amendment, only the United States had standing to bring a suit against someone submitting a
false claim to the Government if the Government had information in its possession that proved
the falsity of the claim. Jd. at 941, 117 S.Ct. at 1874. Private parties at the time could bring suit
on behalf of the United States only where the Government did not have that information in its
possession. Jd, The amendment removed this restriction and allowed private parties to bring
lawsuits even where the Government had the information. Jd. The Supreme Court found that the
statute could not be applied retroactively:

The extension of an FCA cause of action to private parties in

circumstances where the action was previously foreclosed is not

insignificant. As a class of plaintiffs, gui tam relators are different

in kind than the Government. They are motivated primarily by

prospects of monetary reward rather than the public good. ... In

permitting actions by an expanded universe of plaintiffs with

different incentives, the 1986 amendment essentially creates a new

cause of action, not just an increased likelihood that an existing

cause of action will be pursued . . . . This is true even if a cause of

action remained open to some other party.
Id. at 949-50, 117 S.Ct. at 1877-1878.

Recently, the Seventh Circuit relied upon Hughes in assessing the retroactive application
of an amendment to the Food Stamp Act and concluding that an amendment cannot be applied
retroactively if it increases the likelihood that a person will be sued for its actions. Stone v.
Hamilton, 308 F.3d 751, 756-57 (7" Cir. 2002). Under the Food Stamp Act amendment,
Congress required states to collect from food stamp recipients where the state agency had over-
issued food stamps in error, and enabled the states to collect for the error by involuntarily

reducing a recipient’s food stamp allotment. Prior to the amendment, the states could collect

when their agencies had over-issued food stamps, but they could not do so by involuntarily



I. Retroactive Application of Amendment

Defendant’s second objection is sustained. As an initial matter, retroactive application of
a statute or an amendment “is not favored in the law.” Bowen v. Georgetown Univ. Hosp., 488
U.S. 204, 208, 109 S.Ct. 468, 471, 102 L,Ed.2d 493 (1988). In fact, there is a “presumption
against retroactive legislation [that] is deeply rooted in our jurisprudence.” Landgraf v. USI Film
Prods., 511 U.S. 244, 265, 114 S.Ct. 1483, 1497, 128 L.Ed.2d 229 (1994). “Elementary
considerations of fairness dictate that individuals should have an opportunity to know what the
law is and to conform their conduct accordingly; settled expectations should not be lightly
disrupted.” Jd.

When assessing the potential for retroactive application of a statute, the Court looks to the
face of the amended statue to determine if Congress “has expressly prescribed the statute’s
reach.” Stone v. Hamilton, 308 F.3d 751, 754 (7" Cir. 2002). “When congressional intent is
clear as to the issue of prospective versus retroactive application, then this intent controls.”
Mozee v. American Commercial Marine Serv. Co., 963 F.2d 929, 932 (7" Cir. 1992) (citing
Kaiser Alum. & Chem. Corp. v. Bonjorno, 494 U.S. 827, 838, 110 S.Ct. 1570, 1577, 108 L.Ed.2d
842 (1990)). The amended statute, however, does not provide any such guidance. Congress has
not stated its intent on whether this amendment should be applied retroactively.

Without a clear indication of Congress’ intent, the Court must determine whether
applying the amendment to conduct that occurred before the amendment would provide for an
impermissible retroactive effect. The Supreme Court addressed a similar issue in Hughes
Aircraft Co. v. United States, 520 U.S. 939, 117 S.Ct. 1871, 138 L.Ed.2d 135 (1997). In Hughes,

the Supreme Court was confronted with changes to the False Claims Act. Before the



reducing a recipient’s allotment. The Seventh Circuit held that “despite the fact that the plaintiffs
remained liable for the overissuances both before and after the enactment of the amendments,
viewing the effect of the amendment in a commonsense and functional manner, since the
enactment of the amendment, the food stamp recipients face increased legal consequences.” Id.
at 756. The Seventh Circuit further found that “a new statute can increase the legal
consequences to the affected party without necessarily increasing the dollar amount of liability.”
Id.

Here, allowing Native American Arts to seek remedies for conduct that allegedly
occurred before Native American Arts had standing to sue would have the same tetroactive effect
that Hughes and Stone found impermissible. Before the 2000 amendment, the only private party
that had standing to file a lawsuit under the Indiana Arts and Crafts Act was a Native American
tribe. See Native American Arts, Inc. v. Moon Raven International, Inc., 1998 WL 325245
(N.D.IIL Jun. 10, 1998)(holding that Native American Arts, an Indian arts and crafts
organization, does not have standing to sue under the 1990 Act). By expanding the class of
plaintiffs that had standing under the Act to Native American arts and crafts organizations (who
may also be competitors of the parties they sue), Congress increased the likelihood that a person
will be sued for the conduct described in the Act. Accordingly, Defendant’s second objection to
Plaintiff's Jury Instruction No. 8 is sustained.

DATED: January 21, 2003 ENTERED:

(acct S-£

AMY J. SAVE

United States District Judge



Minute Ord Porm (0897)

~ United States District Court, Northern District of Illinois
Name of Assigned Judge Sitting Judge if Oth
or Magistrate Judge Amy J. St. Eve than ‘Assigned Judge
CASE NUMBER 01 C 2370 DATE 1/21/2003
CASE Native American vs. Earth Dweller
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

MOTION: of the motion being presented.)

DOCKET ENTRY:

Q) Oo Filed motion of [ use listing in “Motion” box above.)

(2) ao Brief in support of motion due

(3) Q Answer brief to motion due____. Reply to answer brief due. .

(4) a Ruling/Hearing on set for at

(5) im) Status hearing[held/continued to] [set for/re-set for] on set for at :

6) a Pretrial conference[held/continued to) [set for/re-set for} on setfor______ at. .

(7) Oo Trial{set for/re-set for] on at

(8) QO [Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}

OOFRCP4(m) (Local Rule 41.1 O)FRCP41(a)(1) [1 FRCP41(a)(2).

(10) ] [Other docket entry] | Enter Memorandum Opinion and Order. Defendant's ebjections to Plaintiffs’ Proposed
Jury Instruction No. 8 are overruled in part and sustained in part. Defendant's objection to the reference to “directly
or indirectly” is overruled, Defendant's objection to the retroactive application of the statute allowing Plaintiff to seek damages
for Defendant's conduct that occurred before the statute was amended is sustained. The parties are directed to simultaneously
file supplemental submissions addressing the question of whether Plaintiff should be allow:d to amend its complaint to include
an Indiana tribe as a plaintiff in light of the Court's ruling. A courtesy copy of each party's submission should be provided to
Chambers no later than noon on January 29, 2003. Each party should serve the other party by fax or hand delivery.

aii) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court.
No notices required.
Notices mailed by judge's staff.
Notified counsel by telephone,
oa | Docketing to mail notices.

Mail AO 450 form. LUNDI LIISA SA
Copy to judge/magistrate judge. Walg

coumeam eSeiild 12 er ey senate

THv deputy's a ee,
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IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS ~DOCKETED

EASTERN DIVISION
JAN 2 2 2003
NATIVE AMERICAN ARTS, INC., )
)
Plaintiff, )
) No. 01 C 2370

v. )

) Judge Amy J. St. Eve
THE WALDRON CORPORATION, )
)
Defendant. )

MEMORANDUM OPINION AND ORDER

Native American Arts, Inc. (“NAA”) has sued The Waldron Corporation (“Waldron”) for
violation of the Indian Arts and Crafts Act of 1990 (the “1990 Act”) and The Indian Arts and
Crafts Enforcement Act of 2000, 25 U.S.C. §305e. Judge Conlon previously ordered a bifurcated
trial on the issues of liability and damages. The parties have submitted proposed jury
instructions. The Court addresses the objections to Plaintiff's Jury Instruction No. 8 below.'

ANALYSIS

Plaintiff's Jury Instruction No. 8 states, in relevant part:

This is an action for alleged violations of the Indian Arts and Crafts
Act which provides that an Indian Arts and Crafts Organization
may bring an action against a person who, directly or indirectly,
offers or displays for sale or sells a good in a manner that falsely
suggests it is Indian produced, an Indian product, or the product of

a particular Indian or Indian tribe or Indian arts and crafts
organization resident within the United States.

' The Court is addressing this proposed instruction first in light of Plaintiff's
representation at the pre-trial conference that it wanted to be heard in advance of trial on the issue
of amending the complaint to include an Indian tribe as a Plaintiff if the Court sustained
Defendants’ objections. The Court will address the other jury instruction issues in a subsequent
tuling.

137



Defendant objects to this instruction on two grounds. First, it argues that the reference to the
terminology “directly or indirectly” is not appropriate, because that language was not contained
in the statute or regulations until after November 9, 2000, and at least some of the conduct and
sales took place before the amendment on that date. Second, Defendant claims that the statute
should not be applied retroactively to allow Plaintiff to seek damages for Defendant’s conduct
that occurred before the statute was amended to afford Plaintiff standing to bring a lawsuit.
IL Addition of “Directly or Indirectly”
Defendant’s first objection to Plaintiff's Jury Instruction No. 8 is overruled. From the
face of the statute, the addition of the words “directly or indirectly” did not change the substance
of the statute. As the legislative history makes clear, the addition of this language merely
clarified the statute:
[T}o enhance the ability of the plaintiff to assess and calculate
damages, the phrase “directly or indirectly” will be added after the
phrase “against a person who.” This provision clarifies that suit
may be brought against a manufacturer and/or supplier when the
plaintiff is not in direct competition with the manufacturer or
supplier.

Senate Report (Indian Affairs Committee) No. 106-452, Oct. 2, 2000.

Further, the addition of these words has no bearing on this lawsuit. Defendant has
stipulated that it “is engaged in the design and sale of jewelry,” which includes a line of products
called “Circle of Nations” that is created in a Native American style. (Statement of Uncontested

Facts 8.) Thus, the issue is not whether Defendant “offers or displays for sale or sells a good,”

but instead whether it “falsely suggested its products were made by Native Americans.” (Jd.

q12,)