Opinion ID: 653723
Heading Depth: 2
Heading Rank: 2

Heading: Propriety of Exhaustion

Text: 10 Appellants argue that, even if the tribal court has jurisdiction, the tribal court is not the proper forum to determine the propriety of taxing non-Indians for activities occurring outside the Navajo reservation. Appellants correctly note that the tribal exhaustion rule does not deprive the federal courts of subject-matter jurisdiction. LaPlante, 480 U.S. at 16 n. 8, 107 S.Ct. at 976 n. 8. Rather, as a matter of comity, the federal courts should decline to hear a case when strong federal policy concerns favor[ ] resolution in the nonfederal forum. Id. 11 The Supreme Court has identified three federal policy concerns behind the tribal exhaustion rule: (1) to further the congressional policy of supporting tribal self-government; (2) to promote the orderly administration of justice; and (3) to obtain the benefit of tribal expertise. National Farmers, 471 U.S. at 856-57, 105 S.Ct. at 2453-54. When the activity at issue arises on the reservation, these policies almost always dictate that the parties exhaust their tribal remedies before resorting to the federal forum. 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, 947 F.2d at 445 (quoting Granberry v. Greer, 481 U.S. 129, 131, 107 S.Ct. 1671, 1673, 95 L.Ed.2d 119 (1987)); see also Crawford v. Genuine Parts Co., 947 F.2d 1405, 1408 (9th Cir.1991) (When the dispute is a 'reservation affair,' ... there is no discretion not to defer.). When the dispute involves non-Indian activity occurring outside the reservation, however, the policies behind the tribal exhaustion rule are not so obviously served. Under these circumstances, we must depend upon the district courts to examine assiduously the National Farmers factors in determining whether comity requires the parties to exhaust their tribal remedies before presenting their dispute to the federal courts. See, e.g., Altheimer & Gray v. Sioux Mfg. Corp., 983 F.2d 803, 814-15 (7th Cir.1993) (noting that the propriety of tribal exhaustion depends upon a case by case examination of the comity factors). 12 This case does not present purely intra-reservation affairs. Rather, the Navajo Nation has assessed taxes on non-Indians for activities occurring outside the reservation borders, albeit within the Navajo Indian Country. On the record before us, we cannot say whether the district court abused its discretion in dismissing the federal action because the district court did not examine the National Farmers factors relative to this dispute. We therefore VACATE the district court's order and REMAND for further examination of the comity factors articulated in National Farmers.