, 448 U.S. at 145–46, 148.
Accordingly, the transactions that the Corporation seeks to immunize from state regulation are fundamentally different from the transactions that have led the Court to deem the Statutes preemptive of state regulation as applied to Indian traders. Specifically, the Corporation does not allege that the federal government has licensed it as an Indian trader or otherwise approved its cigarette sales to tribal retailers on other reservations. See Warren Trading Post, 380 U.S. at 691; Cent. Mach., 448 U.S. at 165 n.4. Moreover, it strains credulity to deem a lone federal regulation that prohibits on-reservation cigarette sales to Indian minors, see
b
The Supreme Court’s reasoning in Milhelm further requires dismissal of the Corporation’s claims that the Statutes preempt the Directory Statute and California’s licensing, recordkeeping, and reporting requirements.
(1)
First, the Corporation’s allegation that the Directory Statute impermissibly “specifies the kind and price of goods that may be sold to Indians by limiting the cigarettes that the Tribe may sell . . . to cigarettes of a tobacco product manufacturer or brand family included in the directory” fails under Milhelm. The Directory Statute prohibits the Corporation from selling certain tobacco products based solely on the product manufacturer’s violation of state law and without regard to the type, price, or quantity of the product itself. So long as the Corporation sources its
cigarettes from manufacturers that comply with their escrow obligations, it “remain[s] free to sell Indian tribes and retailers as many cigarettes” as it wishes, “of any kind, and at whatever price.” Milhelm, 512 U.S. at 75.
To be sure, non-participating manufacturers may have an economic incentive to pass the cost of escrow deposits on to their consumers, such that the Corporation’s compliance with the Directory Statute may very well increase the cost of the cigarettes that it sells. Notwithstanding this
In sum, the Corporation fails to plausibly allege that the Directory Statute “disturb[s] and disarrange[s] the statutory plan to protect Indians against prices deemed unfair or unreasonable,” Warren Trading Post, 380 U.S. at 691; see also
(2)
The Corporation also fails to state a claim that the Statutes preempt California’s licensing, recordkeeping, and reporting requirements because it does not plausibly allege that those requirements are not “reasonable regulatory burdens” imposed on Indian traders “to assist enforcement of valid state taxes.” Id. at 74; see also Colville, 447 U.S. at 160
(placing the burden on the tribe to show that the challenged regulations are “not reasonably necessary as a means of preventing fraudulent transactions”). Valid state taxes include the cigarette excise taxes that California seeks to collect from customers who purchase cigarettes on reservations to which they do not belong. See Chemehuevi, 474 U.S. at 11–12; see also Colville, 447 U.S. at 156–59.
These minimal burdens may be imposed on Indian businesses that, like the Corporation, purport to engage only in tax-exempt transactions. See Colville, 447 U.S. at 159–60 (reversing the district court, which had struck down recordkeeping requirements with respect to all on-reservation cigarette sales by Indian retailers after finding that none of these retailers’ sales were taxable); Milhelm, 512 U.S. at 76 (upholding New York law requiring that cigarette wholesalers making on-reservation cigarette sales to tribal retailers “maintain detailed records on tax-exempt transactions” (emphasis added)).
The Corporation does not plausibly allege that California’s licensing, recordkeeping, and reporting requirements, as applied to its sales to nonmember Indian retailers, are excessive burdens. As the district court noted, tax enforcement schemes “with even more demanding requirements than those of California have been repeatedly upheld by the Supreme Court as imposing only a ‘minimal burden.’” Big Sandy, 395 F. Supp. 3d at 1332–33; see also Milhelm, 512 U.S. at 64–67, 76 (upholding state laws requiring “[w]holesale distributors of tax-exempt cigarettes” to “hold state licenses,” maintain records regarding tax-exempt transactions, and adhere to quantity limitations on the untaxed cigarettes that they could sell to reservation retailers); Colville, 447 U.S. at 159–60 (upholding
recordkeeping requirements, which required Indian smokeshop operators to “keep detailed records of both taxable and nontaxable transactions,” including, in connection with the latter, “the names of all Indian purchasers, their tribal affiliations, the Indian reservations within which sales are made, and the dollar amount and dates of sales”).
Indeed, as the Supreme Court reasoned in Milhelm, cigarette wholesalers, like the Corporation—which must “maintain detailed records” regarding their transactions—are
In asserting that California’s licensing, recordkeeping, and reporting requirements are not “designed to prevent non-Indians from evading taxes,” the Corporation disregards the Legislature’s findings to the contrary. See
Just because the state-mandated “reports would not identify [the Corporation’s] retail customers” or any
information about those retailers’ downstream transactions, i.e., “the information necessary to ascertain the products’ ultimate taxability,” that does not make California’s requirements unreasonable. “[A]lthough the Corporation’s reports would not list the identity of its customers, each of its customers’ filings would list the Corporation as the seller, thereby allowing the State to compare the Corporation’s aggregate monthly outflow with the monthly inflow reported by its customers, and to follow up in the event of discrepancies.” Id. Morever, wholesale distributors must “maintain and make available for examination underlying invoices and other records supporting the required reports”—that is, “exactly the kind of information that would aid . . . in tracking [the Corporation’s] downstream sales.” Id.; see also
The Corporation likewise fails to state a claim that the licensing, recordkeeping, and reporting requirements are generally “incompatible with the federal regulation of trade with Indians in Indian country.” The Corporation does not allege, for instance, that the challenged requirements “could . . . disturb and disarrange the statutory plan” by imposing an “economic burden” on the Corporation that “would eventually be passed on to” tribal purchasers in the form of either pricier, fewer, or shoddier products. Bracker, 448 U.S. at 152; see also Cent. Mach., 448 U.S. at 162 (noting that the seller had added the amount of the challenged state tax, nearly $3000, to the price of the tractors purchased by a tribal entity on the reservation). Nor does the Corporation plausibly allege that the challenged regulations, which enable the state to monitor and police statewide cigarette distribution, usurp or interfere with the Commissioner’s “sole power and authority to appoint traders to the Indian tribes.”
failure to apply for an Indian trader license under
V
For the foregoing reasons, we affirm the district court’s dismissal for lack of subject
AFFIRMED.
BERZON, Circuit Judge, concurring in part and acquiescing dubitante in part:
I join the majority opinion in affirming the dismissal of Big Sandy Rancheria Enterprises’ (“BSRE” or “the Corporation”) first four claims. Where I differ from the majority is in the certainty that BSRE is not an “Indian tribe or band” for jurisdictional purposes.
corporations incorporated under
Under the “Indian Tribes exception,” any action that could be brought in federal court under
As the majority points out, Maj. Op. at 22, our analysis of this question must be guided by the canon that “statutes passed for the benefit of Indian tribes, such as [§] 1362, are to be liberally construed, with doubtful expressions being resolved in the Indians’ favor.” Gila River Indian Cmty. v. Henningson, Durham & Richardson, 626 F.2d 708, 712 (1980); see Bryan v. Itasca County, 426 U.S. 373, 392 (1976). In this case, construing the statute “liberally . . . in the Indians’ favor” with regard to any “doubtful expressions” would mean holding that the statute includes tribes incorporated under
is whether the scope of “any Indian tribe or band” in
Case law construing either
First, I view the majority’s focus on whether the Corporation, itself and independently, is a federally recognized tribe as misguided. See Maj. Op. at 22–25. It is undisputed that Big Sandy Rancheria is a federally recognized tribe. The relevant question is therefore not whether BSRE is federally recognized for the purposes of
Framed in this way, I am not certain that BSRE’s position that
This statutory language does, as the majority points out, distinguish between the Tribe’s governing body and its corporate entity. But by issuing the corporate charter “to such tribe” and referring to a
It is this reasoning that guided the only other Ninth Circuit opinion to consider whether
In dissent, however, Judge Fletcher concluded that it did. Because she would have held that the Tribe had asserted a viable
Nor do I find, in my own review of the legislative history, a persuasive answer to the question whether Congress intended
Third, I believe the majority overstates our mandate to “narrowly construe[]” the
Cir.1980)). Its holding has been applied only once since, in a case declining to apply the exception to a private enterprise owned by tribal members. See Amarok Corp. v. Nev. Dep’t of Tax’n, 935 F.2d 1068, 1069–71 (1991).
I do not read these cases as sanctioning in general a cramped construction of the jurisdictional statute. Rather, the construction of
Navajo Tribal Util. Auth. v. Arizona Dep’t of Revenue, 608 F.2d 1228 (9th Cir. 1979), does, however, present a wrinkle for a more forgiving reading of the case law. As the majority points out, Navajo rejected an expansive reading of the jurisdictional statute in part on the ground that “[i]f the leadership of a tribe or band decides that litigation is necessary,” then that leadership is free to bring suit itself under
Tribe v. Jones, 411 U.S. 145, 158 n.13 (1973) (“[T]he question of tax immunity cannot be made to turn on the particular form in which the Tribe chooses to conduct its business.”).
In the end, I am not convinced that Navajo’s interpretation of the jurisdictional statute squarely forecloses federal jurisdiction here. Navajo held only that
By contrast,
identical to tribal governments for purposes of federal tax immunity. See
Finally, I address the majority’s assertion that it would be “odd” to allow tribes to allow a
of corporations are not imbued automatically with such status.”). The Supreme Court reinforced this principle in Michigan v. Bay Mills Indian Cmty., 572 U.S. 782 (2014), when it held that tribes are entitled to sovereign immunity when engaging in commercial activity both on- and off-reservation, id. at 790.
That many
As our precedent and that of other circuits makes clear, a waiver of sovereign immunity does not negate inherent sovereignty. As State of Oregon pointed out, some tribal constitutions ratified under
waive immunity in some contexts while invoking the benefits of sovereignty in others. I see no reason why, as a matter of principle, tribes incorporated under
This is not to conclude definitively that
I join the majority’s conclusion because, with the exceptions noted, its reasoning is persuasive, and I cannot be certain, faced with an ambiguous statutory text, a thin legislative history, and sparse case law, that the majority’s conclusion is incorrect. But I am quite certain that the question is