Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-35165/USCOURTS-ca9-14-35165-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CONFEDERATED TRIBES AND

BANDS OF THE YAKAMA INDIAN

NATION,

Plaintiff-Appellant,

v.

ALCOHOL AND TOBACCO TAX

AND TRADE BUREAU; JOHN J.

MANFREDA, in his official

capacity as Administrator of the

Alcohol and Tobacco Tax and

Trade Bureau; UNITED STATES

DEPARTMENT OF THE

TREASURY; TIMOTHY

GEITHNER, in his official

capacity as Secretary of the

United States Department of the

Treasury; UNITED STATES OF

AMERICA,

Defendants-Appellees.

No. 14-35165

D.C. No.

2:11-cv-03038-RMP

OPINION

Appeal from the United States District Court

for the Eastern District of Washington

Rosanna Malouf Peterson, District Judge, Presiding

Argued and Submitted August 30, 2016

Seattle, Washington

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2 YAKAMA NATION V. TTB

Filed December 13, 2016

Before: Alfred T. Goodwin, Mary M. Schroeder,

and M. Margaret McKeown, Circuit Judges.

Opinion by Judge Goodwin

SUMMARY*

Tax

The panel vacated and remanded the district court’s

summary judgment in favor of federal agencies in an action

seeking to bar defendant federal agencies and officials from

imposing the federal excise tax on tobacco products

manufactured by King Mountain Tobacco Company – a

corporation organized, existing, and operating under the laws

of the Yakama Nation – for lack of jurisdiction under the

Anti-Injunction Act.

The panel held that the declaratory and injunctive relief

sought in this case “falls squarely within the literal scope” of

the Anti-Injunction Act (“Act”), 26 U.S.C. § 7421(a), which

bars any suit that would restrain the assessment and collection

of any tax. The panel was unpersuaded by the Yakama

Nation’s contention that it is not a “person” within the

meaning of the Act. The panel was also unpersuaded by the

contention that the Yakama Nation’s claims fell within the

narrow exception to the Act set out in South Carolina v.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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YAKAMA NATION V. TTB 3

Regan, 465 U.S. 367 (1984) (upholding an injunction against

the collection of federal taxes on interest from state-issued

bearer bonds because enforcing the jurisdictional bar would

deprive the state of any opportunity to obtain review of its

claims).

COUNSEL

Randolph Henry Barnhouse (argued) and Justin J. Solimon,

Johnson Barnhouse & Keegan LLP, Albuquerque, New

Mexico, for Plaintiff-Appellant.

Patrick J. Urda (argued), Teresa E. McLaughlin, and Gilbert

S. Rothenberg, Attorneys; Tamara W. Ashford, Acting

Assistant Attorney General; Tax Division, Department of

Justice, Washington, D.C.; for Defendants-Appellants.

OPINION

GOODWIN, Circuit Judge:

Confederated Tribes and Bands of the Yakama Indian

Nation (“the Yakama Nation” or “the tribe”) appeals the

district court’s summary judgment in the Yakama Nation’s

action seeking to bar defendant federal agencies and officials

from imposing the federal excise tax on tobacco products

manufactured by King Mountain Tobacco Co. (“King

Mountain”). The Yakama Nation alleges that King Mountain

is entitled to exemptions from the excise tax under the

General Allotment Act, 25 U.S.C. § 331 et seq., and the

Treaty with the Yakama, 12 Stat. 951 (1855). Defendants, in

turn, contend that the Anti-Injunction Act and the tax

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4 YAKAMA NATION V. TTB

exception to the Declaratory Judgment Act bar the Yakama

Nation’s claims seeking injunctive and declaratory relief.

We hold that the Anti-Injunction Act deprived the district

court of jurisdiction to hear the Yakama Nation’s claims. We

therefore vacate the judgment and remand with instructions

to dismiss.

FACTUAL AND PROCEDURAL BACKGROUND

The Yakama Nation, King Mountain, and Delbert

Wheeler, Sr., brought suit for injunctive and declaratoryrelief

barring the imposition of the federal tobacco excise tax on

King Mountain. The tobacco excise tax applies to “cigarettes,

manufactured or imported into the United States,” 26 U.S.C.

§ 5701(b), and “roll-your-own tobacco, manufactured in or

imported into the United States,” id. § 5701(g). “[A]ny person

who manufactures” cigarettes or roll-your-own tobacco, id.

§ 5702(d), is liable for the tax, see id. § 5703(a).

The Yakama Nation is a federally recognized Indian

Tribe. King Mountain, a corporation organized, existing, and

operating under the laws of the Yakama Nation, manufactures

cigarettes and “roll-your-own” tobacco. Wheeler, an enrolled

member of the Yakama Nation, owns King Mountain. The

tribe alleged that some of the tobacco used by King Mountain

is grown on Yakama Nation trust land consistent with

Yakama Nation historical practices, and the trust land-grown

tobacco is then blended with other tobacco to produce King

Mountain products.

The federal agencies moved to dismiss, contending that

the claims were barred by the Anti-Injunction Act and the tax

exception to the Declaratory Judgment Act. The district court

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YAKAMA NATION V. TTB 5

granted the motion to dismiss as to King Mountain and

Wheeler but denied it as to the Yakama Nation, concluding

that the Yakama Nation’s claims fell within the exception to

the Anti-Injunction Act set out in South Carolina v. Regan,

465 U.S. 367, 373–81 (1984). The district court subsequently

granted summary judgment in favor of the federal agencies,

concluding that King Mountain was not exempt from the

excise tax under the General Allotment Act or the Treatywith

the Yakama. The Yakama Nation timely appealed.

DISCUSSION

On de novo review, Munoz v. Mabus, 630 F.3d 856, 860

(9th Cir. 2010), we hold that the Anti-Injunction Act deprived

the district court of jurisdiction over the Yakama Nation’s

claims.1

The Anti-Injunction Act (“the Act”) provides that “no suit

for the purpose of restraining the assessment or collection of

any tax shall be maintained in any court by any person,

whether or not such person is the person against whom such

tax was assessed.” 26 U.S.C. § 7421(a). The Act’s principal

purpose is to protect “the Government’s need to assess and

collect taxes as expeditiously as possible with a minimum of

preenforcement judicial interference, ‘and to require that the

1 Because we hold that the Anti-Injunction Act barred the Yakama

Nation’s claims, we need not determine if the tax exception to the

Declaratory Judgment Act, 28 U.S.C. § 2201(a), similarly would bar the

claims seeking declaratory relief. See Bob Jones Univ. v. Simon, 416 U.S.

725, 732 n.7 (1974) (noting that “the federal tax exception to the

Declaratory Judgment Act is at least as broad as the Anti-Injunction Act,”

but declining to determine whether the Declaratory Judgment Act is more

preclusive after deciding that the suit was barred by the Anti-Injunction

Act).

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6 YAKAMA NATION V. TTB

legal right to the disputed sums be determined in a suit for

refund.’” Bob Jones Univ., 416 U.S. at 736 (citation omitted).

Unless a suit otherwise barred by the Act “falls within one of

the statutory or judicially created exceptions to the Act, the

district court lacks subject matter jurisdiction and must

dismiss the complaint.” Jensen v. Internal Revenue Serv.,

835 F.2d 196, 198 (9th Cir. 1987).

The relief sought in this case—declaratory and injunctive

relief prohibiting the imposition of the tobacco excise tax on

King Mountain—would restrain the assessment and

collection of that tax and thus “falls squarelywithin the literal

scope of the Act.” Bob Jones Univ., 416 U.S. at 732. The

Yakama Nation nonetheless asserts that the claims are not

barred, contending, first, that the Yakama Nation is not a

“person” for purposes of the Act and second, that the claims

qualify for the narrow exception set out in Regan, 465 U.S.

367. We reject both contentions.

First, the Yakama Nation is a “person” subject to the

Act’s jurisdictional prohibition. This question is a matter of

statutory construction, turning primarily on congressional

intent as demonstrated by “[t]he words chosen by Congress

. . . [and] their plain meaning.” Griffin v. Oceanic

Contractors, Inc., 458 U.S. 564, 570 (1982). “In ascertaining

the plain meaning of [a] statute, [we] must look to the

particular statutory language at issue, as well as the language

and design of the statute as a whole.” K Mart Corp. v.

Cartier, Inc., 486 U.S. 281, 291 (1988).

The Act itself does not define “person,” but it is part of

the Internal Revenue Code, whose general definitional

provision states as follows: “The term ‘person’ shall be

construed to mean and include an individual, a trust, estate,

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YAKAMA NATION V. TTB 7

partnership, association, company or corporation.” 26 U.S.C.

§ 7701(a)(1). Where a definition is introduced with the verb

“includes,” “[t]his word choice is significant because it makes

clear that the examples enumerated in the text are intended to

be illustrative, not exhaustive.” Christopher v. SmithKline

Beecham Corp., 132 S. Ct. 2156, 2170 (2012). The Internal

Revenue Code itself tells us that “[t]he terms ‘includes’ and

‘including’ when used in a definition contained in this title

shall not be deemed to exclude other things otherwise within

the meaning of the term defined.” 26 U.S.C. § 7701(c).

Because the list of entities contained in § 7701(a)(1) thus is

merely illustrative, it is not determinative of whether an

Indian tribe constitutes a “person” under the Act.

“When a word is not defined by statute, we normally

construe it in accord with its ordinary or natural meaning.”

Smith v. United States, 508 U.S. 223, 228 (1993). Webster’s

defines “person” to include, inter alia, “a human being, a

body of persons, or a corporation, partnership, or other legal

entity that is recognized by law as the subject of rights and

duties.” Webster’s Third New International Dictionary 1686

(1971). Black’s similarly defines “person” to include, inter

alia, “[a]n entity (such as a corporation) that is recognized by

law as having the rights and duties of human beings.” Black’s

Law Dictionary 1178 (9th ed. 2004). These broad definitions

are consistent with the non-exhaustive list set out in

§ 7701(a)(1), which includes as illustrative various entities

recognized by law as having rights and duties. Accordingly,

relying on the ordinary meaning of the word, the term

“person” in § 7701(a)(1) covers entities that are recognized

by law as the subject of rights and duties, including Indian

tribes. Accord Chickasaw Nation v. United States, 208 F.3d

871, 878–80 (10th Cir. 2000) (relying on the ordinary

meaning of the word to hold that an Indian tribe was a

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8 YAKAMA NATION V. TTB

“person” for purposes of § 7701(a)(1) and therefore was

subject to federal wagering and occupational excise taxes).

Interpreting “person” to cover Indian tribes has another

virtue: it is consistent with courts’ treatment of other

sovereign entities as “persons” for various provisions of the

Internal Revenue Code. For example, the Tenth Circuit has

construed “person” in § 7701(a)(1) to cover the United States

and individual states. See Estate of Wycoff v. Comm’r,

506 F.2d 1144, 1151 (10th Cir. 1974). More broadly, the

Supreme Court has held that states and other sovereign

entities are “persons” for other Code provisions with similar

definitions of “person.” See Sims v. United States, 359 U.S.

108, 112 (1959) (holding that the term “person” included a

state or other sovereign where the special definition of

“person” in 26 U.S.C. § 6632 spoke only of corporations and

partnerships, and the employees or officers thereof); Ohio v.

Helvering, 292 U.S. 360, 370 (1934) (holding that a state was

“embraced within the meaning of the word ‘person’” where

the word “person” was defined as “meaning and including a

partnership, association, company, or corporation, as well as

a natural person”), overruled on other grounds by Garcia v.

San Antonio Met. Transit Auth., 469 U.S. 528 (1985). And in

Regan, the Court did not question that South Carolina, acting

as sovereign, was a “person” under the statute at issue here,

the Anti-Injunction Act.

The same reasoning that extends the Act’s reach to states

applies with equal force to Indian tribes. The strength of the

analogy is further supported by the fact that, were Indian

tribes not “persons,” “we would essentially exempt tribes and

tribal organizations from many forms of federal tax liability

and render entire sections of the [Internal Revenue Code]

superfluous.” Chickasaw Nation, 208 F.3d at 879. This result

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YAKAMA NATION V. TTB 9

would be at odds with both the plain terms of the Internal

Revenue Code and with the principle that “Indians and their

tribes are equally subject to statutes of general applicability,

just as any other United States citizen,” subject to exception

if there is some proof that “‘Congress intended the law not to

apply to Indians.’” Solis v. Matheson, 563 F.3d 425, 430 (9th

Cir. 2009) (quoting Donovan v. Coeur d’Alene Tribal Farm,

751 F.2d 1113, 1116 (9th Cir. 1985)).

Nothing in the other constraints on the use of the word

“person” in the Anti-Injunction Act—that impliedly the

“person” be able to maintain a suit and that the Act applies

“whether or not such person is the person against whom such

tax was assessed”—detracts from construing “person” to

include Indian tribes. In fact, the way in which the “person”

language was added to the Anti-Injunction Act lends credence

to the broad reading. The original Anti-Injunction Act

contained no reference to “person,” barring any suit “for the

purpose of restraining the assessment or collection of [any]

tax,” Rev. Stat. § 3224, and so it would have covered a suit

like the one here. But, as the Supreme Court has indicated,

the addition of the phrase “by any person, whether or not such

person is the person against whom such tax was assessed”

was not meant to be limiting. Bob Jones Univ., 416 U.S. at

731 n.6. Instead, the new verbiage “reaffirm[ed] the plain

meaning” of the Anti-Injunction Act as applying to taxpayers

and nontaxpayers alike, clarifying that the new remedy in

26 U.S.C. § 7426—added as part of the same

amendment—was the only means for nontaxpayer lien

holders to bring an action. Bob Jones Univ., 416 U.S. at 731

n.6. This history cuts against an interpretation of the statute

that excludes suits based merely on the identity of the

plaintiff, at least where that party readily fits the ordinary

definition of “person.”

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10 YAKAMA NATION V. TTB

All of these various textual and contextual clues in the

Internal Revenue Code and the Anti-Injunction Act

specifically overcome any presumption that “person” does

not include the sovereign. See Inyo Cty.,Cal. v. PaiuteShoshone Indians of the Bishop Cmty. of the Bishop Colony,

538 U.S. 701, 709–11 (2003); Vt. Agency of Nat. Res. v.

United States ex rel. Stevens, 529 U.S. 765, 780 (2000). We

conclude that Congress intended “person” in the AntiInjunction Act to include Indian tribes like the Yakama

Nation here.

Next, the district court erred in concluding that the

Yakama Nation’s claims fell within the exception to the Act

set out in Regan, 465 U.S. 367. In Regan, South Carolina

sought to enjoin the collection of federal taxes on the interest

from state-issued bearer bonds, claiming that the tax violated

the Tenth Amendment by, in practical effect, requiring it to

issue bonds in registered form. Id. at 370–72. In finding an

exception to the Act’s jurisdictional bar, the Regan Court

noted that South Carolina otherwise would have to depend on

third parties to purchase bearer bonds, file refund suits, and

raise the state’s constitutional claims. Id. at 379–81. Because

it was “by no means certain that the State would be able to

convince a taxpayer to raise its claims,” enforcing the Act’s

jurisdictional bar “would create the risk that the [Act] would

entirely deprive the State of any opportunity to obtain review

of its claims.” Id. at 380–81.2

2 Although Regan contains some broad language that might suggest

that “the Act was intended to apply only when Congress has provided an

alternative avenue for an aggrieved party to litigate its claims on its own

behalf,” id. at 381 (emphasis added), the true focus appears to be on

whether the claims can be judicially reviewed at all. Indeed, that statement

is preceded by the language quoted above emphasizing that the Court’s

real concern was “entirely depriv[ing]” South Carolina of “any

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YAKAMA NATION V. TTB 11

The Regan exception, however, is a narrow one. See Am.

Bicycle Ass’n v. United States (In re Am. Bicycle Ass’n),

895 F.2d 1277, 1281 (9th Cir. 1990) (declining to apply the

Regan exception and noting that “[p]romoting the purpose

behind the Act requires a strict construction of any possible

exceptions”); see also RYO Machine, LLC v. U.S. Dep’t of

Treasury, 696 F.3d 467, 472 (6th Cir. 2012) (describing the

Regan exception as “very narrow”); Judicial Watch, Inc. v.

Rossotti, 317 F.3d 401, 408 n.3 (4th Cir. 2003) (“Because of

the strong policy animating the Anti-Injunction Act, and the

sympathetic, almost unique, facts in Regan, courts have

construed the Regan exception very narrowly[.]”).

This narrow exception is inapplicable here. Most

critically, in Regan, the state’s interest in issuing bonds in the

form it chose existed separately from the bondholders’

interest in avoiding taxation. See Regan, 465 U.S. at 380–81.

A bondholder could avoid taxation simply by purchasing

registered bonds, and thus would have little incentive to pay

the tax, file a refund suit, and raise the state’s constitutional

claims. See id. at 381. Therefore, the state “would be required

to depend on the mere possibility of persuading a third party

[bondholder] to assert [its] claims.” Id. (emphasis added).

Here, in contrast, the Yakama Nation’s asserted injury flows

from the taxation of its members, and thus is wholly

derivative of any injury suffered by King Mountain, a tribal

corporation, and Wheeler, an enrolled member of the tribe.

opportunity to obtain reviewofits claims,” id. at 380–81, and immediately

followed by a footnote explaining that taxpayers cannot evade refund suits

by setting up organizations to litigate their tax claims because allowing

them to do so would “elevate form over substance,” id. at 381 n.19. If the

true inquiry is whether the aggrieved party itself can obtain review, it

would have been unnecessary for the Court to discuss third-party

bondholder refund suits at all.

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12 YAKAMA NATION V. TTB

King Mountain and Wheeler share the Yakama Nation’s

interest in preventing taxation. Indeed, the Yakama Nation’s

interest is one that, in another context, likely would be found

adequately protected by King Mountain and Wheeler’s

participation in a suit. See Fed. R. Civ. P. 19(a)(1)(B)(i),

24(a)(2); Shermoen v. United States, 982 F.2d 1312, 1318

(9th Cir. 1992). And third-party challengers are more than a

mere possibility: King Mountain and Wheeler were originally

parties to this action and appear to have every incentive to

raise these claims in a refund suit.

Our conclusion is consistent with that of the Sixth Circuit

in RYO Machine, where that court declined to apply the

Regan exception to manufacturers of high-speed cigaretterolling machines that challenged an agency ruling subjecting

retailers to the same taxation as the manufacturers. 696 F.3d

at 468. Because the manufacturers’ interests were

“inextricably intertwined with those of the retailers,” the

retailers could raise all relevant claims in a refund suit. Id. at

472. Moreover, there was “no need to find an elusive thirdparty challenger,” as a retailer “was originally part of this

lawsuit and appears to have every incentive to [raise these

claims] through a refund suit.” Id. Similarly, the Yakama

Nation’s interest in avoiding the taxation of its members is

inextricably intertwined with King Mountain and Wheeler’s

interest in avoiding their own taxation. Nor, given King

Mountain and Wheeler’s incentives to pursue a refund suit, is

there any need to find an elusive third-party challenger. We

agree that the narrow Regan exception cannot extend so far.

Because the Anti-Injunction Act bars the Yakama

Nation’s claims, we VACATE the judgment of the district

court and REMAND with instructions to dismiss for lack of

jurisdiction. Each party shall bear its own costs on appeal.

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