THIS MATTER comes before the Court on Defendant Nambe Pueblo Development Corporation's
FACTUAL BACKGROUND
The Court draws its facts from World Fuel's Petition to Compel Arbitration Pursuant to Section 4 of the Federal Arbitration Act, filed August 31, 2018 (Doc. 1)("Complaint"). World Fuel then filed a Notice of Errata, in which World Fuel "respectfully notifies the Court and all parties that the Petition to Compel Arbitration Pursuant to Section 4 of the Federal Arbitration Act, filed electronically on August 31, 2018 and served on September 6, 2018, was inadvertently filed and served without Exhibits 1, 2 and 3." Notice of Errata at 1, filed September 11, 2018 (Doc. 9). Exhibit 1 is the Agreement, see Agreement at 1; Exhibit 2 is the Federal Corporate Charter Issued By the United States of America Department of the Interior Bureau of Indian Affairs to the Pueblo of Nambe for Nambe Pueblo Development Corporation at 6 (dated May 29, 1996), filed September 11, 2018 (Doc. 9-2)("Federal Charter"), and Exhibit 3 is a letter from World Fuel to Nambe Corp., addressed to Carlos Vigil ("C. Vigil"),
The Court accepts World Fuel's factual allegations in the Complaint, the Agreement, the Federal Charter, and the Aug. 8, 2018 Letter, as true for the limited purpose of deciding the Motion.
With that understanding, World Fuel is a corporation organized and existing under the laws of the State of Texas, qualified to do business in the State of New Mexico, and with its principal place of business in the County of Miami-Dade, State of Florida. See Complaint ¶ 1, at 1. Nambe Corp. is a "federally chartered corporation organized under the laws of the United States, pursuant to
World Fuel is engaged in, among other things, supplying petroleum fuel to distributors. See Complaint ¶ 2, at 1. Nambe Corp. is engaged in the tourism and gasoline business, and operates the Nambe Falls Travel Center, where Nambe Corp. operates a gasoline station. See Complaint ¶ 4, at 2. World Fuel and Nambe Corp. entered into a ten-year contractual relationship with a term from May 17, 2017, through May 16, 2027, providing that
The arbitration provision states in relevant part:
If any dispute arises between the parties over or in connection with this Agreement and the parties, after good faith efforts, are unable to resolve the dispute between themselves, either party may serve notice in writing to the other of such dispute and demand that it be resolved through binding arbitration, giving the other party the name of an arbitrator of the noticing party's choice.
Agreement ¶ 18(a), at 7. See Complaint ¶ 8, at 2. The sovereign immunity waiver provision states, in relevant part:
Nothing in this Agreement is or shall be deemed to be a waiver of the Pueblo's sovereign immunity from suit, provided however, that Customer [Nambe Corp.] agrees to waive its immunity protection for the limited and sole purposes of compelling arbitration or enforcing any binding arbitration decision rendered pursuant to the terms and conditions of this Agreement by any court having jurisdiction over the parties and the subject matter and for purposes of any such arbitration proceedings.
Agreement ¶ 18(b), at 8. See Complaint ¶ 9, at 2-3. The Federal Charter contains a "sue and be sued" clause, providing that Nambe Corp. is expressly authorized and empowered "[t]o sue and be sued in its Corporate name in courts of competent jurisdiction within the United States." Complaint ¶ 10, at 3 (quoting Federal Charter § 3.01(b), at 2).
On or about May, 2018, "a dispute arose between World Fuel and [Nambe Corp.] regarding unpaid taxes owed by [Nambe Corp.] to World Fuel pursuant to the Agreement." Complaint ¶ 11, at 3. On July 27, 2018, World Fuel issued an invoice for the unpaid taxes, and Nambe Corp. refused to pay. See Complaint ¶ 12, at 3. On August 8, 2018, World Fuel provided Nambe Corp. formal notice of the dispute and a demand that, pursuant to the Agreement, the dispute be resolved through binding arbitration. See Aug. 8, 2018 Letter at 1. The Aug. 8, 2018 Letter states, in relevant part:
In accordance with section 18(a) of the Agreement, Alta gives [Nambe Corp.] formal notice of the above-mentioned dispute and demands that the dispute be resolved through binding arbitration. As one of the three arbitrators to hear and decide the dispute, Alta selects the Honorable Bruce D. Black, the former United States District Judge for the District of New Mexico.8 Under the terms of the Agreement, [Nambe Corp.] must select a second arbitrator within ten days ofthe receipt of this notice, and then Judge Black and [Nambe Corp.]'s selected arbitrator will jointly appoint a third person to serve on the arbitration panel. The panel shall convene as soon as practicable, and hear and decide the dispute within 60 days of this notice to arbitrate.
Aug. 8, 2018 Letter at 1. See Complaint ¶ 13, at 3 (internal quotation marks omitted)(quoting Aug. 8, 2018 Letter at 1, and stating that, to date, Nambe Corp. has not responded to the Aug. 8, 2018 Letter).
PROCEDURAL BACKGROUND
World Fuel's Complaint raises a single claim for relief against Nambe Corp. See Complaint ¶ 14, at 3. World Fuel alleges that the Agreement is valid and enforceable, and that Nambe Corp. agreed to its terms -- including the arbitration provision. See Complaint ¶¶ 15-16, at 3. World Fuel alleges that the parties' dispute is "over or in connection with [the] Agreement," and falls within the arbitration provision's scope. Complaint ¶ 17, at 3 (quoting Agreement ¶ 18(a), at 7). World Fuel alleges that "[a]ll conditions precedent to the maintenance of this [Complaint] have been performed, have been waived, or have occurred." Complaint ¶ 18, at 4. World Fuel alleges that, pursuant to § 4 of the FAA, the Court has the authority to compel Nambe Corp. to arbitrate the parties' dispute, and World Fuel requests that the Court issue an Order compelling arbitration pursuant to the Agreement's terms. See Complaint ¶ 19, at 4.
1. The Motion.
Nambe Corp. moves the Court to dismiss the case, alleging that World Fuel "is required to exhaust its tribal remedies in the Nambe Tribal Courts, including its designated appellate court, the Southwest InterTribal Court of Appeals." Motion at 1. Nambe Corp. alleges that, when required to answer in the "appropriate court," it will deny many of World Fuel's allegations, will otherwise show that its actions were justified, and will raise other dispositive defenses, including "Nambe Corp.'s unwaived sovereign immunity." Motion at 2. Nambe Corp. contends that, under the Tribal exhaustion doctrine, "the proper forum for addressing Plaintiff's demand for arbitration and Nambe Corp.'s legal defenses (and the merits of Plaintiff's claims) in the first instance is the Nambe Tribal Courts." Motion at 2.
2. The R. Vigil Aff.
To the Motion, Nambe Corp. affixes the R. Vigil Aff. See Affidavit of Randy Vigil, ¶ 1, at 1 (dated Sept. 27, 2018), filed October 1, 2018 (Doc. 14-1)("R. Vigil Aff."). R. Vigil states that he is an enrolled member of Nambe Pueblo and is currently the Operations Manager of the Los Alamos National Laboratory's Utilities Department, a position that he has held since August, 2008. R. Vigil Aff. ¶ 1, at 1. R. Vigil states that he has been a member of Nambe Corp.'s
R. Vigil states that fuel sales transactions between Alta Fuels/World Fuel and Nambe Corp. related to the Nambe Travel Center have continued from 2009 until the present. See R. Vigil Aff. ¶ 11, at 3. R. Vigil states that, on November 10, 2008, the Board approved a contract with Alta Fuels for fuel sales at the Nambe Travel Center. See R. Vigil Aff. ¶ 6, at 2. On April 8, 2009, Alta Fuels entered into that valid and binding contract with Nambe Corp., which Herbert Yates, Nambe Corp.'s Chief Executive Officer, executed. See R. Vigil Aff. ¶ 6, at 2. R. Vigil attests that the Board understood §§ 301(e) and 701 of the Federal Charter to require its approval of the contract.
R. Vigil attests that World Fuel sent Nambe Corp. an arbitration demand in the Aug. 8, 2018 Letter attached to the Complaint. See R. Vigil Aff. ¶ 16, at 4. R. Vigil states that, although the Complaint's ¶ 13 states otherwise, Nambe Corp. authorized a response to the Complaint and sent it by letter on August 9, 2018. See R. Vigil Aff. ¶ 17, at 4.
3. The Memo.
In the Memorandum in Support of the Motion to Dismiss, filed October 1, 2018 (Doc. 15)("Memo."), Nambe Corp. states the facts which the R. Vigil Aff. describes. See Memo. at 1-5. Nambe Corp. asserts that two triggers for Montana v. United States,
Nambe Corp. asserts that, under the Williams v. Lee,
Nambe Corp. argues that the Court must dismiss or stay World Fuel's suit because of World Fuel's failure to exhaust Tribal remedies. See Memo. at 6. Nambe Corp. contends that National Farmers Union v. Crow Tribe of Indians,
where a party seeks to secure a federal court ruling on a civil cause of action arising on lands constituting a federally recognized Tribe's Indian Country based on voluntary transactions or other commercial relationships between one of the parties to the dispute and a tribal member, tribe or tribal entity of that tribe (or Pueblo), the federal court must dismiss (or stay) the federal suit until plaintiff has exhausted its tribal remedies -- so long as there exist colorable Tribal Court jurisdiction over the claims pled under Montana... and/or Williams v. Lee... In this case, the tribal entity sued is [Nambe Corp.].
Memo. at 6-7. Nambe Corp. argues that the Supreme Court of the United States has repeatedly reaffirmed the requirement that, where there is at least a colorable claim that the federal requirements for exercising Tribal jurisdiction over a non-Indian party are met, the parties must exhaust Tribal remedies as National Farmers and Iowa Mutual require. See Memo. at 7 (citing Atkinson Trading Co. v. Shirley,
Nambe Corp. contends that, even when a plaintiff seeks to compel arbitration under the FAA or based on a binding arbitration clause in an allegedly binding contract, the plaintiff must still exhaust Tribal
Nambe Corp. asserts that, to satisfy its duty to exhaust Tribal remedies, World Fuel must seek adjudication of all legal questions bearing on its dispute with Nambe Corp. in the Nambe Pueblo Tribal Court, including appellate review by the Southwest InterTribal Court of Appeals. See Memo. at 10. Nambe Corp. contends that questions for the Nambe Pueblo Tribal Court include "whether the 2017 contract document upon which World Fuel bases its demand for arbitration was lawfully executed and became a binding contract under Nambe law and the terms of [Nambe Corp.]'s corporate charter," and "whether the limited waiver of immunity set out at § 301(b) of that charter is applicable to the 2017 contract document [-- the Agreement --] here at issue." Memo. at 11. Nambe Corp. alleges that § 301(b) does not apply to the Agreement, even if the Agreement is valid, binding, and Board-approved, because the Agreement contains no language involving "property or income of the Corporation ... specifically mortgaged, pledged or assigned as collateral for particular corporate debts or liabilities," Memo. at 11 (quoting Federal Charter § 301(b) ), and § 301(b) "only applies to such contacts," Memo. at 11.
Nambe Corp. contends that the Nambe Pueblo Tribal Court must also address whether "the unauthorized execution of contracts containing immunity waivers by officials or employees of a tribe or a § 477 corporation
Nambe Corp. next argues that the "Plaintiff's duty to exhaust tribal remedies did not go away just because" World Fuel brought its suit in federal court before Nambe Corp. had an opportunity to raise a claim in the Nambe Pueblo Tribal Court. Memo. at 14. Nambe Corp. contends that a plaintiff's duty to exhaust Tribal remedies exists even when no Tribal lawsuit is pending "at the time a federal action is commenced." Memo. at 14. Nambe Corp. avers that this duty to exhaust exists especially where, as here, "the party seeking to evade tribal jurisdiction is a non-Indian
Nambe Corp. next avers that the Nambe Pueblo Tribal Court and the Southwest InterTribal Court of Appeals have colorable jurisdiction to adjudicate all of World Fuel's claims. See Memo. at 14. Nambe Corp. states, in support of this assertion, that its headquarters and travel center are located on Nambe Pueblo lands, that all actions of which World Fuel complains occurred on Nambe Pueblo lands, and that the Nambe Tribal Code confers jurisdiction on Nambe Pueblo Tribal Courts to hear and decide civil disputes arising from Nambe Corp.'s actions or inactions occurring on Nambe Pueblo lands. See Memo. at 15. Nambe Corp. contends:
Under Williams v. Lee , where a cause of action arises on lands constituting a tribe's Indian country and involves a non-member plaintiff suing a tribal defendant, based on alleged civil wrongs committed by the Indian defendant on the reservation in derogation of the rights of the non-Indian plaintiff, the propriety of Tribal Court jurisdiction to adjudicate such claim under federal law is well-settled.
Memo. at 16. Nambe Corp. contends that in Nevada v. Hicks,
Nambe Corp. argues that, after Plains Commerce Bank v. Long Family Land & Cattle Co.,
4. The Response.
World Fuel responds. See Petitioner's Opposition to Respondents Motion to Dismiss, filed October 29, 2018 (Doc. 22)("Response"). World Fuel begins by asserting that, in enacting the FAA, Congress sought to "control the procedures employed by a federal court, and thus ensure that petitions to compel arbitration would be expeditious summary proceedings." Response
World Fuel avers that the Court should deny the Motion for several reasons. See Response at 2. First, World Fuel argues that two threshold issues bar the Court from considering the exhaustion argument: (i) arbitrators, not a court, should determine whether World Fuel has satisfied conditions precedent to arbitration, including Tribal exhaustion, and whether the parties' agreement is valid; and (ii) the Motion "improperly relies on matters extrinsic to World Fuel's petition and allegations contrary to World Fuel's factual allegations." Response at 2. World Fuel asserts that, even if the Court reaches the merits of Nambe Corp.'s Tribal exhaustion argument, it must deny the Motion, because: (i) "especially" where a petition's filing is not "an attempt to circumvent the tribal entity's invocation of a parallel proceeding in Tribal Court and the underlying controversy is not an intra-tribal dispute," the Tribal exhaustion doctrine is inapplicable to petitions to compel arbitration under the FAA's § 4; (ii) the parties' arbitration clause waives any otherwise applicable Tribal exhaustion rule; and (iii) there is no pending proceeding in the Nambe Tribal Courts, rendering the Tribal exhaustion doctrine inapplicable. Response at 3.
World Fuel describes the arbitration clause, which states:
If any dispute arises between the parties over or in accordance with this Agreement and the parties, after good faith efforts, are unable to resolve the dispute between themselves, either party may serve notice in writing to the other of such dispute and demand that it be resolved through binding arbitration.
Response at 2 (quoting Agreement ¶ 18(a), at 7). World Fuel states that the arbitration clause "provides that the arbitration panel 'shall convene as soon as practicable' and that the panel 'shall hear and decide the dispute within sixty (60) days of the notice to arbitrate' " "based on the laws of the State of New Mexico." Response at 3-4 (quoting Agreement ¶ 18(a), at 7).
World Fuel contends that the arbitration provision expressly waives Nambe Corp.'s immunity from suit "for the limited and sole purposes of compelling arbitration or enforcing any binding arbitration decision ... by any court having jurisdiction over the parties and the subject matter and for purposes of any such arbitration provisions." Response at 3 (emphasis in Response)(quoting Agreement ¶ 18(b), at 7). World Fuel also notes that the Federal Charter contains a "sue and be sued" clause, stating that Nambe Corp. "is expressly authorized and empowered ... [t]o sue and be sued in its Corporate name in courts of competent jurisdiction within the United States." Response at 4 (quoting Federal Charter § 3.01(b), at 2). World Fuel contends that the Federal Charter
World Fuel asserts that it provided Nambe Corp. formal notice of the dispute regarding unpaid taxes that Nambe Corp. owes to World Fuel, after Nambe Corp. refused to pay an invoice for amounts owed and demanded arbitration pursuant to the Agreement. See Response at 4. World Fuel asserts that Nambe Corp. "has not selected a second arbitrator within ten days of its receipt of the notice as required by the Agreement, and has refused to proceed to arbitration." Response at 4-5. World Fuel avers that, on August 31, 2018, it "filed a petition in this Court to compel arbitration pursuant to Section 4 of the FAA." Response at 5. World Fuel contends that, according to Nambe Corp.,
before World Fuel may avail itself of the summary procedures afforded under Section 4 of the FAA, which apply only to federal courts, it must bring its FAA claim in the Nambe Tribal Courts and engage in the exact type of protracted litigation about venue that the FAA was enacted to curb.
Response at 5. World Fuel argues that arbitrators, and not a court, must decide the exhaustion argument, because it is a procedural question regarding grievance procedure. See Response at 5. World Fuel asserts that arbitrators, and not a court, must determine the Agreement's validity, because the Supreme Court has held that, "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance." Response at 5-6 (quoting Buckeye Check Cashing, Inc. v. Cardegna,
Next, World Fuel argues that, even if Nambe Corp.'s issues were for the Court to decide, "a district court generally may not consider matters outside the four corners of the complaint on a motion to dismiss, and certainly may not consider matters directly contrary to the allegations in the complaint." Response at 6. World Fuel argues that the Court must disregard the R. Vigil Aff. See Response at 6-7. World Fuel contends that motions to dismiss for lack of jurisdiction may be based on extrinsic evidence, but that Nambe Corp.'s Motion is not based on a lack of jurisdiction, because the Supreme Court "has made clear that, when applicable, the tribal exhaustion doctrine 'is required as a matter comity, not as a jurisdictional prerequisite.' " Response at 7 (emphasis in Response)(quoting Iowa Mutual,
Next, World Fuel avers that it "undoubtedly states a claim under Section 4 of the FAA" where World Fuel alleges that it and Nambe Corp. entered into a written contract containing an arbitration clause, and Nambe Corp. failed to arbitrate a dispute within the scope of the clause, despite the occurrence, waiver, or performance of all conditions precedent. Response at 7. World Fuel argues, accordingly, that "[a]ny counterfactual arguments that NPDC seeks to present," including regarding the Agreement's validity and the Tribal exhaustion requirement, "must be made at trial, not on a motion to dismiss[,]" because the FAA requires that where factual issues exist, courts shall proceed summarily to trial. Response at 7 (quoting
World Fuel argues that the FAA supersedes the Tribal exhaustion doctrine, which is "merely a judicially-created, non-jurisdictional rule." Response at 8. World Fuel argues that the Tribal exhaustion doctrine's purpose is to serve the congressional policy of promoting Tribal self-governance, and that it does not apply where Congress has expressed an "unmistakable preference for a federal forum" or applying the doctrine would "frustrate a 'congressional policy of immediate access to federal forums.' " Response at 8 (quoting El Paso Nat. Gas Co. v. Neztsosie,
World Fuel argues that the Supreme Court has "strongly doubted that Section 4 applies to courts other than federal courts." Response at 9-10. World Fuel argues that § 4's language is mandatory and that, under the FAA, a district court "must exercise its jurisdiction when confronted with a petition to compel arbitration." Response at 10 (emphasis in Response). World Fuel argues that "[a]pplying an exhaustion doctrine would mean that a party could never take advantage of the quick resolution offered by Section 4 of the FAA, as satisfying the exhaustion requirement would always add delay." Response at 12 (emphasis in Response).
World Fuel analogizes its dispute to those in El Paso and Preston v. Ferrer,
Next, World Fuel argues that the cases which Nambe Corp. cites are distinguishable or do not address World Fuel's arguments, and that, because the Tenth Circuit has never ruled on "the issue of tribal exhaustion in the context of a petition under Section 4 of the FAA," the Court need not follow blindly cases from other circuits with distinguishable circumstances and considering different arguments than those raised here. Response at 16. World Fuel argues that "each case Nambe relies on for the proposition that tribal exhaustion
World Fuel argues that Nambe Corp. waived the Tribal exhaustion requirement by allowing any court of competent jurisdiction to preside over an action to compel arbitration. See Response at 21. World Fuel contends that that Nambe Corp. did not expressly refer to exhaustion of Tribal proceedings "does not mean that Nambe did not waive an exhaustion defense" and that the Court must consider the real-world consequences of the Agreement's language. Response at 22. World Fuel contends that, in stating that any court could preside over an action to compel arbitration, Nambe Corp. could not have intended that only the Nambe Pueblo Tribal Court preside. See Response at 22.
Finally, World Fuel contends that the Tribal exhaustion requirement does not apply where there are no pending parallel proceedings in Tribal Court and that, even though the Tenth Circuit has not spoken on the issue, there is "a pending petition for a writ of certiorari for which the Supreme Court has entered an order calling for the views of the Solicitor General (CVSG)" on the issue. Response at 23 n.8 (citing Petition for Writ of Certiorari, Harvey v. Ute Indian Tribe of Uintah ab Ouray Reservation, Case No. 17-1301 (dated March 7, 2018) ).
5. The Reply.
Nambe Corp. begins by arguing that whether a contract ever came into existence is a matter for a court and not an arbitrator to decide. See Defendant's Reply in Support of Motion to Dismiss at 1-2, filed December 10, 2018 (Doc. 27)("Reply").
Nambe Corp. asserts that the Motion's core issue is its "contention that because of Plaintiff's duty to exhaust tribal remedies, the proper court to rule on the contract formation question (and all related arbitration and contract questions ...), most of which require interpretation of NPDC's Charter[ ] is the Nambe Tribal Court, not this Court." Reply at 4-5. Nambe Corp. next turns to World Fuel's contention that wording in the arbitration clause allowing any court with competent jurisdiction to enforce any binding arbitration decision and referring to a limited sovereign immunity waiver associated with the arbitration clause, "implicitly waived World Fuels' [sic] duty to exhaust its tribal remedies." Reply at 5.
Nambe Corp. argues that World Fuel cannot rely on words in a contract instrument to which Nambe Corp. is not a party to excuse itself from the Tribal exhaustion requirement. See Reply at 5. Nambe Corp. avers that "it is well-settled in this Circuit that the duty to exhaust tribal remedies applies even if the party seeking to compel arbitration claims the Tribal party has waived its immunity." Reply at 6. Nambe Corp. contends that waiver of sovereign immunity and Tribal remedy exhaustion are two separate issues. See Reply at 6. Nambe Corp. argues that pursuant to federal policy, in the Tenth Circuit, a party may not waive the Tribal exhaustion requirement through contract, even with explicit waiver language. See Reply at 6.
Next, Nambe Corp. asserts that, in the Tenth Circuit, "the duty to exhaust tribal remedies exists and must be enforced even if no parallel Tribal Court proceedings are ongoing." Reply at 7. Nambe Corp. argues that, "no matter whether the tribal or federal case is filed first" the risk of creating competition between Tribal and federal court proceedings exists and, "if the absence of a Tribal Court case excused exhaustion, parallel Tribal Court proceedings would be routinely filed in every case following a federal court filing, thus giving rise to the very inter-court conflict the exhaustion doctrine is intended to avoid." Reply at 7.
Nambe Corp. argues that World Fuel's assumption that Tribal resolution of its contract and arbitration dispute will take longer than dispute resolution in federal court is erroneous, and that "any delay World Fuels [sic] suffers from initially filing in the wrong court is a self-inflicted wound." Reply at 8. Nambe Corp. contends that, after Tribal remedies are exhausted, the only post-Tribal Court proceedings permitted would be to challenge the Nambe Pueblo Tribal Courts' jurisdiction, because res judicata would bar relitigation of the Nambe Pueblo Tribal Court's rulings. See Reply at 8. Nambe Corp. avers that "even persons detained by tribal governments who seek to invoke the speedy statutory habeas corpus remedy to obtain their release under
Nambe Corp. contends that, contrary to World Fuel's assertion that federal courts are the only courts which may hear FAA claims, state courts "routinely rule on motions to compel arbitration in contract or tort cases that come before them." Reply at 10. Nambe Corp. contends that federal courts have also "required non-Indian parties to first present their arbitration demands in Tribal Courts where the dispute giving rise to the arbitration demand arose from on-reservation transactions...." Reply at 10. Nambe Corp. avers that the FAA's § 4
merely provides that the party seeking to compel arbitration "may" choose to seek that relief in a U.S. District Court -- and provides the further restriction that a party can seek that relief only in circumstances where the federal court would otherwise have jurisdiction to adjudicate the underlying dispute between the parties.
Reply at 10 (quoting
Nambe Corp. avers that, in El Paso, the Supreme Court held that cases involving ordinary questions of federal law are subject to the Tribal exhaustion requirement unless the Tribe lacks jurisdiction under Montana or one of the exceptions to exhaustion under National Farmers is invoked. See Reply at 11. Nambe Corp. avers that, in El Paso, the Supreme Court also distinguished cases filed in Tribal Court but involving claims which fall within exclusively federal court jurisdiction based either on a completely preemptive statute or on a statute evidencing unmistakable congressional preference for a federal forum, as in the Price Anderson Act,
Next, Nambe Corp. argues that it did not improperly rely on materials outside the Complaint, but that, under D.N.M. LR-Civ. 7.3(b), the factual allegations which Nambe Corp. needs to ground its Motion for a failure to exhaust Tribal remedies require the support of an affidavit or of other admissible evidence. See Reply at 16. Nambe Corp. states that it filed and referenced the R. Vigil Aff. in its Motion. See Reply at 17. Nambe Corp. asserts that World Fuel "has not controverted any of
the rule that would normally require this Court when handling a Section 4 petition (Resp., p. 6) to "proceed summarily to the trial" of contract formation issues in the face of factual disputes bearing on that issue, or to otherwise rule on that issue without a trial if no disputed facts are involved, is not applicable.
Reply at 17 (quoting Response at 6 ).
6. The Hearing.
The Court held a hearing. See Draft Transcript of Motion Hearing at 1:10-11 (December 21, 2018)(Court)("Tr.").
Nambe Corp. stated that National Farmers and Iowa Mutual provide the basis for Nambe Corp.'s motion for dismissal or for a stay. See Tr. at 4:24-5:1 (Rogers). Nambe Corp. stated that the Tenth Circuit interprets these cases to establish an inflexible bar "that prohibits this Court from reaching the merits" of World Fuel's petition. Tr. at 5:1-4 (Rogers). Nambe Corp. stated that the Tenth Circuit repeats the inflexible bar holding in so many cases that "there is really no discretion here in regard to [World Fuel's] duty to exhaust Tribal remedies before asking this Court to look at anything." Tr. at 5:4-11 (Rogers). Nambe Corp. asserts that there is a colorable basis for Tribal jurisdiction, first, because the case's impact is "potentially adverse to the resources of the tribe," given that Nambe Pueblo wholly owns Nambe
Nambe Corp. averred that the fuel sales, the basis of the parties' dispute, "are continuing today, notwithstanding that [Nambe Corp. has] told World Fuel that [their] contract was never approved by the Board." Tr. at 6:3-6 (Rogers). Nambe Corp. argued that whether Board approval was required or what the effect of a lack of Board approval is "needs to go to the Tribal Court." Tr. at 6:6-8 (Roger). Nambe Corp. submitted that Tribal Court jurisdiction clearly exists under federal law, because World Fuel will be the plaintiff in any Nambe Pueblo Tribal Court suit to compel arbitration, and, when a non-Indian plaintiff sues a Tribal entity in Tribal Court, Williams v. Lee clearly establishes jurisdiction, because the dispute arises from the parties' dealings and the Indian party's actions on their reservation. See Tr. at 6:10-20 (Roger). Nambe Corp. asserted that the Tenth Circuit recently reaffirmed Williams v. Lee's rule in Navajo Nation v. Dalley.See Tr. at 6:21-23 (Rogers).
Nambe Corp. contended that Montana's jurisdictional test does not apply, because it applies only where the non-Indian party is the defendant in a suit that a Tribal plaintiff files in Tribal Court, typically arising from something that happened on the reservation. See Tr. at 6:25-7:6 (Rogers). Nambe Corp. averred that, if the Court concludes Montana's test applies, this case also fits Montana's test. See Tr. at 7:6-8 (Rogers). Nambe Corp. contended that, to establish Tribal Court jurisdiction, Nambe Corp. must show that "there is a non-Indian party involved with a Tribal party [in] some kind of dealings on the reservation, [and] the dispute arises from those dealings, and the relief sought has a nexus to the dispute and the activity of the non[-]Indian party on the reservation." Tr. at 7:15-21 (Rogers). Nambe Corp. averred that Atkinson Trading Co., Inc. v. Shirley,
The Court next asked whether both National Farmers and Iowa Mutual involve cases with parallel proceedings in Tribal Court. See Tr. at 8:8-10 (Court). Nambe Corp. responded that parallel Tribal Court proceedings existed for both National Farmers and Iowa Mutual, but that the Tenth Circuit has said there is no requirement of a parallel or prior Tribal Court proceeding to trigger the Tribal remedy exhaustion duty, as United States v. Tsosie,
Nambe Corp. next contended that World Fuel cannot rely on a contract that no
Nambe Corp. next argued that the FAA is unlike the PAA, because the FAA does not make the federal court the exclusive forum to hear arbitration demands. See Tr. at 11:10-14 (Rogers). Nambe Corp. argues that the FAA's § 4 says a party seeking to compel arbitration may file that petition in federal court, but that state and Tribal Courts also hear FAA cases, and that, unlike the PAA, the FAA confers on the court no independent basis for federal jurisdiction. See Tr. at 12:1-11 (Rogers). Nambe Corp. argued that El Paso, on which World Fuel relies, reiterates the normal rule of exhaustion, and carves out a narrow exception for the PAA, which converts state claims to federal ones and allows for removal to federal court, expressing a clear congressional preference for a federal forum. See Tr. at 13:3-19 (Rogers). Nambe Corp. argued that none of the cases on which World Fuel relies exclude from the scope of the Tribal exhaustion rule situations where there is an underlying dispute whether the contract containing the arbitration clause ever bound the party resisting arbitration and that the Nambe Tribal Court must determine the contract's binding nature. See Tr. at 14:13-19 (Rogers). Nambe Corp. argued, furthermore, that, in the cases on which World Fuel relies, the arbitration clauses at issue committed the gateway issues of the contract's validity to the arbitrator, whereas the clause at issue here does not do that. See Tr. at 14:20-15:2 (Rogers).
Nambe Corp. contended that the Nambe Pueblo Tribal Court should decide all the factual and legal issues here, because their resolution requires Federal Charter interpretation. See Tr. at 15:13-18 (Rogers). Nambe Corp. stated that federal courts have a duty to act when confronted with federal causes of action, but the Tribal exhaustion doctrine creates a non-jurisdictional exception to that duty. See 16:3-9 (Rogers). Nambe Corp. also argued that there is no reason to believe that requiring Tribal exhaustion will unduly deprive World Fuel of a speedy remedy and that World Fuel elected to file in federal court before exhausting Tribal remedies in the first instance. See 16:17-17:3 (Rogers). Nambe Corp. contended that, if the Nambe Pueblo Tribal Court correctly determines that it has jurisdiction, res judicata will bar relitigation of issues it resolves. See Tr. at 17:3-9 (Rogers). Nambe Corp. also contends that attacks on the Nambe Pueblo Tribal Court's competence do not excuse World Fuel from the Tribal exhaustion requirement. See Tr. at 17:9-13 (Rogers).
The Court asked Nambe Corp. to tell it about the Nambe Pueblo Tribal Court and to what the Court will be deferring, if it dismisses or stays the proceedings. See Tr. at 17:19-21 (Court). Nambe Corp. responded that the Nambe Pueblo Tribal Court's judge was a barred attorney in New Mexico before her license lapsed, that she is law-trained, and that she has many years of experience. See Tr. at 17:22-25 (Rogers). Nambe Corp. stated that the Nambe Pueblo Tribal Court has rules of procedure, and that it borrows from state law where Tribal law does not apply, and that
The Court next asked about the pending petition for certiorari in Harvey v. Ute Indian Tribe of the Uintah & Ouray Reservation, which was fully briefed and distributed for the January 4, 2019, conference and presents two questions: (i) whether the Tribal exhaustion doctrine which requires federal courts to stay cases challenging Tribal jurisdiction until the parties have exhausted parallel Tribal Court proceedings applies to state courts as well, and (ii) whether the Tribal exhaustion doctrine requires that non-Tribal courts yield to Tribal Courts when the parties have not invoked the Tribal Courts' jurisdiction. See Tr. at 18:14-19:4 (Court). The Court stated that "it appears that federal courts are split regarding whether the Tribal exhaustion doctrine applies in the absence of parallel Tribal Court proceedings." Tr. at 19:5-8 (Court). The Court asked whether United States v. Tsosie suggests that a non-Tribal court may still consider the absence of a parallel Tribal proceeding as a factor in determining whether the Tribal exhaustion doctrine should apply. See Tr. at 19:13-16 (Court). Nambe Corp. responded that non-Tribal courts may not consider as a factor the absence of a parallel Tribal proceeding. See Tr. at 19:19-20:2 (Rogers).
The Court asked whether, if the Tribal exhaustion doctrine is analogous to an abstention doctrine, the Court should abstain from considering a case only when there is a parallel proceeding to which the Court may abstain. See Tr. at 20:9-20 (Court). Nambe Corp. responded that, although Tribal exhaustion is a form of abstention, it is a special form that the Supreme Court and the Tenth Circuit created, in the Tribal exhaustion context, and does not require a parallel proceeding. See Tr. at 20:23-21:2 (Rogers). The Court next asked whether the Motion is a 12(b)(1) or a 12(b)(6) motion. See Tr. at 22:7-9 (Court). Nambe Corp. responded that "a lot of people are struggling with that question" and that it is "sort of neither." Tr. at 22:10-13 (Rogers). Nambe Corp. contended that the Motion is akin to a 12(b)(1), but that it is not a jurisdictional motion, and that it is akin to a 12(b)(6), but it is not an attack on the Complaint's merits. See 22:15-18 (Rogers). Nambe Corp. averred that, in the District of New Mexico, parties "file affidavits like we did to show the predicate facts that are necessary to invoke the doctrine...." Tr. at 22:19-21 (Rogers). Nambe Corp. stated that the Tribal exhaustion requirement is not jurisdictional, but is a unique, non-waivable, Supreme-Court-established duty which does not require a parallel Tribal Court proceeding to apply. See Tr. at 23:6-14 (Rogers). Nambe Corp. states that the Tribal exhaustion doctrine falls under neither rule 12(b)(1) nor rule 12(b)(6), and that it "just says notwithstanding" the validity of the pleading in any other context "there is a duty to exhaust Tribal remedies." Tr. at 23:21-24:1 (Rogers).
World Fuel began by averring that the Tribal exhaustion doctrine is the sole basis for Nambe Corp.'s Motion, and that World Fuel's Complaint is validly pled. See Tr. at 25:1-4 (Zaron). World Fuel alleged that the Agreement is valid, Nambe Corp. breached the arbitration provision's terms, and the conditions precedent for arbitration have been satisfied. See Tr. at 25:6-9 (Zaron). World Fuel argued that the Court may not consider the R. Vigil Aff. unless Nambe Corp.'s Motion is jurisdictional, and that, because it is not jurisdictional,
World Fuel alleged that, on page 12, the Federal Charter states that the president signs and approves of all contracts and instruments on behalf of Nambe Corp., except for those expressly delegated to the chief executive officer after the Board's authorization. See Tr. at 27:14-22 (Zaron). World Fuel contended, accordingly, that there is no colorable claim for jurisdiction, because, if the Nambe Corp. president had authority to sign the contract, the contract is valid, and this Court "would have jurisdiction to decide whether or not this matter should go to arbitration." Tr. at 27:22-28:5 (Zaron). World Fuel argued that there is no dispute as to the contract's validity and "that's really the basis for which [Nambe Corp. is] seeking exhaustion...." Tr. at 28:23-25 (Zaron). The Court examined the Federal Charter and stated that it did not appear complete, noting its inconsistent pagination, and stated that "[i]t seems to raise more questions than it does answers."
World Fuel contended that the Tribal Courts do not have jurisdiction to consider an action under the FAA's § 4, because "there is exclusive jurisdiction in this Court to consider actions under section 4." Tr. at 30:4-8 (Zaron). World Fuel argued that, while state courts consider FAA §§ 2 and 3 arbitration claims, exclusively federal courts consider § 4 claims. See Tr. at 30-20-22 (Zaron). World Fuel argued that § 4 sets forth "specific procedures that are governed by the Federal Rules of Civil Procedure that specifically provide for a speedy and efficient resolution." Tr. at 31:8-11 (Zaron). World Fuel argued that, although they could seek to compel arbitration
World Fuel next argued that, if the Court dismisses this case, World Fuel would be the plaintiff in the Nambe Pueblo Tribal Court and would have to file a motion to dismiss World Fuel's own Complaint, because "we think that there is no colorable basis for jurisdiction under this section of the FAA in Tribal Court...." Tr. at 33:7-16 (Zaron). World Fuel argued that, in the administrative context, Supreme Court caselaw suggests that arbitration's goals trump the practice of administrative remedy exhaustion, despite the states' strong interest in protecting regulations and ordinances. See Tr. at 34:24-35:10 (Zaron). World Fuel argued that, in El Paso, the Supreme Court determined that the PAA's speed and efficiency goals were more important than Tribal exhaustion, and that the FAA has "similar language in terms of the need for speed and efficiency...." Tr. at 35:14-36:8 (Zaron). World Fuel then stated that the Court has diversity jurisdiction over the case. See Tr. at 37:2-15 (Zaron).
World Fuel then argued that, based on Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation,
World Fuel argued that, where there is a factual dispute, "the proper mechanism is to go to trial on the factual issues in a summary fashion." Tr. at 39:14-16 (Zaron). World Fuel alleged that the dispute involves about two million dollars in allegedly unpaid excise taxes which World Fuel contends that Nambe Corp. owes World Fuel. See Tr. at 40:10-13 (Zaron). World Fuel averred that, in Comanche Indian Tribe of Okla. v. 49 L.L.C.,
World Fuel next turned to the issue of parallel proceedings, and argued that the lack of a Tribal proceeding "is a factor in making a decision whether or not you should dismiss this and say that exhaustion applies here." Tr. at 42:3-6 (Zaron). World Fuel argued that, because a § 4 arbitration claim may not be filed in Tribal Court, there can be no parallel proceeding, and that the appropriate course of action "would be to deny the motion to dismiss and require the Nambe corporation to file an answer, and then proceed to a summary trial of the issue...." Tr. at 42:12-42:22 (Zaron).
Regarding the R. Vigil Aff.'s improper consideration of facts outside the Complaint, Nambe Corp. stated that, while some of Nambe Corp.'s responses regarding the inapplicability of Rent-A-Center, W., Inc. v. Jackson,
The Court stated that it would not rule definitively at the hearing, but that the Court's impression "is this is a very strong exhaustion requirement...." Tr. at 54:15-55:1 (Court). The Court stated that it is concerned about trying to avoid the Tribal exhaustion doctrine without firmer footing. See Tr. at 55:8-10 (Court). The Court indicated that it would attempt to get an opinion to the parties after the first of the year. See Tr. at 56:1-3 (Court).
LAW REGARDING RULE 12(b)(1) MOTIONS TO DISMISS.
"Federal courts are courts of limited jurisdiction; they are empowered to hear only those cases authorized and defined in the Constitution which have been entrusted to them under a jurisdictional grant by Congress." Henry v. Office of Thrift Supervision,
On a facial attack, a plaintiff is afforded safeguards similar to those provided in opposing a rule 12(b)(6) motion: the court must consider the complaint's allegations to be true. See Ruiz v. McDonnell,299 F.3d at 1180 ; Williamson v. Tucker,, 412 (5th Cir. 1981). But when the attack is aimed at the jurisdictional facts themselves, a district court may not presume the truthfulness 645 F.2d 404 of those allegations. A court has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1). In such instances, a court's reference to evidence outside the pleadings does not convert the motion to a Rule 56 [summary-judgment] motion.
Alto Eldorado Partners v. City of Santa Fe, No. CIV 08-0175 JB/ACT,
[T]he trial court may proceed as it never could under 12(b)(6) or Fed. R. Civ. P. 56. Because at issue in a factual 12(b)(1) motion is the trial court's jurisdiction -- its very power to hear the case -- there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.
Williamson v. Tucker,
When making a rule 12(b)(1) motion, a party may go beyond the complaint's allegations to challenge the facts upon which jurisdiction depends, and may do so by relying on affidavits or other evidence properly before the court. See New Mexicans for Bill Richardson v. Gonzales,
LAW REGARDING MOTIONS TO DISMISS UNDER RULE 12(b)(6)
Rule 12(b)(6) authorizes a court to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "The nature of a Rule 12(b)(6) motion tests the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true." Mobley v. McCormick,
A complaint's sufficiency is a question of law, and, when considering a rule 12(b)(6) motion, a court must accept as true all well-pled factual allegations in the complaint, view those allegations in the light most favorable to the non-moving party, and draw all reasonable inferences in the plaintiff's favor. See Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
A complaint need not set forth detailed factual allegations, yet a "pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action" is insufficient. Iqbal,
To survive a motion to dismiss, a plaintiff's complaint must contain sufficient facts that, if assumed to be true, state a claim to relief that is plausible on its face. See Bell Atl. Corp. v. Twombly,
"[P]lausibility" in this context must refer to the scope of the allegations in a complaint: if they are so general that they encompass a wide swath of conduct, much of it innocent, then the plaintiffs "have not nudged their claims across the line from conceivable to plausible." The allegations must be enough that, if assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief.
Robbins v. Oklahoma,
Generally, the sufficiency of a complaint must rest on its contents alone. See Casanova v. Ulibarri,
In Gee v. Pacheco,
The Court has previously ruled that, when a plaintiff references and summarizes the defendants' statements in a complaint, the Court cannot rely on documents containing those statements that the defendants attach in their briefing. See Mocek v. City of Albuquerque, No. CIV 11-1009 JB/KBM,
On the other hand, in a securities class action and as an exception to the general rule, the Court has concluded that the Court may consider a defendant's operating certification, to which plaintiffs refer in their complaint, and which was central to whether the plaintiffs adequately alleged a loss, when ruling on the defendant's motion to dismiss without converting the motion into one for summary judgment. See Genesee Cty. Emps.' Ret. Sys. v. Thornburg Mortg. Secs. Tr. 2006-3,
LAW REGARDING TRIBAL EXHAUSTION DOCTRINE
The Supreme Court requires a party to exhaust Tribal Court remedies even in cases where a federal court has jurisdiction concurrent with a Tribal Court and even where non-Indian parties are involved. See National Farmers,
The exhaustion doctrine's second purpose is that "the orderly administration of justice in the federal court will be served by allowing a full record to be developed in the Tribal Court before either the merits or any question concerning appropriate relief is addressed." National Farmers,
There are three exceptions to the Tribal exhaustion doctrine's operation. See National Farmers,
In Juidice , the state court issued a commitment order, and the defendant was arrested after he failed to attend a deposition, appear for a hearing, and pay a fine. Rather than appeal his case in state court, he filed a42 U.S.C. § 1983 claim in district court. Upon review, the Supreme Court held that a federal court must abstain from making a determination during a state proceeding based on the principle of comity unless the proceeding was motivated by a desire to harass or was conducted in bad faith. The Court looked to the proceeding and the court overseeing that proceeding to make its determination. The defendant there alleged bad faith by the plaintiffs, which the Court explicitly held insufficient to trigger the exception.
Grand Canyon Skywalk Dev., LLC v. 'Sa' Nyu Wa Inc.,
The second exception to the Tribal exhaustion doctrine is "where the action is patently violative of express jurisdictional prohibitions." National Farmers,
The Tribal exhaustion doctrine's third exception is "where exhaustion would be futile because of the lack of an adequate opportunity to challenge the court's jurisdiction." National Farmers,
The Tenth Circuit held in Mustang Prod. Co. v. Harrison,
It is difficult to conceive how tribal self-government and self-determination will be advanced by the exercise of federal court jurisdiction over a matter involving the Navajo Nation, a Navajo commercial entity, and a contract between these Navajo parties and a non-Indian defendant to construct a Navajo-owned building located on Navajo land within the boundary of the Navajo Nation. This is especially true because the parties disagree about the applicability of Navajo law and custom....
....
Moreover, if the Navajo Tribal Court reached the merits of the action, a federal court would have the benefit of the Navajo Tribal Court's prior interpretation of Navajo law and customs that may apply to this case.
Navajo Nation v. Intermountain Steel Bldgs., Inc.,
LAW REGARDING TRIBAL SOVEREIGN IMMUNITY
The Supreme Court has long held that an Indian Tribe has the exclusive power to
A tribe's right to define its own membership for tribal purposes has long been recognized as central to its existence as an independent political community. Given the often vast gulf between tribal traditions and those with which federal courts are more intimately familiar, the judiciary should not rush to create causes of action that would intrude on these delicate matters.
1. Indian Self-Determination Act,
Congress enacted the ISDA, as well as the Indian Civil Rights Act,
the establishment of a meaningful Indian self-determination policy which will permit an orderly transition from the Federal domination of programs for, and services to, Indians to effective and meaningful participation by the Indian people in the planning, conduct, and administration of those programs and services. In accordance with this policy, the United States is committed to supporting and assisting Indian tribes in the development of strong and stable tribal governments, capable of administering quality programs and developing the economies of their respective communities.
25 U.S.C. § 450a(b). The courts have so interpreted ISDA. See, e.g., New Mexico v. Mescalero Apache Tribe,
The ISDA does not contain any express federal right of action against Tribes or Tribal officials concerning the Tribes' implementation of contracts with the United States to operate contracted federal programs. In a few specified instances, ISDA authorizes federal litigation. See Demontiney v. United States,
In Demontiney v. United States, the Ninth Circuit held that a Tribe was immune from a suit brought against it by a Tribal member seeking amounts that the member claimed were due him as a subcontractor to the Tribe for work he performed under an ISDA contract between the Tribe and the Bureau of Indian Affairs (BIA). The Ninth Circuit concluded that "[t]here is a strong presumption against waiver of tribal sovereign immunity,"
Courts examine several factors "in determining whether a cause of action is implicit in a statute not expressly providing one." Santa Clara Pueblo v. Martinez,
First, is the plaintiff one of the class for whose especial benefit the statute was enacted -- that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one traditionally relegated to state or tribal law, in an area basically the concern of the States or tribes, so that it would be inappropriate to infer a cause of action based solely on federal law?
Cort v. Ash,
Since Cort [v. Ash ], the question of Congressional intent has become the main concern and the other Cort [v. Ash ] factors have diminished in significance. The question of implication of private remedies is now viewed as a strict question of "statutory construction" to determine "whether Congress intended to create the private right of action asserted." Touche Ross & Co. v. Redington, 442 U.S. [at] 568,.... 99 S.Ct. 2479
[I]n Touche Ross [& Co. v. Redington ], the Supreme Court employed the familiar maxim "expressio unius est exclusio alterius" to find no implied liability where a statutory scheme contained provisions providing express liability elsewhere. Thus, there has been a distinct shift away from the full application of the Cort [v. Ash ] factors to a narrower exercise of statutory construction in order to glean Congressional intent.
Rawson v. Sears, Roebuck & Co.,
2. State Court Jurisdiction.
In Worcester v. Georgia,
LAW REGARDING DIVERSITY JURISDICTION AND ARBITRATION
"Subject-matter jurisdiction under
1. Diversity of Citizenship.
For diversity jurisdiction purposes, a person's domicile determines citizenship. See Crowley v. Glaze,
2. Amount in Controversy.
The statutory amount-in-controversy requirement, which presently stands at $ 75,000.00, must be satisfied as between a single plaintiff and a single defendant for a federal district court to have original jurisdiction over the dispute; "a plaintiff cannot aggregate independent claims against multiple defendants to satisfy the amount-in-controversy requirement," nor can multiple plaintiffs aggregate their claims against a single defendant to exceed the threshold. Martinez v. Martinez, No. CIV 09-0281,
Satisfaction of the amount-in-controversy requirement must be established by a preponderance of the evidence. See McPhail v. Deere & Co.,
The Supreme Court recently clarified that a defendant seeking removal to federal court need only include in the notice of removal a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. See Dart Cherokee Basin Operating Co. v. Owens,
3. Diversity of Citizenship in Motions to Compel Arbitration.
In the context of FAA motions to compel arbitration, parties often invoke a federal court's diversity jurisdiction, because the FAA does not by itself create federal question jurisdiction. "[T]he Act does nothing, being 'something of an anomaly in the field of federal-court jurisdiction' in bestowing no federal jurisdiction but rather requiring an independent jurisdictional basis." Hall St. Assocs., L.L.C. v. Mattel, Inc.,
A common issue in the arbitration context is the situation in which not all of the parties to a state court action are present in a federal court action to compel arbitration of the state lawsuit. Such a situation implicates the Court's diversity jurisdiction.
The Supreme Court has held that "a federal court may 'look through' an [FAA motion to compel arbitration] to determine whether it is predicated on an action that 'arises under' federal law." Vaden v. Discover Bank,
ignores the underlying facts and the Supreme Court's decision in Moses H. Cone . In that case, the Supreme Court stated that the independent basis of federal jurisdiction was diversity of citizenship. But it did not discuss that threshold issue, despite noting the presence of a non-diverse party who made the parallel state court action non-removable.460 U.S. at 7 & n. 4,103 S.Ct. 927
....
Even if no party challenged diversity jurisdiction, that the Supreme Court did not even discuss the issue is telling because in other cases it has noted that federal courts are obligated to consider lack of subject matter jurisdiction sua sponte.
Rutherford,
The Court also notes that multiple judges within the District of New Mexico have ruled that a court should not "look through" to the parties in the state court action in a diversity case. "The Eighth Circuit held that non-diverse nursing home administrators who were named as defendants in the underlying state tort action were not necessary and indispensable parties in the nursing home's federal court action to compel arbitration, and thus their citizenship did not destroy diversity jurisdiction." THI of N.M. at Hobbs Ctr., LLC v. Patton,
4. Amount in Controversy in Motions to Compel Arbitration.
Unlike determining the citizenship of the parties, a court may "look through" to a possible arbitration award when evaluating the amount in controversy. The Tenth Circuit has held that "[t]his court ... finds persuasive the holding of other circuits that 'look through to the possible award resulting from the desired arbitration' to determine the amount in controversy." Woodmen of the World Life Ins. Soc'y v. Manganaro,
LAW REGARDING ARBITRATION AGREEMENTS
An arbitration agreement is a contract or a provision in a contract whereby parties agree to "settle by arbitration a controversy ... arising out of such contract or transaction."
1. Federal Law.
"The FAA reflects the fundamental principle that arbitration is a matter of contract." Rent-A-Center, W., Inc. v. Jackson,
Under § 4 of the FAA, a party "aggrieved" by another party's failure "to arbitrate under a written agreement for arbitration" may petition a federal court "for an order directing that such arbitration proceed in the manner provided for in such agreement."
Upon a finding that a matter is referable to arbitration, the FAA also indicates that the district court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement."
The Tenth Circuit has cautioned that, when one of the parties petitions the court to stay an action pending compulsory arbitration,
2. New Mexico Law.
New Mexico's Uniform Arbitration Act,
Similar to the federal courts' interpretation of the FAA, New Mexico courts have viewed the NMUAA as an expression of a public policy favoring arbitration. See United Tech. & Res., Inc. v. Dar Al Islam,
When a broad and general arbitration clause is used, as in this case, the court should be very reluctant to interpose itself between the parties and the arbitration upon which they have agreed. When the parties agree to arbitrate any potential claims or disputes arising out of their relationships by contract or otherwise, the arbitration agreement will be given broad interpretation unless the parties themselves limit arbitration to specific areas or matters. Barring such limiting language, the courts only decide the threshold question of whether there is an agreement to arbitrate. If so, the court should order arbitration. If not, arbitration should be refused.
K.L. House Constr. Co. v. City of Albuquerque,
3. Public Policy Favoring Enforcement of an Arbitration Agreement.
"There is a strong federal policy encouraging the expeditious and inexpensive resolution of disputes through arbitration." Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
4. A Valid Arbitration Agreement's Existence.
The Supreme Court has noted that "[a]rbitration is simply a matter of contract between parties; it is a way to resolve those disputes -- but only those disputes -- that the parties have agreed to submit to arbitration." First Options of Chi., Inc. v. Kaplan,
While "the presumption in favor of arbitration is properly applied in interpreting the scope of an arbitration agreement, ... this presumption disappears when the parties dispute the existence of a valid arbitration agreement." Dumais v. Am. Golf Corp.,
5. Consideration and Illusory Arbitration Agreements.
"To determine whether the agreement to arbitrate is valid, courts look to general state contract law, with the caveat that state laws that are specifically hostile to arbitration agreements are preempted by the FAA." Salazar v. Citadel Commc'ns Corp.,
"Consideration consists of a promise to do something that a party is under no legal obligation to do or to forbear from doing something he has a legal right to do." Talbott v. Roswell Hosp. Corp.,
Several cases arising in New Mexico provide examples of illusory agreements to arbitrate. For instance, in Dumais v. American Golf Corp.,
Additionally, in Heye v. American Golf Corp., the Court of Appeals of New Mexico considered a question similar to the one that the federal court addressed in Dumais v. American Golf Corp. See Heye v. Am. Golf Corp.,
Next, in Piano v. Premier Distributing Co., the plaintiff worked as an administrative assistant for the defendant on an at-will employment basis. See
In Lumuenemo v. Citigroup, Inc., No. 08-cv-0830,
Plaintiff cites Piano v. Premier Distributing Co.,, 60, 137 N.M. 57 (N.M. Ct. App. 2004), as support for her argument. However, the holding in Piano turned on the fact that the plaintiff was an at-will employee prior to signing the arbitration agreement, and therefore, the implied promise of continued at-will employment did not constitute consideration. 107 P.3d 11 Id. at 60 []. Piano is distinguishable from the facts before this Court. Here, Defendant's initial hiring of Plaintiff was conditioned on her consent to the terms of the Arbitration Agreement; thus, there was consideration in the form of employment. Further, Defendant does need Plaintiff's approval -- Plaintiff had up to 30 days to contest any changes to the Arbitration Agreement and/or to decide whether to continue employment based on such changes. Moreover, the holding in Piano is not binding on this court. 107 P.3d 11
Lumuenemo v. Citigroup, Inc.,
Further, in Salazar v. Citadel Communications Corp., the Supreme Court of New Mexico held that, because Citadel Communications reserved the right to modify any provision of its employee handbook at any time, including the arbitration agreement contained therein, the agreement to arbitrate was "an unenforceable illusory promise." Salazar v. Citadel Commc'ns Corp.,
LAW REGARDING DIVERSITY JURISDICTION AND ERIE
Under Erie Railroad Co. v. Tompkins,
When a court's jurisdiction rests on diversity of citizenship under
"In tort actions, New Mexico courts follow the doctrine of lex loci delicti commissi and apply the law of the place where the wrong took place." Mosley v. Titus,
LAW REGARDING ABSTENTION
In Colorado River Water Conservation District v. United States,
In applying the factors set forth in Colorado River, the Supreme Court in Moses H. Cone Memorial Hospital v. Mercury Construction Corp. stated: "No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counseling against that exercise is required."
This factor, as with the other Colorado River factors, is to be applied in a pragmatic, flexible manner with a view to the realities of the case at hand. Thus, priority should not be measured exclusively by which complaint was filed first, but rather in terms of how much progress has been made in the two actions. Colorado River illustrates this point well. There, the federal suit was actually filed first. Nevertheless, we pointed out as a factor favoring dismissal "the apparent absence of any proceedings in the District Court, other than the filing of the complaint, prior to the motion to dismiss."
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,
District courts may only stay or dismiss such actions when "extraordinary circumstances," as established by a weighing of the factors laid out in Colorado River, warrant such action. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,
Brillhart abstention is applicable "when a district court is considering abstaining from exercising jurisdiction over a declaratory judgement action. In contrast, when actions involve coercive relief the trial court must apply the standards enunciated by the Court in Colorado River." [Defendant] concedes that [Plaintiff] has requested both declaratory and injunctive relief, but argues that Brillhart is nevertheless applicable because [Plaintiffs] claims for coercive relief are merely "ancillary" to its request for declaratory relief. This Circuit has rejected similar arguments on at least two occasions. When a party seeks both injunctive and declaratory relief, the appropriateness of abstention must be assessed according to the doctrine ofColorado River; the only potential exception to this general rule arises when a party's request for injunctive relief is either frivolous or is made solely to avoid application of the Brillhart standard.
Black Sea Inv., Ltd. v. United Heritage Corp.,
In Moses H. Cone Memorial Hospital v. Mercury Construction Corp., the defendant moved for an order compelling arbitration under
[I]t is clear that there was no showing of the requisite exceptional circumstances to justify the District Court's stay. The Hospital concedes that the first two factors mentioned in Colorado River are not present here. There was no assumption by either court of jurisdiction over any res or property, nor is there any contention that the federal forum was any less convenient to the parties than the state forum. The remaining factors -- avoidance of piecemeal litigation, and the order in which jurisdiction was obtained by the concurrent forums -- far from supporting the stay, actually counsel against it.
In many cases, no doubt, a § 3 stay is quite adequate to protect the right to arbitration. But in a case such as this, where the party opposing arbitration is the one from whom payment or performance is sought, a stay of litigation alone is not enough. It leaves the recalcitrant party free to sit and do nothing -- neither to litigate nor to arbitrate. If the state court stayed litigation pending arbitration but declined to compel the Hospital to arbitrate, Mercury would have no sure way to proceed with its claims except to return to federal court to obtain a § 4 order -- a pointless and wasteful burden on the supposedly summary and speedy procedures prescribed by the Arbitration Act.
In Nationstar Mortgage, LLC v. Knox,
We are fully cognizant of the "national policy in favor of arbitration." Brown,. For reasons of "[w]ise judicial administration", Colo. River, 462 F.3d at 396, 424 U.S. at 817, however, abstention was not improper. As discussed, this diversity action is governed by state law (except, of course, the arbitrability issue); the state court is subject to, and can likewise apply, the FAA; and the merits of the parties' dispute have not been reached in either the state or the federal action. 96 S.Ct. 1236
Nationstar Mortgage, LLC v. Knox,
In Garber v. Sir Speedy, Inc.,
Because the Colorado River/ Moses Cone factors should be weighed in favor of exercising jurisdiction, a mechanical application of the factors would counsel against a stay. However, further analysis is required in light of the unique factual circumstances of this case.... Absent a stay in this case, the driving policy of the Arbitration Act would be circumvented. The Court takes judicial notice of the fact an apparently arbitrable dispute has involved three Texas trial courts, one California trial court, one Texas appeals court, one California appeals court, and one federal district court, all without final resolution of the dispute between the parties. As such, a stay in this case is appropriate to effectuate the policies underlying the Arbitration Act.
In addition, a stay in this case is appropriate to discourage forum shopping. Litigants should be discouraged from filing suits in courts with concurrent jurisdiction for the purpose of avoiding adverse rulings in the court in which the action was originally filed. This factor has been recognized by other courts in the context of deciding whether to stay a case pending concurrent state court litigation. See American Intern. Underwriters v. Continental Ins.,(9th Cir. 1988). As the action filed in Dallas County was an apparent attempt to circumvent the adverse ruling of the Nacogdoches court, the Garbers should not be rewarded for forum shopping. 843 F.2d 1253
ANALYSIS
The Court concludes that the parties have established diversity jurisdiction, that tribal exhaustion should be construed as a rule 12(b)(6) motion to dismiss, that -- under the current state of the law -- none of the exceptions to the Tribal exhaustion doctrine apply, and that World Fuel must first exhaust its Tribal remedies in the Nambe Pueblo Tribal Court and the Southwest InterTribal Court of Appeals. Because the Nambe Pueblo Tribal Court
I. THE PARTIES HAVE ESTABLISHED DIVERSITY JURISDICTION .
World Fuel invokes federal diversity jurisdiction pursuant to
Here, it is undisputed that the parties are completely diverse. The parties agree that World Fuel is a corporation duly organized and existing under the laws of the State of Texas, with its principal place of business in the State of Florida. See Complaint ¶ 1, at 1. Nambe Corp. is a federally chartered corporation organized under the laws of the United States, pursuant to
At the hearing, World Fuel stated that the Court has diversity jurisdiction over the case, and Nambe Corp. did not dispute World Fuel's characterization of the Court's jurisdiction. See Tr. at 37:2-15 (Zaron). The Aug. 8, 2018 Letter, incorporated by reference into the Complaint, states:
On July 27, 2018, World Fuel Services, Inc. d/b/a Alta Fuels ("Alta") sent an invoice to Nambe Pueblo Development Corporation ("Nambe") for $ 1,929,486.18 based on unpaid taxes owing from Nambe to Alta under the Motor Fuel Supply Agreement (the "Agreement") by and between Alta and Nambe dated May 17, 2017. Nambe did not pay Alta these amounts.
Aug. 8, 2018 Letter at 1. The Court concludes that, because World Fuel is a citizen of Texas and Florida, and Nambe Corp. is a citizen of New Mexico, and the amount in controversy, $ 1,929,486.18, exceeds $ 75,000.00, that the requirements for diversity jurisdiction under
II. THE COURT CONSTRUES THE MOTION AS A MOTION TO DISMISS UNDER 12(b)(6) .
The Court first addresses the question whether to construe a motion to dismiss for failure to exhaust Tribal remedies as a 12(b)(1) motion, a 12(b)(6) motion, or as neither. A rule 12(b)(1) motion is a motion to dismiss for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). In the Tenth Circuit, 12(b)(1) motions generally take one of two forms: (i) a facial attack on the sufficiency of the complaint's allegations as to subject matter jurisdiction, or (ii) a challenge to the facts on which subject matter jurisdiction is based. See Ruiz v. McDonnell,
Rule 12(b)(1) is an improper vehicle for considering application of the Tribal exhaustion doctrine. In Iowa Mutual, the Supreme Court "reversed the Ninth Circuit's dismissal for lack of subject matter jurisdiction ...," holding instead that the Tribal Courts should first consider the case as a matter of comity. See Brown v. Washoe Hous. Auth.,
The cases on exhaustion provide little guidance as to whether motions to dismiss for failure to exhaust may be treated as 12(b)(6) motions.
The Court concludes that rule 12(b)(6) provides the appropriate standard regarding which documents a Court may review in ruling on a motion to dismiss for failure to exhaust Tribal remedies, because Tribal exhaustion is non-waivable,
III. NAMBE CORP. HAS WAIVED ITS SOVEREIGN IMMUNITY.
When a party raises the defenses of waiver of sovereign immunity and Tribal exhaustion in the same proceeding, the majority of Courts of Appeals generally address waiver of sovereign immunity before Tribal exhaustion. See, e.g., Thlopthlocco Tribal Town v. Stidham,
United States courts have acknowledged Tribal governments' sovereign immunity. See United States v. U.S. Fid. & Guar. Co.,
The Tenth Circuit has stated that "Tribal sovereign immunity may extend to subdivisions of a tribe, including those engaged in economic activities, provided that the relationship between the tribe and the entity is sufficiently close to properly permit the entity to share in the tribe's immunity." Breakthrough Mgmt. Group, Inc. v. Chukchansi Gold Casino and Resort,
At this time there is no need to define the precise boundaries of the appropriate test to determine if a tribe's economic entity qualifies as a subordinate economic entity entitled to share in a tribe's immunity. In this case, we conclude that the following factors are helpful in informing our inquiry: (1) the method of creation of the economic entities; (2) their purpose; (3) their structure, ownership, and management, including the amount of control the tribe has over the entities; (4) the tribe's intent with respect to the sharing of its sovereign immunity; and (5) the financial relationship between the tribe and the entities.
Breakthrough,
Those policies include protection of the tribe's monies, see [California v. ] Cabazon Band of Mission Indians , 480 U.S. [202,] 218-19,[ 107 S.Ct. 1083 (1987) ], ... as well as "preservation of tribal cultural autonomy, preservation of tribal self-determination, and promotion of commercial dealings between Indians and non-Indians," Dixon [v. Picopa Constr. Co., 94 L.Ed.2d 244 , 258,] 772 P.2d [1104,] 1111 [ (1989) ]. 160 Ariz. 251
Breakthrough,
The first factor, Nambe Corp.'s method of creation, weighs against the conclusion
The second factor, Nambe Corp.'s purpose, weighs for and against immunity, because Nambe Corp., although created for Nambe Pueblo's financial benefit, is restricted in the functions it performs. On one hand, revenue from Nambe Corp. "clearly benefits the Tribe," Breakthrough,
The third factor, Nambe Corp.'s structure, ownership, and management, weighs for and against immunity. Whereas in Breakthrough, the Tenth Circuit concluded that the third factor weighed in part in favor of immunity because all members of the corporate entity's board were also sitting members of the Tribal Council, here, the Board consists of seven persons, and "[n]o more than two permanent or elected members of the Nambe Pueblo Tribal Council shall be eligible to serve on the Board concurrently." Federal Charter § 8.01, at 6. Unlike in Breakthrough, the Tribal Council is not identical to the Board. The Court notes, however, that the Nambe Pueblo Tribal Council appoints all members of the Board. See Federal Charter § 8.01, at 6.
The fourth, fifth, and sixth factors weigh in favor of immunity. The fourth factor weighs in favor of immunity, because Nambe Pueblo "clearly intended for" Nambe Corp. "to have tribal sovereign immunity." Breakthrough,
Nothing in this Agreement is or shall be deemed to be a waiver of the Pueblo's sovereign immunity from suit, provided however, that Customer [Nambe Corp.] agrees to waive its immunity protection for the limited and sole purposes of compelling arbitration or enforcing any binding arbitration decision rendered pursuant to the terms and conditions of this Agreement by any court having jurisdiction over the parties and the subject matter and for purposes of any such arbitration proceedings.
Agreement ¶ 18(b), at 8. See Complaint ¶ 9, at 2-3. The fifth factor, the financial relationship between Nambe Pueblo and Nambe Corp., weighs in favor of immunity, because Nambe Pueblo wholly owns Nambe Corp. The sixth factor, "the overall
Considering these factors, Nambe Corp. is so closely related to Nambe Pueblo that it should share in Nambe Pueblo's sovereign immunity. World Fuel contends, however, that Nambe Corp. waived its sovereign immunity. Response at 4. World Fuel contends, specifically, that the Federal Charter waives Nambe Corp.'s immunity "independently of the contractual waiver of sovereign immunity in the Agreement." Response at 4 n.1 ("The narrower waiver in the Agreement does not negate the general waiver of immunity in the sue and be sued clause of Nambe's corporate charter -- each waiver operates independently."). The Federal Charter contains a "sue and be sued" clause, providing that Nambe Corp. is expressly authorized and empowered "[t]o sue and be sued in its Corporate name in courts of competent jurisdiction within the United States." Complaint ¶ 10, at 3 (quoting Federal Charter § 3.01(b), at 2). The Federal Charter authorizes Nambe Corp. to
sue and be sued in its Corporate name in courts of competent jurisdiction within the United States: Provided , however, that this power does not authorize the levy or execution of any judgment, lien, garnishment or attachment upon any property or income of the Corporation other than corporate property or income specifically mortgaged, pledged or assigned as collateral for particular corporate debts or liabilities.
Federal Charter § 3.01(b), at 2 (emphasis in Federal Charter). The Eighth Circuit recognized a clause permitting a Tribal corporation to sue and be sued in its corporate name "as constituting an express waiver of sovereign immunity." Weeks Constr., Inc. v. Oglala Sioux Hous. Auth.,
IV. NO EXCEPTIONS TO THE TRIBAL EXHAUSTION DOCTRINE'S APPLICABILITY APPLY, AND WORLD FUEL HAS NOT EXHAUSTED ITS TRIBAL REMEDIES.
The Court concludes that, although the Court has subject-matter jurisdiction under
The tribal exhaustion requirement is subject to several exceptions:
(1) where an assertion of tribal jurisdiction is motivated by a desire to harass or is conducted in bad faith; (2) where the Tribal Court action is patently violative of express jurisdictional prohibitions; (3) where exhaustion would be futile because of the lack of an adequate opportunity to challenge the Tribal Court's jurisdiction; (4) where it is plain that no federal grant provides for tribal governance of nonmembers' conduct on land covered by the main rule established in Montana v. United States,, 450 U.S. 544 , 101 S.Ct. 1245 (1981) ; or (5) it is otherwise clear that the Tribal Court lacks jurisdiction so that the exhaustion requirement would serve no purpose other than delay. 67 L.Ed.2d 493
Burrell v. Armijo,
The Nambe Pueblo Tribal Courts have a colorable claim for jurisdiction, because the case involves a non-Indian Plaintiff (World Fuel) that entered into a consensual commercial relationship with an Indian Defendant (Nambe Corp.). See Montana,
None of the exceptions to the tribal exhaustion rule apply. First, the bad-faith exception to the Tribal exhaustion doctrine refers only to the Tribal Court's bad faith. See Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation,
World Fuel contends that, in enacting the FAA, Congress expressed an unmistakable preference for a federal forum -- which application of the Tribal exhaustion doctrine would thwart -- and that, given the guidance in El Paso, the Court should decline to apply Tribal exhaustion doctrine to claims brought under the FAA's § 4. See Response at 1-2, 8. World Fuel argues that the FAA supersedes the Tribal exhaustion doctrine, which is "merely a judicially-created, non-jurisdictional rule." Response at 8. World Fuel argues that the Tribal exhaustion doctrine's purpose is to serve the congressional policy of promoting Tribal self-governance, and that it does not apply where Congress has expressed an "unmistakable preference for a federal forum" or where applying the doctrine would "frustrate a 'congressional policy of immediate access to federal forums.' " Response at 8 (quoting El Paso,
In El Paso, the Supreme Court held that Congress would have disfavored Tribal exhaustion in cases involving the PAA, because "[a]ny generalized sense of comity toward nonfederal courts is obviously displaced by the provisions for preemption and removal from state courts...." El Paso,
This is not to say that the existence of a federal preemption defense in the more usual sense would affect the logic of tribal exhaustion. Under normal circumstances, Tribal Courts, like state courts, can and do decide questions of federal law, and there is no reason to think that questions of federal preemption are any different. SeeSanta Clara Pueblo v. Martinez, , 65 [ 436 U.S. 49 , 98 S.Ct. 1670 ] (1978) (Tribal Courts available to vindicate federal rights). The situation here is the rare one in which statutory provisions for conversion of state claims to federal ones and removal to federal courts express congressional preference for a federal forum. 56 L.Ed.2d 106
El Paso,
Section 2210(n)(3)(A) empowers the chief judge of a district court to appoint a special caseload management panel to oversee cases arising from a nuclear incident. The functions of such panels include case consolidation, § 2210(n)(3)(C)(i) ; setting of priorities, § 2210(n)(3)(C)(ii) ; "promulgat[ion] [of] special rules of court ... to expedite cases or allow more equitable consideration of claims," § 2210(n)(3)(C)(v) ; and implementation of such measures "as will encourage the equitable, prompt, and efficient resolution of claims arising out of the nuclear incident." § 2210(n)(3)(C)(vi).
El Paso,
By contrast, the FAA contains no provisions encouraging consolidation of cases in a federal forum or removal of cases from state to federal courts. See
Other courts to confront the applicability of Tribal exhaustion doctrine to cases involving claims brought under FAA § 4 have found that, despite § 4's language referring to a federal forum, the Tribal exhaustion doctrine applies, unless a National Farmers exception to its applicability
the tribal exhaustion doctrine does not apply because this case does not involve a challenge to the Tribal Court's jurisdiction; rather, this suit seeks simply to compel defendant to pursue his claims through arbitration as provided under § 4 of the FAA and thus, according to Bank One's characterization, raises only questions of federal law that do not involve tribal sovereignty or implicate the tribal exhaustion doctrine.
Bank One, N.A. v. Lewis,
On the contrary, it is manifest to the court that, directly or not, the relief sought by Bank One in this case would undeniably undermine the Tribal Court's authority to determine its jurisdiction. That is because, while the relief demanded by Bank One is an order compelling arbitration, a concomitant goal, or a necessary byproduct of this suit, is to foreclose the Tribal Court from further consideration of defendant's claims for relief. That is, then, in the court's opinion, properly viewed as a challenge to the Tribal Court's jurisdiction which implicates considerations of tribal exhaustion.
World Fuel argues that, by insisting on Tribal exhaustion, Nambe Corp., contrary to Congress' intent in enacting the FAA, "seeks to drag out the litigation regarding the preliminary question of whether to enforce the parties' arbitration agreement in at least two tiers of Tribal Courts before World Fuel may seek enforcement in this Court." Response at 1-2. World Fuel contends that Congress has empowered only federal courts to hear petitions under the FAA's § 4, and that the 2017 contract's arbitration clause contemplates resolving disputes in a non-Tribal forum. See Response at 2. World Fuel contends that arbitration agreements with Tribes and Tribal entities would be meaningless if it were the law "that every time a party and a tribal corporation contractually agree to arbitration, the tribal corporation has a virtual veto power over the contractually-agreed-to forum through invocation of the tribal exhaustion doctrine." Response at 2.
World Fuel contends that the Tribal exhaustion doctrine does not apply where
National Farmers recognized three interests that the Tribal exhaustion rule, properly applied, advances: "(1) furthering congressional policy of supporting tribal self-government; (2) promoting the orderly administration of justice by allowing a full record to be developed in the tribal court; and (3) obtaining the benefit of tribal expertise if further review becomes necessary." Kerr-McGee Corp. v. Farley,
Even if the underlying action did not arise from activities on the reservation, the comity factors still favor exhaustion. First, strong Tribal interests are implicated where the Nambe Travel Center was located on Nambe Pueblo lands, and the Tribe's interest as a sovereign in its corporation's affairs is strong. See Kerr-McGee Corp. v. Farley,
V. THE COURT WILL STAY THE SUIT PENDING EXHAUSTION OF TRIBAL COURT REMEDIES.
The Supreme Court has stated that, "[w]hether the federal action should be dismissed, or merely held in abeyance pending the development of further Tribal Court proceedings, is a question that should be addressed in the first instance by the District Court." National Farmers,
dismissal might mean that [the plaintiff] would later be "barred permanently from asserting his claims in the federal forum by the running of the applicable statute of limitations." Deakins v. Monaghan,, 203 n.7, 484 U.S. 193 , 108 S.Ct. 523 (1988) ; see also 98 L.Ed.2d 529 29 U.S.C. § 2617 (c). Under the circumstances, the district court should have stayed, not dismissed, the federal action pending the exhaustion of tribal remedies. See, e.g., Allstate Indem. Co. v. Stump ,, 1076 (9th Cir. 1999). 191 F.3d 1071
Sharber v. Spirit Mtn. Gaming Inc.,
IT IS ORDERED that: (i) the Defendant Nambe Pueblo Development Corporation's Motion to Dismiss, filed October 1, 2018 (Doc. 14), is granted in part and denied in part; (ii) the Plaintiff World Fuel Services, Inc. must exhaust Tribal Court remedies in the Nambe Pueblo Tribal Court and the Southwest InterTribal Court of Appeals; and (iii) the Court stays the current federal proceedings pending World Fuel's exhaustion of Tribal Court remedies and Tribal appellate review, if any.
Notes
Although the parties refer to Defendant Nambe Pueblo Development Corporation at times as "Nambe" or "Nambe Pueblo," the Court refers to Nambe Pueblo Development Corporation as "Nambe Corp.," to distinguish the corporation from the Pueblo of Nambe ("Nambe Pueblo"), which the Court refers to as "Nambe Pueblo." Because this dispute implicates questions of a corporation's waiver of a sovereign's immunity, the Court determines that it is important to clearly distinguish between the corporation, Nambe Corp., and the sovereign, Nambe Pueblo.
Although the letter does not identify Carlos Vigil's role, the Affidavit of Randy Vigil, ¶ 8, at 3 (dated Sept. 27, 2018), filed October 1, 2018 (Doc. 14-1)("R. Vigil Aff.") identifies Carlos Vigil as Nambe Corp. Board President. R. Vigil Aff. ¶ 8, at 3. The Court does not rely on the R. Vigil Aff. in deciding the Motion but notes its explanation of Carlos Vigil's role here for clarity purposes.
Alta Fuels is World Fuel Services, Inc.'s trade name. See Agreement ¶ 21, at 9 ("World Fuel Services, Inc. d/b/a Alta Fuels.").
In its Analysis section, the Court explains its decision to construe the Motion as a rule 12(b)(6) motion.
McGee v. Hayes is an unpublished Tenth Circuit opinion, but the Court can rely on an unpublished Tenth Circuit opinion to the extent its reasoned analysis is persuasive in the case before it. See 10th Cir. R. 32.1(A) ("Unpublished opinions are not precedential, but may be cited for their persuasive value."). The Tenth Circuit has stated: "In this circuit, unpublished orders are not binding precedent, ... and ... citation to unpublished opinions is not favored.... However, if an unpublished opinion ... has persuasive value with respect to a material issue in a case and would assist the court in its disposition, we allow a citation to that decision." United States v. Austin,
Nambe Corp. asserts that the version of Nambe Corp.'s Federal Charter, which the Secretary of the Interior approved and the Nambe Pueblo Tribal Council ratified, and which World Fuel attaches to the Complaint, is the 1994 charter and that the version currently in force, the 2007 charter, is attached to an affidavit affixed to the Motion. See R. Vigil Aff. ¶ 5, at 2. As the Court explains in its Analysis section, the Court may not rely on the R. Vigil Aff. in deciding a motion under rule 12(b)(6) and the Court does not, therefore, rely on documents attached to the R. Vigil Aff., to which the Complaint does not refer, and which do not fall within any of the exceptions to the general rule that, when deciding a rule 12(b)(6) motion, the Court may consider only the Complaints' allegations. The Court notes that neither party contests the authenticity of the Federal Charter attached to the Complaint and, although the version of the charter attached to the R. Vigil Aff. may be more current, the Court notes that it is inconsistently paginated, and the Court declines to rely on it in deciding the Motion. See infra n.14. The Court may, and does, rely on the Federal Charter attached to the Complaint, and to which the Complaint refers.
Paragraph A states in full:
Customer [Nambe Corp.] is authorized by the Pueblo of Nambe to use and occupy certain tribal lands situated on the Highway U.S. 84/285 frontage road on which Customer currently markets and in the future intends to market gasoline, diesel fuel and related fuels as well as alternative fuels at a facility known as the Nambe Falls Travel Center.
Agreement ¶ A, at 1.
The Court, of course, knows of and served with Judge Black. The Court is confident that it can remain fair and impartial in this case. The Court infrequently sees or converses with Judge Black, and it has been years since it has been in Judge Black's home or he in the Court's home.
To the extent that the factual allegations in the R. Vigil Aff. differ from the factual allegations contained in the Complaint, the Agreement, the Federal Charter, and the Aug. 8, 2018 Letter, the Court does not consider the factual allegations in the R. Vigil Aff. in deciding the Motion.
R. Vigil attests that Nambe Corp.'s headquarters "is located on Nambe Pueblo grant lands at 33 Arroyo Cuyamungue, Santa Fe, New Mexico, within the Nambe Indian Country." R. Vigil Aff. ¶ 12, at 3. The Court believes R. Vigil's reference to Nambe Pueblo grant lands refers to the land Nambe Pueblo purchased from Pojoaque Pueblo in a grant effectuated on January 12, 1983. See Warranty Deed at 26 (dated Aug. 20, 1997), filed October 1, 2018 (Doc. 14-1)(memorializing the exchange of Tribal lands between Nambe Pueblo and Pojoaque Pueblo, resulting in a tract of land known as the Cuyamungue Grant's transfer to Nambe Pueblo ownership). R. Vigil states that Nambe Corp. owns the Nambe Travel Center, which "is located on Nambe Indian reservation lands within the Nambe Indian Country," west of and adjacent to the lands on which Nambe Corp.'s headquarters are located. R. Vigil Aff. ¶¶ 13-14, at 3. The Court believes R. Vigil's reference to Nambe Indian reservation lands refers to all land which the Nambe Indians own. See, e.g., Pueblo of Nambe Law and Order Code 2015, ¶ 2.1, at 37, filed October 1, 2018 (Doc. 14-1)("Nambe Tribal Code")(establishing the Tribal Code as applicable on the entire Nambe Pueblo Indian Reservation); Federal Register at 30 (dated Sept, 14, 1999), filed October 1, 2018 (Doc. 14-1)(describing the addition of the lands acquired through grant from Pojoaque Pueblo "to the reservation of the Pueblo of Nambe Indians"). R. Vigil asserts that these grant lands "were initially taken in trust for the Pueblo in 1997 and were later declared Nambe Indian reservation lands in 1999." R. Vigil Aff. ¶ 14, at 3-4.
The Federal Charter numbers the sections to which R. Vigil refers 3.01 and 7.01, respectively. See Federal Charter §§ 3.01, 7.01, at 2-3, 5. Section 3.01 describes the duties Nambe Corp. is expressly authorized and empowered to perform. See Federal Charter § 3.01, at 2. Section 3.01(e) states in full:
To make contracts, guarantees, or agreements, incur liabilities and borrow money in any amount, from any source, upon such terms and at such rates of interest as the Corporation may determine; to issue notes, bonds, and other obligations and secure any of its obligations by specifically mortgaging, pledging or assigning its corporate property or income as collateral for its corporate debts or liabilities, all without the approval of the Secretary of the Interior, except when its use of trust or Federally-restricted Indian property requires such approval.
Federal Charter § 3.01(e), at 3. Federal Charter § 7.01 states in full:
Control and operation of this Corporation and all powers and authorities thereof shall be vested in its governing Board. The Board shall have full power and authority to manage and operate the Corporation in accordance with the powers and limitations set out in these Articles of Incorporation.
Federal Charter § 7.01, at 5.
R. Vigil attests that the federal excise tax dispute which gives rise to World Fuel's arbitration demand "is based on fuel sales transactions which occurred at the Nambe Travel Center on Nambe Indian Reservation lands." R. Vigil Aff. ¶ 15, at 4.
To the extent that the factual allegations in the Memo. differ from the factual allegations contained in the Complaint, the Agreement, the Federal Charter, and the Aug. 8, 2018 Letter, the Court does not consider the factual allegations in the Memo. in deciding the Motion.
A § 477 corporation is an Indian Tribe operating as a federally chartered corporation. See Indian Reorganization Act of 1934,
The petition is available at https://www.supremecourt.gov/DocketPDF/17/17-1301/38004/20180307131150405_Harvey% 20v.% 20UTE% 20et% 20al.% 20Petition.pdf. Nambe Corp. filed a Notice of Supplemental Authority, filed January 7, 2019 (Doc. 31) stating: "the U.S. Supreme Court issued an order denying certiorari on January 7, 2019 regarding Case No. 17-1301." Notice of Supplemental Authority at 1.
The Court's citations to the hearing's transcript refer to the court reporter's original, unedited version. Any final transcript may contain slightly different page and/or line numbers.
At the hearing, World Fuel referred to the version of the Federal Charter affixed to the R. Vigil Aff. See Tr. at 27:14-22 (Zaron). See also Amended Federal Corporate Charter Issued By the United States of America at 8-14 (dated April 11, 2006), filed October 1, 2018 (Doc. 14-1)("Amended Charter"). The Court noted that the pagination is inconsistent. See Tr. at 29:16-24 (Court, Zaron). Page 4 of the Amended Charter ends with § 4.03, but page 5 begins with a subsection "B," with no numbered section heading. See Amended Charter at 11-12. No numbered section headings appear on page 5, but page 6 begins with § 6.03. See Amended Charter at 12-13. The Court notes that it does not rely on the R. Vigil Aff. or its attachments in deciding the Motion, and that the Federal Charter, upon which the Court relies, does not display inconsistent pagination. The Court notes that the Federal Charter upon which the Court relies, and the Amended Charter, contain identical language in all relevant provisions. The one difference which the Court notes in a relevant provision is that the Amended Charter states in § 8.02(c) that no more than "three permanent or elected members of the Nambe Tribal Council shall be eligible to serve on the Board concurrently," Amended Charter § 8.02(c), at 13, whereas § 8.02(c) of the Federal Charter states that no more than "two permanent or elected members of the Nambe Tribal Council shall be eligible to serve on the Board concurrently," Federal Charter § 8.02(c), at 6.
In performing its Erie-mandated duty to predict what a state supreme court would do if faced with a case, see Comm'r v. Estate of Bosch,
The Supreme Court has addressed what the federal courts may use when there is not a decision on point from the state's highest court:
The highest state court is the final authority on state law, but it is still the duty of the federal courts, where the state law supplies the rule of decision, to ascertain and apply that law even though it has not been expounded by the highest court of the State. An intermediate state court in declaring and applying the state law is acting as an organ of the State and its determination, in the absence of more convincing evidence of what the state law is, should be followed by a federal court in deciding a state question. We have declared that principle in West v. American Telephone and Telegraph Co. ,[ 311 U.S. 223 , 61 S.Ct. 179 ] (1940), decided this day. It is true that in that case an intermediate appellate court of the State had determined the immediate question as between the same parties in a prior suit, and the highest state court had refused to review the lower court's decision, but we set forth the broader principle as applicable to the decision of an intermediate court, in the absence of a decision by the highest court, whether the question is one of statute or common law. 85 L.Ed. 139
... We have held that the decision of the Supreme Court upon the construction of a state statute should be followed in the absence of an expression of a countervailing view by the State's highest court, and we think that the decisions of the Court of Chancery [the New Jersey trial court] are entitled to like respect as announcing the law of the State.
....
The question has practical aspects of great importance in the proper administration of justice in the federal courts. It is inadmissible that there should be one rule of state law for litigants in the state courts and another rule for litigants who bring the same question before the federal courts owing to the circumstance of diversity of citizenship. In the absence of any contrary showing, the rule [set forth by two New Jersey trial courts, but no appellate courts] appears to be the one which would be applied in litigation in the state court, and whether believed to be sound or unsound, it should have been followed by the Circuit Court of Appeals.
Fid. Union Tr. Co. v. Field,
In determining the proper weight to accord Tenth Circuit precedent interpreting New Mexico law, the Court must balance the need for uniformity between federal court and state court interpretations of state law with the need for uniformity among federal judges. If the Court adheres too rigidly to Tenth Circuit caselaw, ignoring changes undergone by a state's law in the ensuing years, then parties litigating state-law claims will be subject to a different body of substantive law, depending on whether they litigate in state court or federal court. This result frustrates the purpose of Erie, which held that federal courts must apply state court interpretations of state law, rather than their own, in part so that parties achieve a consistent result regardless of the forum. This consideration pulls the Court toward according Tenth Circuit precedent less weight and according state court decisions issued in the ensuing years more weight. On the other hand, when the state law is unclear, it is desirable for there to at least be uniformity among federal judges as to its proper interpretation. Otherwise, different federal judges within the same circuit -- or even the same district, as district courts' decisions are not binding, even upon themselves -- would be free to adopt differing interpretations of a state's law. This consideration pulls the Court towards a stronger respect for vertical stare decisis, because a Tenth Circuit decision on point -- regardless whether it accurately reflects state law --at least provides consistency at the federal level, so long federal district judges are required to follow it.
The Court must decide how to weigh Tenth Circuit caselaw against more-recent state court decisions, choosing a point on the spectrum between the two extremes: rigidly adhering to Tenth Circuit precedent unless there is intervening caselaw directly on point from the state's highest court, on one end; and independently interpreting the state law, regarding the Tenth Circuit precedent as no more than persuasive authority, on the other. In striking this balance, the Court notes that it is generally more concerned about systemic inconsistency between the federal courts and the state courts than it is about inconsistency among federal judges. Judges, even those within a jurisdiction with ostensibly identical governing law, sometimes interpret and apply the law differently from one another; this inconsistency is part and parcel of a common-law judicial system. More importantly, litigants seeking to use forum selection to gain a substantive legal advantage cannot easily manipulate such inconsistency: cases are assigned randomly to district judges in this and many federal districts; and, regardless, litigants cannot know for certain how a given judge will interpret the state law, even if they could determine the identity of the judge pre-filing or pre-removal. All litigants know in advance is that whomever federal district judge they are assigned will look to the entirety of the state's common law in making his or her determination -- the same as a state judge would. Systemic inconsistency between the federal courts and state courts, on the other hand, not only threatens the principles of federalism, but litigants may more easily manipulate the inconsistency. When the Tenth Circuit issues an opinion interpreting state law, and the state courts subsequently shift away from that interpretation, litigants -- if the district courts strictly adhere to the Tenth Circuit opinion -- have a definite substantive advantage in choosing the federal forum over the state forum, or vice versa.
The Court further notes that district courts may be in a better position than the Tenth Circuit to be responsive to changes in state law. Tenth Circuit decisions interpreting a particular state's law on a specific issue are further apart in time than the collective district courts' are. More importantly, the Tenth Circuit does not typically address such issues with the frequency that the state's courts themselves do. As such, Tenth Circuit precedent can lag behind developments in state law -- developments that the district courts may be nimble enough to perceive and adopt. Additionally, much of the benefit of having a consistent Tenth Circuit-wide interpretation of a particular state's law is wasted. Other than Oklahoma, every state encompassed by the Tenth Circuit contains only one federal judicial district, and there is relatively little need for federal judges in Wyoming and Kansas to have a uniform body of New Mexico law to which to look. Last, the Court notes, respectfully, that district courts may be in a better position than the Tenth Circuit to develop expertise on the state law of the state in which they sit. Every federal judicial district in the nation, except the District of Wyoming, covers at most one state. It is perhaps a more workable design for each district court to keep track of legal developments in the state law of its own state(s) than it is for the Tenth Circuit to monitor separate legal developments in eight states.
Having outlined the relevant considerations, the Court thinks the proper stance on vertical stare decisis in the context of federal court interpretations of state law is as follows: the Tenth Circuit's cases are binding as to their precise holding -- what the state law was on the day the opinion was published -- but lack the positive precedential force that its cases interpreting a federal statute or the federal Constitution possess. A district court considering a state law issue after the publication of a Tenth Circuit opinion on point may not come to a contrary conclusion based only on state court cases that were available to the Tenth Circuit and that the Tenth Circuit considered, but it may come to such a conclusion based on intervening state court cases.
When interpreting state law, the Tenth Circuit does not and cannot issue a case holding that x is the law in New Mexico; it holds that the proper interpretation of New Mexico law, at the time the opinion is released, is x. Its holdings are descriptive, not prescriptive -- interpretive, not normative. Because federal judicial opinions lack independent substantive force on state law issues, but possess such force regarding federal law issues, the Court thinks the following is not an unfair summary of the judicial interpretive process: (i) when interpreting federal law, the federal appellate courts consider the existing body of law, and then issue a holding that both reflects and influences the body of law; that holding subsequently becomes a part of the body of law; but (ii) when interpreting state law, the federal appellate courts consider the existing body of law, and then issue a holding that only reflects the body of law; that holding does not subsequently become a part of the body of law. The federal district courts are bound to conclude that the Tenth Circuit's reflection of the then-existing body of law was accurate. The question is whether they should build a doctrine atop the case and use the existence of the Tenth Circuit's case to avoid any responsibility to independently consider the whole body of state law that exists when the time comes that diversity litigants raise the issue in their courtrooms. Giving such effect to the Tenth Circuit's interpretations of state law is at tension with Erie, giving independent substantive effect to federal judicial decisions -- i.e., applying federal law -- in a case brought in diversity.
The purpose of Erie is well-known and simple, and the Court should not complicate it beyond recognition: it is that the same substantive law governs litigants' cases regardless whether they are brought in a federal or state forum. For simplicity's sake, most courts have settled on the formulation that "the federal court must attempt to predict how the states' highest court would rule if confronted with the issue." Moore's Federal Practice § 124.22[3] (citing Comm'r v. Estate of Bosch,
The Erie doctrine results in federal cases that interpret state law withering with time. While cases interpreting federal law become more powerful over time -- forming the groundwork for doctrines, growing upward from one application (Congress may create a national bank) to many (Congress may set quotas on wheat-growing for personal consumption), expanding outward from the general (states must grant criminal jury trials) to the specific (the jury need not be twelve people, nor must it be unanimous) -- federal cases interpreting state law often become stale. New state court cases -- even when not directly rebuking the federal court's statement of law -- alter the common-law legal landscape with their dicta, their insinuations, and their tone. The Supreme Court, which picks its cases sparingly and for maximum effect, almost never grants certiorari to resolve issues of state law.
The Court's views on Erie, of course, mean little if the Tenth Circuit does not agree. In Wankier v. Crown Equipment Corp.,
[w]here no controlling state decision exists, the federal court must attempt to predict what the state's highest court would do. In performing this ventriloquial function, however, the federal court is bound by ordinary principles of stare decisis. Thus, when a panel of this Court has rendered a decision interpreting state law, that interpretation is binding on district courts in this circuit, and on subsequent panels of this Court, unless an intervening decision of the state's highest court has resolved the issue.
Wankier v. Crown Equip. Corp.,
It is difficult to know whether the Honorable Michael W. McConnell's, former United States Circuit Judge for the Tenth Circuit, limitation of "intervening decision" to cases from the highest state court was an oversight or intentional. Most of the Tenth Circuit's previous formulations of this rule have defined intervening decisions inclusively as all subsequent decisions of "that state's courts," a term which seems to include trial and intermediate appellate courts. Even Koch v. Koch Industries, Inc.,
In the absence of intervening Utah authority indicating that a plaintiff is not required to prove a safer, feasible alternative design, we are bound to follow the rule of Allen [v. Minnstar, Inc.,(10th Cir. 1993), a Tenth Circuit case interpreting an issue of Utah law], as was the district court. "Following the doctrine of stare decisis, one panel of this court must follow a prior panel's interpretation of state law, absent a supervening declaration to the contrary by that state's courts or an intervening change in the state's law." Koch v. Koch Indus., Inc., 8 F.3d 1470 . 203 F.3d at 1231
Wankier v. Crown Equip. Corp.,
Whether the decision to limit the intervening authority a district court can consider was intentional or not, the Tenth Circuit has picked it up and run with it. In Kokins v. Teleflex, Inc., the Tenth Circuit, quoting Wankier v. Crown Equipment Corp., refused to consider an opinion from the Court of Appeals of Colorado holding directly the opposite of an earlier Tenth Circuit interpretation of Colorado law. See Kokins v. Teleflex, Inc.,
The Tenth Circuit has set forth a stringent restriction on its district courts' ability to independently administer the Erie doctrine. More importantly, the Tenth Circuit's view may be at tension with the above-quoted Supreme Court precedent, as well as its own prior caselaw. Moore's Federal Practice lists the Tenth Circuit as having been, at one time, a "court[ that] hold[s] that a prior federal appellate decision [interpreting state law] is persuasive." Moore's Federal Practice § 124.22[4] (citing State Farm Mut. Auto. Ins. v. Travelers Indem. Co.,
With regard to this factor, its development can be traced from Colorado River,
Two "limited, well-defined exceptions" to the general rule that federally chartered corporations are ineligible for diversity jurisdiction have emerged, although the Tenth Circuit has commented on neither. Lehman Bros. Bank, FSB v. Frank T. Yoder Mortg.,
At the hearing, World Fuel agreed that the Court has diversity jurisdiction over the case. See Tr. at 37:2-15 (Zaron).
At the hearing, Nambe Corp. suggested that Tribal exhaustion is a form of abstention. See Tr. at 20:23-21:2 (Rogers). The Court explored the law regarding abstention doctrines to determine if it might provide guidance as to how to consider a Tribal exhaustion motion. Kirsten M. Carlson, Towards Tribal Sovereignty and Judicial Efficiency: Ordering the Defenses of Tribal Sovereign Immunity and Exhaustion of Tribal Remedies,
The most analogous state law doctrines to exhaustion under federal law are the abstention doctrines, which contend that state court issues have to be decided before a case can be filed in federal court. See [Erwin Chemerinsky, Federal Jurisdiction 590,] 735 [ (3d ed. 1999) ]. The tribal exhaustion doctrine functions like a state abstention doctrine because it stays the federal court's jurisdiction until after the tribal court has heard and decided the merits of the case. Abstention doctrines are judicially created rules that limit the ability of federal courts to decide issues before them even though the jurisdictional and justiciability requirements have been met. See Chemerinsky at 735.
Carlson at 576 n.44. The Supreme Court, in Iowa Mutual, stated that:
Exhaustion is required as a matter of comity, not as a jurisdictional prerequisite. In this respect, the rule is analogous to principles of abstention articulated in Colorado River Water Conservation Dist. v. United States ,[ 424 U.S. 800 , 96 S.Ct. 1236 ] (1976) : even where there is concurrent jurisdiction in both the state and federal courts, deference to state proceedings renders it appropriate for the federal courts to decline jurisdiction in certain circumstances. 47 L.Ed.2d 483
Iowa Mutual,
The tribal exhaustion doctrine is in no way based on Colorado River .... [T]he Colorado River doctrine "proceeds from the premise that 'the federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given to them" and ... therefore, the pendency of litigation in state court is not a bar to proceedings in federal court involving the same subject matter in the absence of "exceptional circumstances." The policy which animates the tribal exhaustion doctrine, however, "subordinates the federal court's obligation to exercise its jurisdiction to the greater policy of promoting tribal self-government." Colorado River abstention is thus the exception to the rule, whereas tribal exhaustion is the rule rather than the exception.
Bank One,
Nor are exhaustion doctrines in other areas of law, such as in the context of the Prison Litigation Reform Act, 42 U.S.C. § 1997e(a) ("PLRA") analogous enough to be instructive. In the PLRA context, failure to exhaust administrative remedies is treated as an affirmative defense, which the defendant has the burden to plead and prove by a preponderance of the evidence. See Lee v. Willey,
See Ute Indian Tribe v. Lawrence,
Some courts have held that 12(b)(6) is not the "proper vehicle through which to address the tribal exhaustion rule." Petrogulf Corp. v. Arco Oil & Gas Co.,
Some courts have construed Tribal exhaustion as an affirmative defense. See, e.g., Tenorio v. High Hawk,
The Court notes that there is competing language within the Tenth Circuit whether the Tribal exhaustion doctrine is waivable. On one hand, Nambe Corp. directs the Court to Smith v. Moffett's language that "the requirement of exhaustion of tribal remedies" is not "a mere defense to be raised or waived by the parties", see Smith v. Moffett,
Some courts have suggested that a Tribe may waive Tribal exhaustion. The United States Court of Appeals for the Seventh Circuit concluded, in Altheimer & Gray v. Sioux Manufacturing Corp.,
More importantly, we believe the application of the tribal exhaustion rule would not serve the policies articulated in Iowa Mutual and National Farmers . As discussed above, the Supreme Court was concerned with implementing Congress's policy of tribal self-government. The Court feared that "unconditional access to the federal forum would place it in direct competition with the tribal courts, thereby impairing the latter's authority over reservation affairs." Iowa Mutual ,480 U.S. at 16 ,107 S.Ct. at 976See generally Duro v. Reina ,, 692, 495 U.S. 676 , 2063, 110 S.Ct. 2053 (1990) (history of modern tribal courts indicate they embody only powers of internal self-governance). 109 L.Ed.2d 693
In this case, however, the tribal entity wished to avoid characterization of the contract as a reservation affair by actively seeking the federal forum. In the Letter of Intent, Sioux Manufacturing Corporation [ ("SMC") ] explicitly agreed to submit to the venue and jurisdiction of federal and state courts located in Illinois. To refuse enforcement of this routine contract provision would be to undercut the Tribe's self-government and self-determination. The Tribe created SMC to enhance employment opportunities on the reservation. As the Ninth Circuit recognized, economic independence is the foundation of a tribe's self-determination. If contracting parties cannot trust the validity of choice of law and venue provisions, SMC may well find itself unable to compete and the Tribe's efforts to improve the reservation's economy may come to naught.
Altheimer & Gray v. Sioux Mfg. Corp.,
On the other hand, Supreme Court and Tenth Circuit caselaw repeatedly characterizes Tribal exhaustion as an inflexible bar. In Granberry v. Greer, to which Smith v. Moffett cites, the Supreme Court considers whether a "State's failure to raise nonexhaustion in the district court constitutes a waiver of that defense in the court of appeals...." Granberry v. Greer,
Thus, we have characterized the tribal exhaustion rule as "an inflexible bar to consideration of the merits of the petition by the federal court." Moffett ,(quoting Granberry v. Greer , 947 F.2d at 445, 131, 481 U.S. 129 , 1673, 107 S.Ct. 1671 (1987) ); see also Crawford v. Genuine Parts Co. , 95 L.Ed.2d 119 , 1408 (9th Cir. 1991) ("When the dispute is a 'reservation affair,' ... there is no discretion not to defer.") 947 F.2d 1405
Texaco, Inc. v. Zah,
Furthermore, even if a Tribe may waive the Tribal exhaustion doctrine's applicability, here, as in Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation, World Fuel's argument that Nambe Corp. waived Tribal exhaustion hinges on the Agreement's validity. See Response at 3 (stating that "the parties' arbitration clause -- an agreement to resolve disputes in a non-tribal forum and to have petitions to compel arbitration heard in 'any court' -- is a waiver of any otherwise applicable tribal exhaustion rule."). Nambe Corp. contests the validity of the Agreement which contains the arbitration clause to which World Fuel refers. See Memo. at 11 ("The questions which must be put before the Nambe Courts include whether the 2017 contract document upon which World Fuels bases its demand for arbitration was lawfully executed...."). In Becker v. Ute Indian Tribe of the Uintah & Ouray Reservation, the Tribe argued that "any waiver is ineffective because the Contract is void...."
Carlson analogizes exhaustion to abstention doctrines:
The most analogous state law doctrines to exhaustion under federal law are the abstention doctrines, which contend that state court issues have to be decided before a case can be filed in federal court. See [Erwin Chemerinsky, Federal Jurisdiction 590,] 735 [ (3d ed. 1999) ]. The tribal exhaustion doctrine functions like a state abstention doctrine because it stays the federal court's jurisdiction until after the tribal court has heard and decided the merits of the case. Abstention doctrines are judicially created rules that limit the ability of federal courts to decide issues before them even though the jurisdictional and justiciability requirements have been met. See Chemerinsky at 735.
Carlson at 576 n.44.
Paragraph A states in full:
Customer [Nambe Corp.] is authorized by the Pueblo of Nambe to use and occupy certain tribal lands situated on the Highway U.S. 84/285 frontage road on which Customer currently markets on in the future intends to market gasoline, diesel fuel and related fuels as well as alternative fuels at a facility known as the Nambe Falls Travel Center.
Agreement ¶ A, at 1.
The Court has reservations about the Tribal exhaustion doctrine and thinks the Supreme Court should reconsider it. It should be emphasized that it is a judge-made doctrine and not something the political branch -- Congress -- has enacted. Yet it judicially creates exceptions from congressional statutes. First, it is an exception to the general jurisdictional statutes related to diversity and federal question jurisdiction. If Congress wanted to create an exception, it certainly knows how. Second, it starts creating exceptions from important, long-standing statutes. Here, the judicially created exception undermines Congress' decision to allow parties to enforce arbitration agreements in federal court. Congress was so concerned about the hostility of state courts to arbitration agreements that it vested concurrent jurisdiction in federal courts to protect freedom of contract and the important federal interest in regulating interstate commerce. The Tribal exhaustion doctrine seems to make up a doctrine that the Supreme Court thinks is more right than the statute as Congress wrote it and overrides Congress' decision that federal courts should be able to enforce arbitration agreements. When Congress takes the time to create a federal statute giving the federal courts jurisdiction over an issue, the federal courts should be hesitant to decline the work the people want them to do. Fourth, if the Supreme Court is going to play legislature, and exercise legal powers, it should at least do the job well. There is no empirical evidence that taking away congressionally-granted federal court powers helps strengthen Tribal court systems. It does not appear that the FAA has hurt the wonderful system of state courts the nation enjoys, and the Supreme Court knows it could not create an exception for state courts that would not gut the FAA and probably many other federal statutes. Fifth, the fourth reason above shows how paternalistic and insulting the Tribal exhaustion doctrine is. A sovereign nation should take pride in its own court system. It should want the very best for its own sake and for its people's sake. It should not depend upon another sovereign throwing them a few cases or bones. Sixth, the Supreme Court should take a hard look at Tribal courts and see whether they are better in 2019 than they were in 1959, when they needed the Tribal exhaustion doctrine. If they are better, then maybe the nation no longer needs the Tribal exhaustion doctrine. If they are not better after sixty years, it may be time to get rid of the ineffective doctrine. American law should not be just aspirational, American laws should be effective. Seventh, if the law really is that Tribal exhaustion doctrine cannot be waived, it is hard to see how that helps the Tribes. If the prior criticism, that the doctrine is paternalistic, is not convincing enough alone, when applied to the entire Tribe, the doctrine is paternalistic and insulting. It would appear that the Tribe -- not the Supreme Court in Washington, D.C. -- is in the best position to decide whether a Tribe should be able to waive Tribal exhaustion as a bargaining chip in an effort to get a non-Indian to come on the reservation to stimulate its economy or the Supreme Court's desire to grow the Tribal courts is more important or is most in the Tribe's interests. For the foregoing reasons, if the Court were writing on a clean slate, the Court would not recognize the Tribal exhaustion doctrine and would deny the Motion. The Court is not, however, writing on a clean slate, and the Court has worked faithfully to apply the applicable Supreme Court and Tenth Circuit law as correctly as possible.