Opinion ID: 2621995
Heading Depth: 1
Heading Rank: 3

Heading: The State may regulate the sale of alcoholic beverages by either a tribe or gaming enterprise, but tribal sovereign immunity, whether asserted by a tribe or gaming enterprise, precludes a private dram shop action from being brought in state court.

Text: ถ 15 Pursuant to 18 U.S.C. ง 1154, it is a Federal crime to dispense intoxicants on Indian lands. [11] Section 1154 provides in pertinent part: (a) Whoever sells, gives away, disposes of, exchanges, or barters any malt, spirituous, or vinous liquor, including beer, ale, and wine, or any ardent or other intoxicating liquor of any kind whatsoever, except for scientific, sacramental, medicinal or mechanical purposes, or any essence, extract, bitters, preparation, compound, composition, or any article whatsoever, under any name, label, or brand, which produces intoxication, to any Indian to whom an allotment of land has been made while the title to the same shall be held in trust by the Government, or to any Indian who is a ward of the Government under charge of any Indian superintendent, or to any Indian, including mixed bloods, over whom the Government, through its departments, exercises guardianship, and whoever introduces or attempts to introduce any malt, spirituous, or vinous liquor, including beer, ale, and wine or any ardent or intoxicating liquor of any kind whatsoever into the Indian country, shall, for the first offense, be fined under this title or imprisoned not more than one year, or both; and, for each subsequent offense, be fined under this title or imprisoned not more than five years, or both.... [12] An exception to criminal liability is found in 18 U.S.C. ง 1161 which provides: The provisions of sections 1154, 1156, 3113, 3488, and 3669, of this title, shall not apply within any area that is not Indian country, nor to any act or transaction within any area of Indian country provided such act or transaction is in conformity both with the laws of the State in which such act or transaction occurs and with an ordinance duly adopted by the tribe having jurisdiction over such area of Indian country, certified by the Secretary of the Interior and published in the Federal Register. In Rice v. Rehner, 463 U.S. 713, 103 S.Ct. 3291, 77 L.Ed.2d 961, the United States Supreme Court addressed the meaning of ง 1161 and whether it allows a state to regulate and license alcohol transactions on tribal land. ถ 16 Rice involved a tribal member and federally-licensed Indian trader who operated a general store on the Pala Reservation in San Diego, California. The Pala Tribe had adopted an ordinance permitting the sale of liquor on the reservation pursuant to ง 1161. Rehner asked the State of California for an exemption from its license requirement to sell liquor for off-premises consumption and the State denied the request. Rehner sought an injunction in federal district court. The federal court determined that ง 1161 required Rehner to have a state license and dismissed his petition. ถ 17 The United State Supreme Court determined that 18 U.S.C. ง 1161 authorized, rather than pre-empted state regulation of Indian liquor transactions. The Court noted that, in the area of liquor regulation, there was no traditional tribal self-governance nor was there any tradition of tribal sovereign immunity in favor of liquor regulation by Indians. The Court recognized state and federal concurrent jurisdiction over alcoholic beverages in Indian country. Rice also recognized that the states' authority to regulate liquor transactions on Indian lands was based solely on ง 1161 without regard to the fact that California was a Public Law 280 state which already possessed general civil and criminal jurisdiction over Indian Country. [13] Consequently, under Rice v. Rehner there is no doubt that the State of Oklahoma, even though it is not a PL 280 state, has the authority under ง 1161 to regulate and license the sale of alcoholic beverages by either a tribe or gaming enterprise. ถ 18 Admittedly, the Supreme Court utilized broad language when discussing a state's interest in regulating and licensing liquor: Rehner's distribution of liquor has a significant impact beyond the limits of the Pala Reservation. The State has an unquestionable interest in the liquor traffic that occurs within it borders, and this interest is independent of the authority conferred on the States by the Twenty-first Amendment. (citation omitted). Liquor sold by Rehner to other Pala tribal members or to non-members can easily find its way out of the reservation and into the hands of those whom, for whatever reason, the State does not wish to possess alcoholic beverages, or to possess them through a distribution network over which the State has no control. This particular spillover effect is qualitatively different from any spillover effects of income taxes or taxes on cigarettes. A State's regulatory interest will be particularly substantial if the State can points to off-reservation effects that necessitate State intervention. (citation omitted.). There can be no doubt that Congress has divested the Indians of any inherent power to regulate in this area. In the area of liquor regulation, we find no congressional enactments demonstrating a firm federal policy of promoting tribal self-sufficiency and economic development. (citation omitted). With respect to the regulation of liquor transactions, as opposed to the state income taxation involved in McClanahan, Indians cannot be said to possess the usual accoutrements of tribal self-government. (citation omitted).... Because we find that there is no tradition of sovereign immunity that favors the Indians in this respect, and because we must consider that the activity in which Rehner seeks to engage potentially has a substantial impact beyond the reservation, we may accord little if any weight to any asserted interest in tribal sovereignty in this case. Rice v. Rehner, 463 U.S. 713, 724, 103 S.Ct. 3291, 3298, 77 L.Ed.2d 961. While this language is very broad, it was written in the context of the regulation and licensing of liquor, not in the context of whether sovereign immunity could extend to a private party lawsuit against a tribe or gaming enterprise. It takes a great leap of jurisprudence to determine that Rice v. Rehner is dispositive of the issue of sovereign immunity as it relates to private dram shop actions. ถ 19 I am not alone in my concern. Four appellate courts have addressed the precise issue we are faced with today and have unanimously concluded that Rice v. Rehner does not extend to private dram shop actions. In Foxworthy v. Puyallup Tribe of Indians Association, 141 Wash.App. 221, 169 P.3d 53 (2007), the Washington Court of Appeals addressed whether the state court had jurisdiction over an action brought by an injured motorist who was involved in a collision with an intoxicated driver. The driver had been served alcohol by the Emerald Queen Casino, owned and operated by the Puyallup Tribe on tribal land. ถ 20 The injured driver sued the Tribe alleging dram shop liability. The Tribe filed a motion to dismiss, asserting lack of subject matter jurisdiction because of sovereign immunity from the private lawsuit in state court. The trial court granted the motion and the injured driver appealed. The driver argued that Congress, by enacting 18 U.S.C. ง 1161, implicitly waived tribal sovereign immunity from private lawsuits arising from a tribe's sale of alcohol to an intoxicated person in violation of a state dram shop act. The Foxworthy Court disagreed. Citing Kiowa Tribe of Okla. v. Manufacturing Techs., 523 U.S. 751, 754-55, 760, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998), the court noted that a tribe's sovereign immunity extends to tribal commercial and governmental activities both on and off the tribe's reservation, and it provides a defense to suits filed against them in state and federal court. It also noted that there were only two ways to waive immunity: from a tribe's express waiver or through a Congressional statute expressly abrogating tribal immunity. ถ 21 Foxworthy discussed Rice v. Rehner and concluded that the state could regulate alcohol under ง 1161; noting, however, that central to Rice's holding was the long-standing lack of tribal control over alcohol which had always been subject to regulation by some nontribal governmental entity โ initially the federal government, and now the states. There was, however, no analogous legislative history which would support a private dram shop action against the tribe. The Foxworthy Court stated: Moreover, Foxworthy disregards Rehner's narrow holding, which by its own language limits waiver of tribal sovereignty to the states' regulation of alcohol licensing and distribution. Rehner does not expand such waiver to private lawsuits. We conclude, therefore, that the narrow waiver of tribal sovereignty immunity in Rehner does not apply here to establish waiver of tribal sovereign immunity from private tort lawsuits in state court based on Dram Shop violations. Foxworthy v. Puyallup, supra at ถ 25. ถ 22 Regarding arguments that immunity was inconsistent with public policy or unfair because the plaintiff's ability to recover damages depends upon the fortuitous circumstance that the intoxicated driver was served from a tribal casino instead of a non-Indian establishment off of the reservation, the Foxworthy Court said: Regardless of whether the current state of dram shop case law tolerates inequities, to date, Congress has not implemented a change or acted to abrogate tribal sovereign immunity in private dram-shop-related tort actions such as Foxworthy's. We hold, therefore, that tribal sovereign immunity remains intact and that the Kiowa Tribe holding supports, rather than undermines, the trial court's dismissal of Foxworthy's complaint. Foxworthy v. Puyallup, supra at ถ 37. ถ 23 Appellate Courts in Arizona and Texas have reached the same conclusion in Filer v. Tohono O'Odham Nation Gaming, 212 Ariz. 167, 129 P.3d 78 (App.2006), review denied Sept. 26, 2006, and Holguin v. Ysleta Del Sur Pueblo, 954 S.W.2d 843 (Tex.App.-El Paso 1997), review denied June 5, 1998. In Filer, an injured motorist sued a tribal casino that had served excessive amounts of alcohol to a motorist who then caused an accident that injured Filer and killed his wife. In affirming the trial court's dismissal of the Filers' negligence action against the tribe that owned and ran the casino, the court determined that: 1) ง 1161 does not even reference tribal sovereign immunity, much less provide a waiver of such immunity for dram-shop-related litigation; and 2) Rice v. Rehner demanded tribal compliance with state law but it did not address a private right of action to enforce a state law against a tribe. Filer v. Tohono, supra at 82-83. ถ 24 Similarly, in Holguin, the victim's family brought a private dram shop action against a tribe that had served alcohol to an intoxicated driver who left the tribal casino and later collided with and killed Hoguin. The Texas Court recognized that under Rice v. Rehner , the tribe was subject to state alcohol licensing and permitting requirements, but noted the difference between state regulation of alcohol and a state's ability to collect monetary damages. The court held that waiver of sovereign immunity for one did not indicate a waiver for the other. Finally, the court determined that ง 1161 neither created a private action under the Texas dram shop act nor waived tribal sovereign immunity for a private lawsuit based on the Texas dram shop act. ถ 25 Finally, our own Court of Civil Appeals in this cause reached the same result as the other appellate courts. It recognized that ง 1161 reflects neither a clear and express Congressional authorization of suit against a tribe for violation of state alcoholic beverage laws, nor a clear and express waiver of tribal sovereign immunity. Additionally, it determined that the Tribe's agreement by ordinance to adhere and comply with state regulations for the service and sales of alcoholic beverages on tribal land does not constitute the requisite clear and express waiver of tribal sovereign immunity for a private right of action. ถ 26 While I realize that these appellate court opinions are not binding or precedential in our Court, I find their reasoning more persuasive than the majority opinion because they follow the traditional legal analysis of the United States Supreme Court. The Supreme Court may choose to extend Rice. It may determine that Rice allows such an action, but it will do so by following precedent within the framework of its procedure rather than by ignoring it. The long line of cases from the United States Supreme Court all stand on the fundamental foundation that for Congress to waive sovereign immunity it must be unequivocally express for that purpose, and for a tribe to relinquish its immunity, a tribe's waiver must be express, in writing and clear. C & L Enterprises, Inc. v. Citizen Band of Potawatomi Indian Tribe of Oklahoma, 532 U.S. 411, 418, 121 S.Ct. 1589, 1594, 149 L.E.2d 623 (2001); Oklahoma Tax Commission v. Citizen Band of Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 509, 111 S.Ct. 905, 909, 112 L.Ed.2d 1112 (1991); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978). Business has learned this lesson, sometimes painfully, that the absence of the magic words renders contracts unenforceable, while the inclusion of the magic sentence imposes legal responsibility. ถ 27 Consequently, I would hold that Congress did not clearly and expressly abrogate tribal immunity from private, state-court, dram-shop litigation when it required tribal compliance with state liquor laws, nor has the United States Supreme Court made such a determination. Until Congress or the United States Supreme Court makes a change in the current law or until the State of Oklahoma begins conditioning the granting of a liquor license to a tribe or gaming enterprise on an express waiver of sovereign immunity for private dram shop actions, much like people have learned to do in private contracts, the Tribe and gaming enterprise are entitled to assert sovereign immunity.