Opinion ID: 169489
Heading Depth: 3
Heading Rank: 3

Heading: Application of Montana

Text: The starting point under Montana is, of course, with the general rule that the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe. 450 U.S. at 565, 101 S.Ct. 1245. The general rule remains in effect unless a nonmember enters into a consensual relationship with the tribe or its members, or the activities of a nonmember threaten the tribe's right to self-government. Id. at 565-66, 101 S.Ct. 1245. Because all Defendants, with the lone exception of Mr. Atcitty, are nonmembers, one of these two exceptions must apply in order for the Navajo Nation to assert regulatory authority over their actions.
Ms. Singer's status as a nonmember of the Navajo Nation renders application of the two Montana exceptions exceedingly straightforward in her case. There is no indication, and Plaintiffs do not contend, that any of the Defendants in this case entered into a consensual relationship with the Navajo Nation itself, and accordingly we are only concerned here with consensual relationships between Defendants and the tribe's members. Because she is a nonmember, however, there is no possibility that Defendants' actions with respect to Ms. Singer could have resulted in a consensual relationship with a member of the Navajo Nation. Moreover, Defendants' employment-related activities in regard to another nonmember on non-Indian land in no way affects the Navajo Nation's right to govern itself. Thus, neither Montana exception applies and the Navajo Nation did not possess regulatory authority over Defendants' activities vis-vis Ms. Singer.
The fact that Mr. Riggs and Mr. Dickson are enrolled members of the Navajo Nation renders application of the Montana exceptions more complicated than in Ms. Singer's case.
Our first task is to determine whether any of the Defendants entered into a consensual relationship with Mr. Riggs or Mr. Dickson through commercial dealing, contracts, leases, or other arrangements. Id. at 565, 101 S.Ct. 1245. The district court below held that SJHSD had entered into such a relationship with Mr. Riggs and Mr. Dickson via its employment relationship with them. See MacArthur II, 391 F.Supp.2d at 1011-12. Plaintiffs do not appear to argue that a consensual relationship was formed in any other manner. There is no doubt that an employment relationship between two parties is contractual in nature. See, e.g., Perry v. Woodward, 199 F.3d 1126, 1133 (10th Cir. 1999) ([T]he employment-at-will relationship encompasses sufficient contractual rights to support section 1981 claims for wrongful termination.); Rackley v. Fairview Care Ctrs., Inc., 23 P.3d 1022, 1026 (Utah 2001) ([A]n employment relationship entered into for an indefinite period of time is presumed to be at-will and gives rise to a contractual arrangement. . . .) In fact, the common law tort cause of action for interference with contractual relations encompasses interference with employment, even where the employment is at-will. See Haddle v. Garrison, 525 U.S. 121, 126, 119 S.Ct. 489, 142 L.Ed.2d 502 (1998) (The kind of interference with atwill employment relations alleged here is merely a species of the traditional torts of intentional interference with contractual relations and intentional interference with prospective contractual relations.). Consequently, Montana 's consensual relationship exception applies to a nonmember who enters into an employment relationship with a member of the tribe. But not just any consensual employment relationship will do. Rather, Supreme Court precedent clearly limits the regulatory authority of tribes  at least that which is derived solely from their inherent sovereignty  to the reservation's borders. See Atkinson Trading Co. v. Shirley, 532 U.S. 645, 653, 121 S.Ct. 1825, 149 L.Ed.2d 889 (2001) (An Indian tribe's sovereign power to tax  whatever its derivation reaches no further than tribal land.); State, 520 U.S. at 446, 117 S.Ct. 1404 ( Montana thus described a general rule that, absent a different congressional direction, Indian tribes lack civil authority over the conduct of nonmembers on non-Indian land within a reservation, subject to two exceptions. . . .) (emphasis added); Montana, 450 U.S. at 565, 101 S.Ct. 1245 (To be sure, Indian tribes retain inherent sovereign power to exercise some forms of civil jurisdiction over non-Indians on their reservations . . . .) (emphasis added). The notion that inherent sovereignty ceases at the reservation's borders is consistent with the Court's statement in Wheeler that the dependent status of Indian tribes within our territorial jurisdiction is necessarily inconsistent with their freedom independently to determine their external relations. 435 U.S. at 326, 98 S.Ct. 1079. It would simply strain credulity to hold that the Navajo Nation may exercise regulatory authority over any employer in the United States so long as the individual or entity employs an enrolled member of the tribe. Therefore, we hold that a tribe only attains regulatory authority based on the existence of a consensual employment relationship when the relationship exists between a member of the tribe and a non-member individual or entity employing the member within the physical confines of the reservation. Applying the foregoing principles to this case, the only Defendant arguably falling within the consensual relationship exception is SJHSD itself. SJHSD entered into contractual employment relationships with Mr. Riggs and Mr. Dickson, and they were employed at the Clinic within the exterior boundaries of the Navajo reservation. Mr. Riggs and Mr. Dickson did not enter into a contractual employment relationship with any other Defendant. While some of the Defendants admittedly played a tangential role in SJHSD's employment relationships with the two, none of the Defendants, other than SJHSD, entered into the type of consensual relationship with Mr. Riggs or Mr. Dickson sufficient to fall within the exception. In other words, it is self-evident that none of them entered into commercial dealing, contracts, [or] leases with either Mr. Riggs or Mr. Dickson. And being one's coworker or superior standing alone cannot possibly constitute the type of other arrangements the Supreme Court had in mind in Montana. If those relationships were sufficient, the exception would swallow the rule. Atkinson Trading Co., 532 U.S. at 655, 121 S.Ct. 1825. Apart from finding that SJHSD fell within the consensual relationship exception, the district court also held that Reid Wood was subject to the regulatory authority of the Navajo Nation at least insofar as Mr. Riggs's defamation claim was concerned. [8] See MacArthur II, 391 F.Supp.2d at 1014. The district court came to this conclusion because Mr. Wood was a central character in the events . . . that form the factual basis for plaintiffs['] . . . employment-related claims, and because the Navajo district court did not clearly err in finding that Mr. Wood's characterization of Mr. Riggs's time card errors as fraudulent may make out an actionable defamation claim. See id. The primary fault with the district court's holding lies in the lack of a central character exception to the general presumption against the exercise of tribal regulatory authority over nonmembers. Moreover, hanging regulatory authority on the fact that Mr. Wood's statements may constitute actionable defamation places the cart before the horse. That a cause of action may successfully be asserted against Mr. Wood says nothing about the Tribe's ability to regulate Mr. Wood's activities in the first place. Without civil jurisdiction the cause of action is null and void, regardless of whether it might result in a successful judgment if there was jurisdiction. Properly applying Montana, it is clear that Mr. Wood did not enter into the type of consensual relationship required for the Navajo Nation to obtain regulatory authority over him  only SJHSD, as the employer of Mr. Riggs and Mr. Dickson, arguably did. Although at first blush it appears that SJHSD's consensual employment relationships with Mr. Riggs and Mr. Dickson fall within Montana 's consensual relationship exception, this case is unique in that the consensual relationship at issue involves a political subdivision of the State of Utah, and it was entered into pursuant to an exercise of the police power on non-Indian land. Relying upon Hicks, SJHSD contends its status as a state entity removes it from Montana 's first exception. In Hicks, Justice Scalia, writing for the majority, stated in a footnote that, Read in context, an `other arrangement' is clearly another private consensual relationship, from which the official actions in this case are far removed. 533 U.S. at 359 n. 3, 121 S.Ct. 2304. SJHSD seizes upon this statement and argues that an employment relationship between a member of a tribe and a governmental entity on non-Indian land (even within the exterior boundaries of the reservation) cannot meet Montana 's first exception, even if a similar private employment relationship would. SJHSD's argument finds strong support in Hicks. In her concurrence in that case, Justice O'Connor read the majority opinion as disavowing civil jurisdiction based on non-private consensual relationships. She further expressed reservation that the Court's disavowment created a per se rule that consensual relationships entered into between state governments and tribes, such as contracts for services or shared authority over public resources, could no longer give rise to tribal civil jurisdiction. See id. at 393-94, 121 S.Ct. 2304 (O'Connor, J., concurring). Justice Scalia responded in kind with the following: The [ Montana ] Court . . . obviously did not have in mind States or state officers acting in their governmental capacity; it was referring to private individuals who voluntarily submitted themselves to tribal regulatory jurisdiction by the arrangements that they (or their employers) entered into. This is confirmed by the fact that all four of the cases in the immediately following citation involved private commercial actors. See Confederated Tribes, 447 U.S., at 152, 100 S.Ct. 2069 (nonmember purchasers of cigarettes from tribal outlet); Williams v. Lee, 358 U.S., at 217, 79 S.Ct. 269 (general store on the Navajo reservation); Morris v. Hitchcock, 194 U.S. 384, 24 S.Ct. 712, 48 L.Ed. 1030 (1904) (ranchers grazing livestock and horses on Indian lands under contracts with individual members of said tribes); Buster v. Wright, 135 F. 947, 950 (8th Cir.1905) (challenge to the permit tax charged by a tribe to nonmembers for the privilege . . . of trading within the borders). Id. at 372, 121 S.Ct. 2304. Justice Scalia is not the only one to have observed that the cases relied upon in support of Montana 's consensual relationship exception dealt exclusively with private conduct. Three years prior to Hicks, the Ninth Circuit observed that all of the cases cited to support Montana 's first exception involve either direct regulation by a tribe of non-Indian activity on the reservation or lawsuits between a private party and the tribe or tribal members arising from an on-reservation transaction or agreement. County of Lewis v. Allen, 163 F.3d 509, 515 (9th Cir.1998) (en banc). As a result of that observation, the en banc court held that an agreement between the State of Idaho and the Nez Perce Tribe did not qualify as a consensual relationship of the type giving rise to tribal regulatory authority. See id. We too adhere to the distinction between private individuals or entities who voluntarily submit themselves to tribal jurisdiction and States or state officers acting in their governmental capacity. The power to exercise regulatory authority over another independent sovereign on that sovereign's land, even where a consensual relationship is involved, closely resembles the freedom independently to determine their external relations, which the tribes necessarily relinquished as a result of their dependent status. See Wheeler, 435 U.S. at 326, 98 S.Ct. 1079. Thus, we hold, in the absence of congressional delegation, the tribes may not regulate a State qua State on non-Indian land [9] (even within the exterior boundaries of the reservation) based only on a consensual relationship between members of the tribe and the State. [10] In the instant case, the employment relationships at issue involved two members of the Navajo Nation and SJHSD, a political subdivision of the State of Utah. SJHSD is strictly a creature of Utah law, see Utah Code Ann. § 17A-2-1304 (1999), and nearly all of its board members were state employees. The employment relationships at issue were entered into exclusively in SJHSD's governmental capacity, and those relationships were part and parcel of SJHSD's duty to provide medical services to residents of San Juan County. See Pueblo Aircraft Serv., Inc. v. City of Pueblo, 679 F.2d 805, 810 (10th Cir.1982) (In its `governmental capacity' a municipality acts as an arm of the state for the public good on behalf of the state rather than itself.). The provision of medical services is unquestionably an exercise of the police power. See Hill v. Colorado, 530 U.S. 703, 715, 120 S.Ct. 2480, 147 L.Ed.2d 597 (2000) (It is a traditional exercise of the States' police powers to protect the health and safety of their citizens.) (internal quotations omitted); see also Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 758, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) (explaining that a mandated-benefit law was a valid and unexceptional exercise of the . . . police power where [i]t was designed in part to ensure that . . . less wealthy [Massachusetts] residents . . . would be provided adequate mental-health treatment should they require it). Accordingly, the employment relationships between SJHSD and Mr. Riggs and Mr. Dickson were not  private consensual relationships in any sense of the term and do not fall within the first Montana exception.
This brings us to Montana 's second exception. Again, the exception requires that the conduct of non-Indians on fee lands within [the] reservation . . . has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe. Montana, 450 U.S. at 566, 101 S.Ct. 1245. When viewed in isolation, the exception appears broad in scope. The Supreme Court has cautioned, however, that: Read in isolation, the Montana rule's second exception can be misperceived. Key to its proper application, however, is the Court's preface: Indian tribes retain their inherent power [to punish tribal offenders,] to determine tribal membership, to regulate domestic relations among members, and to prescribe rules of inheritance for members. . . . But [a tribe's inherent power does not reach] beyond what is necessary to protect tribal self-government or to control internal relations. 450 U.S., at 564, 101 S.Ct. 1245. Neither regulatory nor adjudicatory authority over the state highway accident at issue is needed to preserve the right of reservation Indians to make their own laws and be ruled by them. Williams, 358 U.S., at 220, 79 S.Ct. 269. The Montana rule, therefore, and not its exceptions, applies to this case. Strate, 520 U.S. at 459, 117 S.Ct. 1404 (alterations in original). In framing the second exception, the Court also later added: Tribal assertion of regulatory authority over nonmembers must be connected to th[e] right of the Indians to make their own laws and be governed by them. Hicks, 533 U.S. at 361, 121 S.Ct. 2304. The proper question in this case, then, is whether regulatory authority over Defendants' activities, with the exception of those of Mr. Atcitty, is needed to preserve the Navajo Nation's right to make their own laws and be governed by them. In regard to the County defendants, the district court accurately noted that the Navajo district court did not find facts showing conduct on the part of any County defendant that threatened or had some direct effect on the political integrity, the economic security, or the health or welfare of the Navajo Nation. MacArthur II, 391 F.Supp.2d at 1007. The Navajo district court did not find (and neither do we) that the County defendants  including San Juan County, the San Juan County Commissioners, County Attorney Halls, and County Administrator Bailey  had any role in the complained of activities, other than that they exercised some control over, and provided advice to, SJHSD. Additionally, Mr. Bailey had some role in Plaintiffs' grievance process  he sent grievance decision letters and served as the grievance hearing officer. All of these actions, however, relate exclusively to the governance of SJHSD; they in no way impact the Navajo Nation's ability to make its own laws and be governed by them. SJHSD's activities also do not affect the Navajo Nation's right to self-government. Despite Plaintiffs' attempts to make more of it, this case essentially boils down to an employment dispute between SJHSD and three of its former employees, two of whom happen to be enrolled members of the Navajo Nation. While the Navajo Nation undoubtedly has an interest in regulating employment relationships between its members and non-Indian employers on the reservation, that interest is not so substantial in this case as to affect the Nation's right to make its own laws and be governed by them. This is particularly evident here, when only two members of the Nation were involved and the employment relationships at issue were carried out on non-Indian land. The right at issue in this case is the Navajo Nation's claimed right to make its own laws and have others be governed by them, not the right to self-government. We are therefore left with Ms. Lauren Schafer (SJHSD Personnel Director of Nursing), members of SJHSD's board, and Mr. Wood. Plaintiffs' only complaint about Ms. Schafer is that she failed to do enough to help them in their conflict with SJHSD and Mr. Wood. Moreover, in its orders, the Navajo district court stated only that Ms. Schafer wrote a letter critical of Ms. Singer and that she testified she had discovered only one piece of evidence as to Ms. Singer's intent to commit time card fraud. Failing to help others may violate the golden rule, but it in no way constitutes an affront to the Navajo Nation's self-governance; and Ms. Schafer's actions vis-vis Ms. Singer are irrelevant due to Ms. Singer's lack of membership in the tribe. Next, because the Navajo district court's orders make no mention of the individual members of SJHSD's board and Plaintiffs make no attempt to explain how their activities pose a threat to the tribe's right to make its own laws, it follows that the individual members of the board fall squarely within Montana 's general rule. Finally, as previously detailed, the federal district court held that the Navajo Nation possessed authority over Mr. Wood's alleged defaming of Mr. Riggs. To be sure, that alleged defamation may have had a negative impact on Mr. Riggs individually, but based on the record before us we fail to see how it, or any other of Mr. Wood's actions, negatively affected the tribe as a whole or its ability to self-govern. In sum, with the arguable exception of Mr. Atcitty, the Navajo Nation did not possess regulatory authority over any of Defendants' activities. Because there exists no adjudicatory authority in the absence of regulatory authority, Strate, 520 U.S. at 453, 117 S.Ct. 1404 (As to nonmembers, we hold, a tribe's adjudicative jurisdiction does not exceed its legislative jurisdiction.), the Navajo district court did not possess jurisdiction over Plaintiffs' claims unrelated to the activities of Mr. Atcitty.