Opinion ID: 2978477
Heading Depth: 4
Heading Rank: 1

Heading: Automatic Waiver

Text: MBF argues that the act of incorporation under Section 17 divests entities of their tribal-sovereign immunity. This is an issue of first impression for our Court, and other courts are in dispute over this issue. See generally Ann K. Wooster, Validity and Construction of Indian Reorganization Act, 28 A.L.R. Fed. 2d 563, §§ 25, 26 (2009). For example, in GNS, Inc., v. Winnebago Tribe of Nebraska, the United States District Court for the Northern District of Iowa held that “a Section 17 corporation waives sovereign immunity.” 866 F. Supp. 1185, 1188-89. (N.D. Iowa 1994). In contrast, the Ninth Circuit held in American Vantage Companies v. Table Mountain Rancheria that a “tribe that elects to incorporate does not automatically waive its tribal-sovereign immunity by doing so.” 292 F.3d 1091, 1099 (9th Cir. 2002). After reviewing the two lines of cases, the district court concluded that No. 08-6145 Memphis Biofuels, LLC v. Chickasaw Nation Page 5 Industries, Inc. incorporating under Section 17 does not automatically divest an entity of its tribal-sovereign immunity. We agree. As discussed above, CNI is chartered under the OIWA, 25 U.S.C. § 503, et seq. The OIWA is an extension of the IRA, 25 U.S.C. § 461, et seq., which Congress passed to encourage non-Indian businesses to engage in commerce with Indian tribes. See Parker Drilling Co. v. Metlakatla Indian Cmty., 451 F. Supp. 1127, 1137 (D. Alaska 1978). Section 16 of the IRA, 25 U.S.C. § 476, permits Indian tribes to adopt constitutions, and Section 17 allows the incorporation of a tribal business. Section 17 provides: The Secretary of the Interior may, upon petition by any tribe, issue a charter of incorporation to such tribe . . . . Such charter may convey to the incorporated tribe the power to purchase, take by gift, or bequest, or otherwise, own, hold, manage, operate, and dispose of property of every description, real and personal, including the power to purchase restricted Indian lands and to issue in exchange therefor interests in corporate property, and such further powers as may be incidental to the conduct of business, not inconsistent with law . . . . 25 U.S.C. § 477. Thus, the statute is silent as to whether Section 17 incorporated tribes have sovereign immunity. We conclude that it is more appropriate to interpret this silence as not abrogating sovereign immunity for two reasons. First, in Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., the Supreme Court held that “[a]s a matter of federal law, an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity.” 523 U.S. 751, 754 (1998). The Court came to this conclusion, in part, because sovereign immunity is part of the common law. See United States v. U.S. Fid. & Guar. Co., 309 U.S. 506, 512 (1940). So, unless Congress abrogates a tribe’s immunity, or the tribe waives its immunity, the tribe’s immunity remains intact. The Supreme Court has also held that abrogation of tribal-sovereign immunity must be clear and may not be implied. Okla. Tax Comm’n v. Citizen Band Potawatomi Tribe of Okla., 498 U.S. 505, 509 (1991); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978). Because the language of Section 17 does not explicitly waive sovereign immunity, we conclude that it should not be interpreted to do so impliedly. Second, “statutes are to be construed liberally in favor of the Indians, or [tribes] with ambiguous provisions being interpreted to their benefit.” Montana v. Blackfeet No. 08-6145 Memphis Biofuels, LLC v. Chickasaw Nation Page 6 Industries, Inc. Tribe of Indians, 471 U.S. 759, 766 (1985). This directive to favor tribes counsels against interpreting Section 17 as impliedly waiving tribal-sovereign immunity. MBF responds by arguing that under a multi-factor test, CNI is not “an arm” of the Chickasaw Nation and thus does not enjoy tribal-sovereign immunity. MBF relies on a Colorado appellate court decision, State ex rel. Suthers v. Cash Advance & Preferred Cash Loans, 205 P.3d 389 (Colo. Ct. App. 2008), and an Alaska Supreme Court decision, Runyon ex rel. B.R.. v. Ass’n of Vill. Council Presidents, 84 P.3d 437 (Alaska 2004), for this argument. But neither of these cases addressed directly a Section 17 corporation; instead, the cases addressed entities incorporated under tribal or state law. Moreover, the language of Section 17 itself––by calling the entity an “incorporated tribe”––suggests that the entity is an arm of the tribe. In sum, we conclude that the better reading of Section 17 is that it creates “arms of the tribe” that do not automatically forfeit tribal-sovereign immunity.