Opinion ID: 202227
Heading Depth: 2
Heading Rank: 2

Heading: The Controversy at Hand.

Text: 12 Rhode Island law establishes a complex scheme for the taxation of cigarettes. See R.I. Gen. Laws §§ 44-20-1 to 44-20-55. Under that scheme, the State imposes an excise tax on all cigarettes sold, distributed, or held for sale or distribution within its borders. Id. §§ 44-20-12, 44-20-13. The excise tax is collected through the sale of cigarette stamps, which must be affixed to every package of cigarettes brought into the State. Id. §§ 44-20-13, 44-20-18, 44-20-29. A dealer has twenty-four hours after coming into possession of unstamped cigarettes within which to affix the stamps. Id. § 44-20-29. The sale or purchase of unstamped cigarettes is a misdemeanor. Id. §§ 44-20-33, 44-20-35, 44-20-36. Unstamped cigarettes are contraband and, as such, are subject to seizure by the State. Id. § 44-20-37. 13 On July 12, 2003, the Tribe, acting pursuant to a tribal ordinance, opened a smoke shop on the settlement lands. The smoke shop offered an array of cigarettes for sale to the general public (i.e., members of the Tribe and nonmembers alike). The Tribe's avowed purpose in establishing the smoke shop was to generate funds for its social programs. 14 Believing that the State lacked the legal authority to compel its compliance with the cigarette tax scheme, the Tribe refused to purchase cigarette stamps. It also refused to precollect the State's sales tax, see id. § 44-18-19, from those who purchased the Tribe's cigarettes. By dint of these refusals, the Tribe was able to sell unstamped, untaxed cigarettes at prices substantially below market. 15 On July 14, 2003, Rhode Island State Police entered the settlement lands and raided the smoke shop. Their intent was to seize contraband cigarettes pursuant to a search warrant issued by a state court of competent jurisdiction. Despite the warrant, the troopers' entry sparked an altercation with members of the Tribe. When the smoke cleared, the troopers had arrested eight individuals, including the Tribe's Chief Sachem, and had confiscated the Tribe's entire inventory of unstamped, untaxed cigarettes. 16 In the aftermath of this acrimonious episode, the Tribe filed suit in the federal district court, seeking a declaratory judgment that its sovereign status as a federally recognized Indian tribe precluded the State from applying its cigarette tax scheme to the Tribe's sale of cigarettes on the settlement lands. Relatedly, the Tribe sought a declaration that sovereign immunity insulated it from the State's criminal process and shielded from arrest those tribal members who had participated in the operation of the smoke shop. After submitting the case on stipulated facts, the parties cross-moved for summary judgment. 17 The district court granted brevis disposition in the State's favor, grounding its decision on two crucial determinations. First, the court concluded that the legal incidence of the cigarette tax fell on the purchaser rather than the seller and that, therefore, the Tribe had to comply with the tax scheme when selling cigarettes on the settlement lands. 296 F.Supp.2d at 167. Second, the court concluded that section 1708(a) of the Settlement Act authorized state officers to enter the settlement lands, seize the Tribe's stock of unstamped, untaxed cigarettes, and arrest tribal members working in the smoke shop. Id. at 170, 177. 18 The Tribe appealed. A panel of this court affirmed in part and reversed in part. The panel accepted the district court's determination that the Tribe must comply with the State's cigarette tax scheme when selling cigarettes on the settlement lands. 3 Op. at 24-25. The panel disagreed, however, with the lower court's ruling that the State could enforce the cigarette tax scheme through the execution of a search warrant against the Tribe. Id. at 33. Although section 1708(a) preserved the State's criminal jurisdiction over the settlement lands, the panel reasoned, it did not grant the State criminal jurisdiction over the Tribe and, accordingly, the Tribe's sovereign immunity prevented the State from executing a search warrant against the Tribe. Id. at 33. 19 On the State's petition, see Fed. R.App. P. 35(b), we vacated the portions of the panel opinion relating to the State's enforcement powers and granted rehearing en banc on the narrow questions of whether, to what extent, and in what manner Rhode Island may enforce its civil and criminal laws with respect to the operation of the [s]moke [s]hop by the Narragansett Indian Tribe and the effect (if any) of tribal sovereign immunity on the State's enforcement authority. Narragansett Indian Tribe v. Rhode Island, 415 F.3d 134 (1st Cir.2005) (unpublished order). We turn now to those questions.