F OR P UB LIC AT ION


### U N I TED STA TES C O U R T O F A PPEA LS F O R T H E N IN T H C IR C U IT

G R AND C ANYON S KY WA LK D EV EL OP MENT , L L C, a Neva da l i m i t e d l i a b i l i t y c o mp an y, Plaintif f-Appellant ,

v.
‘S A ’ N YU W A I

NCORPORATED , a lso
n am e d a s ‘ S a ’ N yuW a : a

t r i b a l l ychar ted cor poration established under the laws of the H ualapa i I nd ian T ri be ; G R AND C ANYON R E S OR T C OR PO R ATI ON , a t r i b a l l ychar tere d corpor ation established under the laws of the H ualapa i I nd ian T ri be ; R I C HAR D W AL E R MA , S R .; W YNONA S I N Y ELLA ; R U BY S T EE LE ; C ANDI DA H UNT ER ; B ARNEY R OC K Y I MUS ; W AYL ON H ONGA ; C H A RLES V AUGHN , S R ., eac h individuals and members of the Hu a la pa i T ri ba l Co un c il; W ANDA E AS TER ; J A C I D UGAN , eac h individuals and Hualapa i I ndian Tr ibe e mpl oy e e s; D UANE Y EL L OWHAWK , Honora

ble, individual and judge of the Hua lapai Tr ibe Court , Defendants-A ppellees

. No. 12-15634

D.C. No. 3:12-cv-08030- DGC

OPI NI ON2 G RAND C ANYON S KYW ALK D EV

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T hi s s ummary cons t i t ut es n o part of t he op i ni on of

t he cour t

. I t ha s * b een p repa red b y co urt s t af f f o r t he co nveni ence o f

t he read er. Appea l from the United States District Court for the D istrict of Arizona David G. Campbe ll, District J udg e, Presiding

Argued and Submitted Oc tob e r 1 9, 20 12 —Sa

n F ra nc isc o, Ca lif

or nia Filed Apr il 26, 2013
Be fore : Ray

mond C. Fisher, Richar d C. Tallman,
and Con su e lo M . Ca lla

ha n, Cir c uit Judg e s. Opinion by

J udg e Ta llman

SUMMAR

Y *

Tribal Cou rt Jurisdiction
Affir ming the district c ourt’s judg ment i n an action
conce rning a dis pute over a revenue -shar ing c ontrac t betwee n a Ne vada corporation and a tribally char tere d corpor ation of the Huala pai Indian Tribe f

or the b u i lding a

nd operation of the Gra n d Cany on Sky

walk, the pa

nel held that the Ne vada corpor ation must e x haust tribal cour t remedie s befor e pr o c e e d in g in f

e d e r a l c o u rt o n it s c la im s c h a ll e n g in g the Tr ibe ’s a uth or ity to c on de mn i ts i nta

ng ibl e pr op e rt

y ri g hts in the c on tr a c t.3

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. Th e pa ne l c on c lud e d th a t th e ba d f a ithand futil ity
e x c e p t i o n s t o t h e e x h a

u s t i o nr e qu i r e m e n td i d

n o ta p p l y
. It he ld t hat whe re a tr iba l c ourt ha s a sse rt e d jur isd ic tio n a nd is
en te rta in in g a s u it , th e tr ib a l c o u rt mu s t h av e a c te d in bad faith for exhaust i o n to be excused; bad fa ith by a litiga nt instit uting the tr ibal court a ction will not suffice. The panel held that t h e s ubmitted evidence did not establish that the tribal co u rtoperated in bad fa ith or was contr olled by the tribal counc il in it s decision making . The pa nel also af

firmed the district court’s conclusion that the evidenc e did not meet the nar row futility

exception, which applies wher e exhaustion
wo u l d b e f u t i l e b e c a u s e o f t h e l a c k o f a d e qu a t e o p p o rtun ity to challeng e the triba l court’s jurisdiction. The panel held i napplicable the exhaustion ex ception for
case s in which the tribal court plainly lacks jurisdiction. The panel state d that the main rule of Montana v. Uni t ed States , 45 0 U .S. 54 4 ( 19 81 ), tha t g e ne ra lly

I nd ian tri bes la c k c ivi l authority over the conduct of

nonmembers on non- Indian land wi thi n a re se rv a tio n, wa s unli ke ly to a pp ly to the fa c ts o f t

his
case . The pa

nel held that the distric t co u rt corr ectly relied upon W a te r W h e e l C a m p R e c r e a ti o n A r e a , I

n c

. v

. LaRanc e , 642 F.3d 802 ( 9th Cir. 2011), which re cog nizes that a tribe’s inhere nt authority

over triba l land may provide for regulatory
a uth or ity ov e r non- I nd ians on

that la nd wi tho ut t he ne e d to consider Montana. Mo re ov e r, e ve n if the tr iba l c ourt

we re to a p p l y Montana ’s m ain rule, the Neva da cor poration’s
consensu al re lationship with t he tribal c orporation, or the financ ial implications of their ag ree ment, likely would place the ca se s q uare ly

within one of Montana ’s exceptions and allow for tr ibal jurisdiction.4 G RAND C ANYON S KYW ALK D EV

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. CO UN SEL Troy A. Eid (arg ued) a

nd J ennife r Weddle, Gre enber g Traur ig, L L P, Denver , Colorado; Tami Denise C o wden and Mark Tr atos, Gre enbe rg T raur ig, L L P, L as Ve g as, Ne vada;
an d Pame la O v e rton, G r e e nb e r g T r a u r ig , L L P, Ph o e n ix, Ar izon a , f

or Pla int if f- Ap pe lla nt.
J eff rey David Gr oss (argu ed ), Paul Kipp Charlton, Glen Hallman and Christopher W. Thompson, Gallag her & Ke nn e dy , P. A. , Phoe nix, Ar izon a , f or De fe nd ants -A

pp e lle e s.

OP IN ION
TAL L MAN, Circuit J udg e: We must once ag ain addr ess the subjec t o f t ribal cour t jur isd ic tio n ove r dis pute s ar isi ngwh e n n on -I nd ians c ho os e to do business in I

ndian country

. Under ly ing this jurisdictional qu e s ti o nis a

mu lt i- mi ll io nd o ll ar

d e v e lo p me n t c o n tr act involving the building and oper ati o n of a tourist destination overlook i n g one of the world’s g reat wonders, the G rand Cany on. The S ky

walk is a g lass-bottomed viewingplatform suspended 70 feet over t he rim of the Grand Canyon with the Colorado River flowingthousands of fe et below.
G r an d Ca n y o nSk y w a lk D e v e lo p me n t, L L C ( “ G CS D ”), a Ne vada c orporation, entere d into a reve nue-sha ring contra ct with Sa Ny

u Wa (“SNW”), a tr ibally char tere d corpor ation of the Huala pai Indian Tribe. When a dispute arose o v er the
c on tr a c t, G CSD su e d SN W in H ua la pa i T riba l Co ur

t to compel ar

bitration. W h i le ar

bitration proce eded, the Hualapa i Tribal Council exercised e minent domain and5

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c on de mne d

G C S D ’ s i nt a

ng ibl e pr op e rt

y ri g hts in t he c on tr a c t, which pra ctically

speakingleft SNW, as a tribal corpor ation, in contrac t with the Hualapa i Tribe. GCSD responded by

filing suit ag ainst SNW i n the United States District Court f or the District of Ariz ona seekingdecla

ratory judgme nt that the Hualapa i Tribe lac ked the autho ri ty

to condemn its intang ible proper ty rig hts and injun ct i ve re lief. The district c ourt denied the temporar y restra in i ng order

(“TRO” ) to enjoin SNW based on the pr inc ipl e of

c omi ty and re qu ir e d G CSD to e xha us t a ll possible tribal court re medies bef ore pr ocee ding in f

ederal court. The district court re lied on o u r d ec i sion in W ater W heel Camp Re creational Area, Inc . v. LaRance , 642 F.3d 80 2 ( 9th Cir . 2 01 1), and

a lso c on c lud e d th e re wa s n ot a su ff ic ie nt b a sis to a

pp ly the ba d f aithor futil ity e xce pti on s. F or the same re a so ns c ite d b y the dis tr ic t c ourt , w e a ff

ir m.
I
On Dec ember

31, 2003, GCSD and S NW en tere d into a
re ve nu e - s h a

r i n g “ D e v e l o p m e nt

a n d M a n a g e m e nt A g re e me nt” to establish a g lass bridg e tourist overlook and relate d f a c i l i t i e s kn o w na s t h e S k yw a l ko nr e m o t e tr i b a l l an d

. In addition, GCSD ag ree d to pr ovide shuttle service s from locations outside the re servation to the S ky walk. The parties signe d an ame nded agree ment on September 1 0 , 2007, and later c reated a trust to m anag e the sha red r evenue s on Marc h 10, 2010.
GCSD file d a complaint in Huala pai Tribal Court on F e bruary 25 , 2 01 1, se e kin g to c omp e l SN W to e ng a g e in arbitration pursuant to their ag ree ment’s dispute resolution clause

. SNW objecte d, but nonetheless par ticipated, and on6 G RAND C ANYON S KYW ALK D EV

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Fe bruar y 1, 2012, an Amer ican Ar bitration A s s o ciation arbit ra t o r set deadlines for a joint prehea

ring schedule and resolution of any

outst an ding disc overy

disputes, including de po sit ion s and

su bp oe na s.
As arb itr a tio n p ro c e e de d, the Hu a la pa i T ri ba l Co un c il passed Resolution No. 20-2011 on Apr il 4, 2011, enacting § 2.16 of the Hualapai L aw a nd Orde r Code, which c odified the Tr ibe’s powe r t o invo ke e min e nt d oma in t o c on de mn pro p erty for public use . On Fe bruar y 7, 2012, actingunder § 2. 1 6 , th e tr i b a l c o u n c i l p a s s e d R e s o l u t i o nN o
. 1 5

- 2 0 1 2 to a c qu ir e “ GC SD’ s c on tr a c tual int e re st i n th e Sky wa lk Ag re e me nt u

nd e r t he po we r o f e min e nt dom a in an d to do a ll things ne cessa

ry to acc omplish t h[at] purpose.” The Hua lapai Tribal Court foll owed by issuing a TRO ag ainst GCSD, and SNW f ile d a De c laratio n o f T akin g wi th t he tr iba l c ourt

. GC S D responde d on two fronts: it filed an expedited mot ion fo r a TRO in d istri c t c ourt to s top the e min e nt d oma in proce eding s, and it opposed the t aking in Hualapa i Tribal Court. After multiple hea rin gs, the district court denie d GCS D’ s T R O by

invoking the pr inciples of comity and
or de re d G CSD to exhau st tri ba l c ourt re me die s p ri or

to revie w in fede ral c ourt. GCSD timely appea led on Marc h 22, 2012.
II
We ha ve jurisdiction unde r 28 U.S.C. § 1292(a) (1) as an ap p eal from denial of injunctive r elief. A lthough TROs a re not ty pically appea lable interloc utory order s, we may revie w a TRO that “posse sses the qualities of a preliminary injunction” wher e t h e “district cour t holds an adver sary he ari ngand

the ba sis fo r t

he c ourt ’s or de r w a s st

ro ng ly7

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W h ile a p p e llate re v ie w o f a d istric t c o u rt’s d e n ia l o f a T R O is t yp ic a lly 1 fo r an abuse of d i scr et i o n, t he q uest i o n of t ri b al jur i sdi ct i o n and exhaust i o n of t ri b al remed i es takes p ri o ri t y i n t hi s case and pro vi d es t he appropri at e s t andar d of r evi ew. ch alleng ed.” S

e r v

. E m p s

. I n t’ l U n io n v

. Na t’ l U

n io n of He alt hc ar e W or k e rs , 598 F.3d 1061, 10 6 7 (9 th Cir. 2010). We reviewquestions of tribal cour t jurisdiction and exhaustion of t ri b al court remedies de novo and fa ctual finding s for c lear

err or. Sm ith v . S

ali sh Koo te na i Co ll ., 434 F.3d 1127, 1130 (9th Cir. 2006); Philip Morris USA, Inc. v. King Mountain Tobacco Co. , 5 6 9 F

. 3 d 9 3 2 , 9 3 8 n
. 1 ( 9th Cir. 2009). 1

III SNW arg ues, for

the firs t t i m e on appeal, that collate ral
e s to p p e l b ar s G CS D f

r o m r a is in g s im il ar

ju r is d ic ti onal qu e sti on s o n a

pp e a l th a t it

ra ise d b e fo re the dis tr ic t c ourt in
an e arl ie r case di smi sse d w ith out pr e jud ic e . B e c a

us e GCSD’s argument fails on th e merits, we ne ed not consider
e ith e r whe the r S NW w a ive d th is a rgume nt b y fa ili ngto r a ise it in the dist rict cour

t or whethe r collate ral e stoppel applies here

. IV
Fe dera l law has long r ecognized a respe ct for c omity and de fe re nc e to t

he tr iba l c ourt

a s th e a pp ro pr iate c ourt

of fi rs t impressio n t o deter

mine its jurisdi ction. Se e Nat ’l Fa rm e rs Union Ins. Cos

. v. C

row Tr ibe of Indians , 471 U.S. 845, 85 6– 57 (1 98 5) ; Io wa M

ut. Ins . Co. v . LaPlan te , 480 U.S. 9, 15 –1 6 ( 19 87 ); Bu rli ng ton N. R .R . Co . v . Cr ow Tr iba l Co u n c il , 94 0 F .2 d 1 23 9, 12 44 –4 7 ( 9th Cir . 1 99 1)

. As su

pp or t f or thi s8 G RAND C ANYON S KYW ALK D EV

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premise, t he Supreme Court cites: (1) Cong ress’s commitment to “a policy of supporting tr ibal self-g overnme nt and self- deter

mination;” (2) a policy

that allows “the f

orum wh os e jur isd ic tio n is be ingc ha lle ng e d th e fi rs t op po rt un ity to evaluate the fa ctual and le g al base s for the c hall en ge; ” and (3) judicial economy , which will be st be serve d “by allowing a full re cord to be develope d in the Tribal C o u rt.” Nat’l Fa rm e rs , 471 U.S. at 856.
W e have interpre ted Nat ion al F ar me rs as dete rmining that tribal court e x haustion is not a jur i sdictional bar, but
ra the r a pr e re qu isi te to a

fe de ra l c ourt ’s exer c ise of its jurisdiction. Cro w Tri ba l Co un c il , 940 F.2d at 1245 n.3. “Therefore, unde r Nat ion al F ar me rs , th e fe de ra l c ourt s should not even m ake a ruli ng on tribal court jurisdi ction

. . . u n ti l tr ib a l r e me d ie s ar e e xh a u s te d.” Stock W

est, Inc. v

. Confederated Tribes of the Co l vi l le Rese rvation , 873 F.2d 1221, 1228 (9th Cir. 1989)

. Howeve r, there ar e four
rec og nized ex ceptions to the req u irement for exhaustion of tribal court r emedies where : (1 ) a n a sse rt io n o f t

ri ba l juri sd ic tio n is mot ivated by

a de sir e to h ara ss o r i s c on du c te d in bad

fa ith ; ( 2) the a c tio n is patently violative of express jurisdictional pr oh ibi tio ns ; ( 3) e xha

us tio n woul d b e futil e be c a us e of the la c k of a de qu a te op po rt un ity to c ha llenge th e c ourt ’s jur isd ic tio n; o r ( 4) it i s plain that no fede ral g rant pr o vides for triba l g overna nce of nonmembers’ conduct on land
c o v e r e d b y Montana ’s main rule.
Bu rli ng ton N. R .R . Co . v

. Re d W olf , 1 96 F .3 d 1 05 9, 10 65 (9 th Cir. 1999) (citations omitted)

. GCSD raises bad f aith,9

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. futil ity , a nd pl ain la c k o f t

ri ba l g ov e rn anc e in s up po rt of its position. W e re v i ew each of these e x ceptions in turn but ult imate ly

c on c lud e tha

t no ne of fe rs a su ff ic ient ba sis to avoid exhaustion of tribal court re medies in this case.
V The Supreme Court has sug g ested that a fede ral c ourt ne e d n ot w a it unti l tr iba l r e me die s h ave been e xha us te d to
c on sid e r a

c a se if “ an a sse rt ion

of tr ibal ju ri sd ic tio n is motivated by

a desire to ha

rass or is c onducted in bad f aith.” Nat ’l Fa rm e rs , 471 U.S. at 856 n.21 (internal ci t ation omitted). Blac k ’s Law D ic tio na ry define s bad fa ith as “[d] ishonesty

of belief o r purpose .” 149 (9th e d. 2009). Nat ion al F

ar me rs used the passive voice and neither we, nor the S upreme Court, have e x pressly stated who must a ct in bad faith for it to apply . We now hold that wher e, as he re, a tribal court ha s asserted jurisdiction and is entertaininga suit, the tribal court must have acte d in bad fa ith for exhaustion to be excused. Ba d faith by

a litiga nt insti tuting t he tribal c ourt action will not suffice

. A
The sourc e of the bad fa ith ex ception i n t h e tribal c ourt c on te xt is Nat ion al F

ar me rs , 471 U.S. at 856 n.21, which imp or te d it fro m J

uid ic e v . V ail , 430 U.S. 327, 338 (1977). I n Juidice , the state court issued a commitment or der, a nd the defe ndant was arre sted afte r he f ailed to attend a

deposition,
a p p e ar f o r a h e ar in g , an d

p ay a fine. Id . at 329–30. Rather than appe al his case in state court, he filed a 42 U .S.C. § 1983 c la im in d is tr ic t court. Id . at 328–30. Upon re view, the Supreme Court held that a fede ral c ourt must abstain fr om making a dete rmination during a state pr ocee d i n g b ased on10 G RAND C ANYON S KYW ALK D EV

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the principle of comity unless the proc eedingwas motivated by a desire t o hara ss or was conducte d in bad fa ith. Se e id . at 334–38. The Court looked to the procee ding and the c ourt overse eing that proce eding to make its deter mination. See id. at 338 (holding that the bad f aith exception “m ay n ot be uti lize d unle ss i t is a lle g e d a nd pr ov e d th a t [th e State Court s] are enfor cingthe c o n t em pt proce dures in bad f aith or ar e motivated by

a desire to hara ss”). T he def endant ther e a lle g e d ba d fa ith by the pla int if fs , w hic h th e Cou

rt e xplic itl y held insufficie nt to trigg er the exception. See id. (holding that th e e xce pti on

wa s n ot t ri g g e re d b ecaus e “[w ]hil e so me para g raphs of

the complaint could be construed to make [bad fa ith ] al le g a tio ns a s to the c re dit or s, the re are no c omp ara ble alleg ations with resp ec t to appellant justices who issued the contempt o r d e r s ” )

. A n a lo g iz in g to th is c a s e , it mu s t b e the Hualapa i Tribal Court that ac t s in bad fa ith to avoid the
re qu ir e me nt t o e xha

us t tr iba l c ourt

re me die s.
Ad ditio nal ly , a b road er i nt erpre ta tio n w ou ld u

nn e c e ssa ri ly deprive tribal courts of jurisdiction and violate the principles of c omi ty that un de rl ie the e xha us tio n re qu ir e me nt. A p art y would need only alleg e bad fa ith by the opposing party , or a thi rd pa rt y , to re mov e the c a se to fe de ra l c ourt . Co mity principles re quire th at we trust that our triba l court counter parts ca n identify and punis h bad faith by litigants as
rea dily as we can. G CSD’s proposed re ad ing of the
exce p ti o nw o u ld

s w a ll o w th e r

u le an d un d e r mi n e the Su p re me Court’s g ener al principle of defe renc e to tribal
c ourt s.
GC SD poi nts to two Ni nth Cir c uit c a se s in supp or t of its broade r interpr etation of who may act in bad f

aith to trigg er the exception, but neither is dispositi ve of the issue. In A &A Conc rete, Inc . v. W

hite Mountain Apache Tribe , the11

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T he t r i bal coun ci l comm i ssi o ne d t he Eval uat i on prep ared by t he 2 N at i o nal Indi an Just i ce C ent er. appellants a

rgued that enf

orce ment of a statutory

scheme had b e e nin b a d f a it h

. 7 8 1 F

. 2 d 1 4 1 1 , 1 4 1 7 ( 9 th Ci r
. 1 9 8 6 )

. We reje cted the a

rgument beca

use there was no e vid en ce of bad faith in the rec ord. See id. Simi larly , in Atwood v. Fort Peck Tribal Court Assi niboine , we c onsidered and reje cted the ba d faith exception i n a sing le sentenc e by stating that “[t] here has bee n no showing that [t he def endant] asserte d tribal jurisdiction in bad faith or that she a cted to har ass [the pla int if f]. ” 51 3 F .3 d 9 43 , 9 48 (9 th Cir

. 20 08 ). Al tho ug h b oth of these de cisions looked beyond the tribal court for their bad faith ana ly sis, the t o p ic re ceive d only a cur sory

revie w and was quickly dismiss ed. Neither ca se def ined the scope of bad fa ith , a nd mor e imp or

tantl y , n e ith e r ca se a

pp lie d th e ba d f

a ith exception. Ulti m ately , wher e a tr ibe has a n established jud ic ia l s y s t e ma s h e r e , t h e i n t e r p r e t a t i o nm o s tf

a i th f u l to Nat ion al F

ar me rs is t hat i t mu st b e the tr iba l c ourt that a c ts in b a d f a ithto e xemp t th e pa

rt y fro m exha

us tin g ava ila

ble tr iba l c ourt

re me die s.
B
Th e fa c ts of thi s ca se do no t supp or t a find ing of ba d f

a ith on the par

t of the t ri b al cour

t. GCSD urge s us to determine that the Hualapai T

r i b a l Court Evaluation , the proff ere d 2 testimony of its a

uthor, Ex ecutive D irec tor J oseph My ers, a nd oth e r e vid e nc e pr ov e d th a t th e tr iba l c ourt and tr iba l c ounc il
wer e inextricably

intertwined such that ba d faith by the tribal council co u l d b e imputed to the tribal cour t. Howeve r, the pr of fe re d e vid e nc e do e s n ot c on c lus ive ly su pp or t tha t c la im. The majority

of the s t at em ents in the Evaluation are broad gen er al i z at i o n s o r gu i d i n g p ri n ci p l es
. T wo s p ec i fi c f i n d i n gs12 G RAND C ANYON S KYW ALK D EV

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d ir e c tl y r e f u te G CS D ’ s c o n te n ti o n s : ( 1 ) “ n o inte r v ie w ee stated that there was a

ny direc t interfer ence in court matters by tr iba l cou ncil me mbe rs ;” and (2 ) “ [t]he jud ic iary

is separ ate a nd apar t from t he tribal council.” Additionally , the tribal counc il’s act of br ingingin an extern al auditi ng or g aniza tio n le nd s c re dib ili ty

to t he tr iba l c ourt sy ste m a s a whole. GCSD challeng es the district cour t’s ref usal to h ear testimony from the Evaluation ’s author, Mr. My ers. “ A dis tr ic t c o u rt’ s e v id e n ti ar y r u li n g s s h o u ld

n o t b e r e v e r s ed absent c lear

abuse of discretion and some prejudice .” S. E. C. v. Jaspe r , 678 F.3d 1116, 1122 ( 9th Cir. 2012) (citation and internal quotatio n m arks omit ted). “ For us to rever se a de c isi on a s an a bu se of dis c re tio n, we mus t have a de fi nit e and fir m co n v iction that the district court committed a c lear
err or of judg ment in the conclusion it rea ched.” United States
v

. Co m p r e h e n s iv e D r ug Te

s ti ng, Inc. , 621 F.3d 1162, 1175 (9th Cir. 2010) (c itation and internal quotation m arks omitted).
Th e d i s t r i c t c o u r

t d i d n o t a

b u s e i t s d i s c r e t i o n wh e n it d e n i e d G C S D ’ s r e qu e s tt o i n tr o d u c e M r
. M ye r s ’ t e s t i m o n y. GCSD requeste d an eme rg ency evidentiar y hear ing but f

ailed to n oti fy the c ourt

of its int e nti on to i ntr od

uc e wi tne ss te sti mony . A s a re su lt, SNW d id n ot h ave an o pp or tun ity to subpoena de fense witnesses. Out of f airne ss to SNW and due to t he ur g e nc y

of a TRO pr oc e e din g , th e c ourt a c c e pte d o nly Mr. My ers’ written repor

t. The cour

t review ed the published Evaluation and lef

t open the possibility

of an a dditional
e v i d e n t i ar y h e ar i n g i f

n e c e s s ar y.
Ul tim a te ly , th e c ourt ’s de nial of the a dmi ssi on

of his actua l testimony

was not an a

buse of discr etion beca

use the13

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. Evaluation documented Mr. My ers’ finding s and provided a balanc ed re view of the Huala pai judiciary . When considere d toge th e r , th e s u

b mi tt e d e v id e n c e d o e s n o t e s ta

b li s hth a t t

he tribal court ope rate d in ba d faith or is controlled by the tribal
co u n ci l i ni t s d ec i s i o nm ak i n g.
VI Futility is a lso a rec og nized e x ception to the require ment to e xha us t c ourt tr iba l r e me die s. Whe re “ex ha us tio n w ou ld be futil e becaus e of

the la c k o f a de qu a te op po rt un ity to challeng e the c ourt’s jurisdiction,” a pa rty is ex cused f

rom exhausting claims in tribal court. Re d W olf , 196 F.3d at 1065. Ge ne ra lly , th is e xce pti on a pp lie s n arr ow ly

to o nly the mos t extreme ca ses. See J

ohnson v. Gila River I

ndian Cmty. , 174 F.3d 1032, 1036 ( 9th Cir. 1999 ) (two-y ear delay called into question the possibi lity of tribal cour

t remedie s); Krempel v. Prairie Island Ind ian Cmty. , 125 F.3d 621, 622 (8th Cir. 1997) (ex haustion not require d wher e ther e wa s no functioning tribal court)

. GCSD has failed to show that the Huala pai Tribal Court d o e s n o to f

f e r ana d e qu a t e an d

i mp art i a l o p p o rtun i ty

to challeng e jurisdiction. Although H ualapa i L aw an dOrde r Code § 2.16(K) orig inally prec luded a judg e pro te m from he ari ngc on de mna

tio n c a ses, th e tr iba l c ourt re me die d th is separ ation o f powers issue by invalidating that section and appointing a

neutra l p ro t em judge to hear this case. The Hualapa i adjudicator

y proce ss has continued, as evidenc ed by
su bmi tte d tr iba l c ourt

and tr iba l c ourt

of a pp e a ls o rd e rs . B oth14 G RAND C ANYON S KYW ALK D EV

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.

A p p e llee s’ o u tstan d ing S e c o n d M o tio n to S u p p le m e n t the R e c o rd , O c t. 3 5 , 2 0 1 2 , E C F N o
. 38 , and A p p el l ant ’ s o ut st and i ng M o t i o n t o Sup p l em ent the R e c o rd , O c t. 1 5 , 2 0 1 2 , E C F N o . 3 9 , ar e gr a n te d . S u b m itt e d m a te ria ls have b een revi ewed and were co nsi d ered i n t hi s d eci si o n. pa rt ie s to thi s a

pp e a l are pa

rt ic ipatin g in tho se pr oc e e din g s. 3 The tribal c ourt deter

mined it has jurisdic t i on to reviewthe condemnation act under t h e ca tchall sec tion of the Huala pai L aw a nd Orde r C o d e, § 3.1(d), whic h states: “the Tr ibal Court ma y be g uided by common law as develope d by other Tribal, fe dera l or state cour ts” wher e no law i s direc tly on point. Even the Evaluation offe red a s evidenc e by GCSD as proof of futility includes statements such as, “[t] he Hua lapai Tribal C o urt is a func tional, established sy stem with court pro cedures” a

nd “[t] he judiciar

y is separate and a

part fr om the tribal counc il.”
The submitted evidenc e supports the district cour t’s finding that the tri b al court ope rate s independe ntly from the tribal counc il and the evidenc e pre sented doe s n o t meet the
na rr ow futil ity e xce pti on
. GC SD is ac tiv e ly lit ig a tin g its c a se in H ua la pa i T ri ba l Co ur

t, c on tr a dic tin g its argument that it has not had a

n “ade quate oppor

tunity to challeng e the c ourt’s jurisdiction.” Re d W

olf , 196 F.3d at 1065.
VI I
F ina lly , w e tur

n to the thi rd i ss ue r a ise d o n a pp e a l, wh e the r t he trib a l c ourt

pla inl y la c ke d ju ri sd ic tio n o ve r t

his
case . The Supreme Court stated in Stratev

. A- 1 Co ntrac tor s that wher e “it is pla in that no fede ral g rant provide s for tribal g overna nce of nonmembers’ conduct on lan d cover ed by Montana ’s m ain rule, it will be equa lly evident that tribal courts lac k adjudicator

y authority over disputes a

rising f rom15

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.

A l t ho ug h G C S D raises m obi l i a s equunt ur pe r s onam as ano t her mea ns 4 t o pr ecl ude t r i bal j ur i s di ct i on i n t he f i r s t i ns t anc e, i t s ar gu ment conf l at es t he i nt erl o cut o ry jur i sdi ct iona l que st i o n wi t h t he m eri t s o f t he
co nd em nat i o n act i o n. T hi s o p i ni o n f o cuses on t he jur i sdi ct i o nal que st i o n, and we need not d et erm i ne t he si t us o f the co nt ract to rende r o ur decis i o n. such conduc t.” 520 U. S. 438, 459 n.14 (1997) ( Montana “desc ribed a

g ener al rule that, absent a diff ere nt cong ressional dire ction, I ndian tribes lack c ivil authority over the conduc t of no n m ember s on non-Indian land within a
rese rvation.” Id . at 446 ). We hol d th a t th is Strateexception does not apply

here to deny

the tribal cour

t of its init ial jurisdiction.
Th e tr iba l c ourt do e s no t pl a inl y la c k ju ri sd ic tio n b e c a

us e Montana ’s ma in ru le is un lik e ly to a pp ly to the fact s o f thi s case . Fur

thermore , the district court c orre ctly relied upon W a ter W heel , w h ic hp r o v id e s f

o r tr ib a l j ur is d ic ti o nw ithout
even rea ching the application of Montana

. Even if the tribal
c o u rtw e r e t o a

p p l y Montana ’s main rule, G CSD’s consensua l relationship wi th SNW or the fina ncial imp lic a tio ns of the a g re e me nt lik e ly pla c e it s qu are ly wi thi n one of Montana ’s exceptio n s and allow f or tribal jurisdiction. 4

A
Montan a v. United States , 450 U.S. 544 (1981), is “the pathm ar k in g c a s e c o n c e r

n in g tr ib a l c iv il a

u th o r it y o v er nonmembers.” S

tr a te , 5 2 0 U.S. at 445. But a s the district court properly

deter mined, a tribe’ s inherent a uthority over tribal land may

provide f

o r re g ulatory

authorityover nonI ndians on that land wit h o u t the nee d to consider Montana

. See W ater W heel , 642 F.3d at 804–05. As a starting point, we16 G RAND C ANYON S KYW ALK D EV

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.

re c og nize “th e lon g -s tand ingru le that Ind ian tr ibe s p os se ss inhere nt sovereig n pow e r s, including the authority to exclude, unless Congr ess clea

rly and unambiguously

say s otherwise.” Id . at 808 (c itation omit ted).

I n W ater W heel , a non-In d i an corpor ation enter ed into a lease ag ree ment with a g roup of tribe s for t h e development and oper ation of a recr eational pa rk and ma rina on tribal land alongthe Colorado River. Id . at 805. Un d er the contra ct Wat e r Whe e l c oll e c te d fe e s fr om us e rs and made pay me nts to the tribes. Id . After a dispute ar ose, Water Wheel stopped making pay

ments and re fused to vac ate the pr emises af ter the lease ended. Id . The tribe s fi led suit in tribal court, and Wat e r Wh e e l mo ve d to dis mis s the c a se , a rguin g the c ourt

did not have jurisdiction under Montana

. Id . at 80 5– 06 . We he ld that “whe re the non-Indian ac tivity in ques t i on occur

red on tribal land, t he ac tivity

interfe red dire ctly

with the tribe’s inhere nt powers to exclude an d m an age its own lands, a nd there are no competingstate intere sts at play , the tribe’s status as landowne r is enoug h to suppo rt regulatory jurisdiction
w i t h o u tco n s i d er i n g Montana ,” id

. a t 81 4, and un le ss a limit ation applies, adjudicatory jurisdiction, as well. Id . at 814–17. Despite GCSD’s attempts to distinguish W ater W heel , the fac tual differ ence s do not diminish the rea soning or t he application of the decision her e. Just as in W ater W heel , GCSD ag ree d to develop an d manag e a tour ist location on tr iba l la nd in e xchan g e fo r a

fe e . It is the imp re ssi ve be a uty of the tribal land’ s location that is the valuable c enter piece of thi s c on tr ov ers y . T ouri sts vis it the Sky wa lk b e c a

us e it provides unpar alleled view ing of the Gra nd C an y on, a loc a tio n to wh ic h th e Tr ibe ha s th e po we r t o lim it a c c e ss throug h its inhe rent sovereig nty and the r ight to exclude.17

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. W ater W heel is instructive because there, just as here, it was
a c c e ss t o th e va lua

ble tr iba l lan d that wa s th e e sse nti a l ba sis fo r t he a g re e me nt. Although this ca se involves an intang ible prop er t y rig ht within a contra ct, rather than a leasehold as in W ater W heel , the contra ct in this case e qually interfe red w ith the Hualapa i’s
a bil ity to e xclu de GC SD f

ro m th e re se rv a tio n. Th e dis pute betwee n GCSD a n d S NW over the mana g ement of the Sky wal k pr op e rt

y re su lte d in

the Hu a la

pa i takin g dr a sti c me a sure s: p a ssi ngan o r d i n a n c e to c on de mn G CSD ’s pr op e rt y ri g hts , p ur

po rt ingto s ub sti tut e the Tr ibe in t he pla c e of

GC SD to car ry out the manag eme n t of the over look, and spending more than two year s in lit igation. W ith the pow er to e x clude comes the le sser powe r to regulate. South Dakota v. Bourland , 508 U.S. 6 7 9 , 689 (1993). Where a tribe ha s re g u lato r y ju r is d ic ti o nan d

inte r e s ts , s u c ha s th o s e a t s ta ke here , it is also li kely

to h ave adjudicatory

jurisdiction as the district court conc luded. See W at erW heel , 642 F.3d at 814–16.
GC SD a rgue s th e Tr ibe wai ve d it s inhe re nt s ov e re ig nty wh e ni te s t a

b l i s h e d S N W t o m an a g e t h e S ky w a l k c o n tr a c t, but that is not t he ca se. Merrion v. J icarilla Apache Tribe cautioned against conflating a tribe’s a g ree ment to contrac t with a waive r of triba l s o vere ignty . 455 U.S. 130, 144–48 (1982). “ T o p r e s u me th a t a s o v e r e ignf

o r e v e r w a iv e s the ri g ht t o e xer c ise on e of its so ve re ig n p ow e rs un le ss i t expre s s l y rese rves the r ight to exerc ise that power in a
c omm e rc ia l ag re e me nt tur ns the c on c e pt of so ve re ig nty on its head . . . .” Id

. a t 1 4 8

. G CS D r e li e s on Merrion wher e the Court state d “ [w] hena

tr ibe g ra nts a no n- Ind ian th e ri g ht t o be on I nd ian la nd , th e tr ibe a g re e s n ot t o e xer c ise its ult imate power to oust the non-I ndian as long a s t he non-Indian18 G RAND C ANYON S KYW ALK D EV

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.

complies with the initial conditions of entry .” Id . at 144. B ut that arg ument g oes to the merits of the c ondemnation ac tion
and no t to the jur isd ic tio na l que sti on be fo re us no w. Re a d in its entirety , Merrion ho lds that un le ss e xpre ssl y wa ived “in
un mis ta ka ble te rm s” wi thi n th e c on tr a c t, a tr ibe re ta ins its inhere nt sovereig nty , and as suc h, the tribe may have jurisdiction. Id . at 148.
B
Fur thermore , althoug h the main rule in Montana v. United States is that a tribal court lacks regulatory authority over the activities of non-Indians unless one o f i ts two ex ceptions
a pp ly , this c a se is n ot Montana

. Montana , 450 U.S. at 565–66. Montana considere d tribal jurisdiction over nonmember a ctivities on non-Indian land, he ld i n fe e sim ple , within a re servation. Id . at 547, 565–66. The la nd underlying this case, howe ver, is fede ral I ndian l and held in trust for the Hualapa i Tribe. The dispute arose out o f an ag ree ment related to the deve lopment, operations, and manag ement of t h e S kyw a l k , ana s s e tl o c a t e d i nIn d i anc o un tr

y.
Wit h the exception of Nevada v . Hicks , 533 U.S. 353 (2001), the Supre me Court has applied Mo n tana “ a lmo st exclusively

to questions of j urisdiction arising on non-Indian land or its equivalent.” W ater W heel , 642 F.3d at 809. When decidingwhether

a tribal c ourt has jurisdiction, land
owner ship may

sometim es p rove dispositive, but when a
c omp e tin g state int e re st e xists c ourt s b a lanc e that int e re st ag ainst the tribe’s. See H icks , 533 U.S. at 360, 370. Her e, as the d is p u te c e n te r s o n H u a la p a i tr u s t la n d an d th e r e ar e no obvious state interests at play , the Hicks e xce pti on is unli ke ly to require Montana ’s application. At the very least, it cannot be said that the triba l court plainly lacks jurisdiction.19

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.

C
Even if Montana applied, either of its two rec og nized
e xce pti on s c ou ld a lso pr ov ide fo r tr iba l juri sd ic tio n in thi s c a se . T he fi rs t e xce pti on a llo ws “ I nd ian tr ibe s [ to ] re ta in inh e re nt so ve re ig n po we r to e xer c ise so me fo rm s of ci vil jurisdiction over non-Indians on their re servations” where
n o n me mb e r s e n te r

into “ c o n s e n s u a l r e lati o n s h ip s w it hthe tr ibe or its me mbe rs , thr ou g h c omm e rc ia l de a lin g , c on tr a c ts, lease s, or other a

rra ng ements.” 450 U.S. at 565. The sec ond exception exis ts wher e the conduct of a non-Indian “thre atens or has some dire ct ef

fec t on the political integr ity , the economic se curity , or the health or welfare of the tribe.” Id

. at 566. Additionally , tribal laws may be fa irly i m p o s ed on nonmembers if the nonmember consents, either e x pressly or throug h his or her a cti o n s
. See P lains Commerce Bank v. Long Family Land & Cattl e Co. , 554 U.S. 316, 337 (2008).
GCS D voluntarily

enter ed into a contr act with SNW by signin g an a g re e me nt to de ve lop and mana g e the Sky wa lk and both par

ties were repr ese n t ed b y

counsel. The scope of the agr eeme nt was ex tensive, l asting more than e ight y ear s at the tim e the c a se wa s fi led in the dis tr ic t c ourt , a nd wi th
a g re e d u po n p os sib le dama g e s of up to $ 50 mil lio n f or e arl y termination. The parties revie wed and signe d an am en d ed ag ree ment and ente red int o a subsequent trust y ear s later. Whil e the ag ree ment was between G CSD and SNW , and not the Tribe dir ectly , the first exception applies equa lly whether the contra ct is with a tribe or its member s. Montana , 450 U.S. at 565. Gi v en t h e conse nsual nature of the
re latio ns hip be tw e e n th e pa rt ie s a nd the po te nti a l e c on omic impact of the a g ree ment, the tribal court could conclude it has jurisdiction over SNW’s dispute with GCSD under either of Montana ’s e xce pti on s.20 G RAND C ANYON S KYW ALK D EV

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.

Moreove r, GCSD should have re asona b ly anticipated beingsubjected to the Tr ibe’s jurisd i ct i o n. See P lains Commerc e , 5 5 4 U

. S. a t 3 3 8

. A rti c le 2 , § 2

. 1 o f th e o r ig in al GCSD/S NW ag ree ment specifie s that the “Mana g er [GCSD] here by acc epts its appointment as the deve loper a nd manag er of the Projec t and ag ree s to develop, super vise, manag e, and op e rate the Pr oje c t . . . in c omp lia nc e wi th a ll a

pp lic a ble fede ral, [ Hualapai ] Nation , state , an d lo c a l la ws , o rd ina

nc e s, rules, and r egulatio n s, including a ll employ ment laws and regulations.” (emphasis added). Thus, the nece ssary corollar y would be that if GCSD oper ated in violation of the Tr ibe ’s laws , it

c ou ld be su

bje c te d to its jur isd ic tio n. GC SD consente d to be bound by t h i s lang uag e whe n it signed the
a g r e e me n t w it

hSN W.
VI II The judg ment of the district c ourt requiring exhaustion of tr iba l c ourt

re me die s p ri or

to p ro c e e din g wi th t

he a c tio n in fe de ra l c ourt

is AF F IRM ED

.