Court Opinion

ID: 9514491
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:49:55.459279+00
Date Added: 2024-06-11T09:06:18.252649
License: Public Domain

SABERS, Justice
(dissenting).
[¶ 27.] PARTICIPATION AND ACQUIESCENCE IN ARBITRATION BY TRIBE, THROUGH ITS CHAIRMAN, ATTORNEY, AND ACCOUNTANT,CONSTITUTED A WAIVER OF SOVEREIGN IMMUNITY.
Indian tribes are “domestic dependent nations” that exercise inherent sovereign authority over their members and territories. Cherokee Nation v. Georgia, 5 Pet. 1, 17, 8 L.Ed. 25 (1831). Suits against Indian tribes are thus barred by sovereign immunity absent a clear waiver by the tribe or congressional abrogation. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978).
Oklahoma Tax Comm’n v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 509, 111 S.Ct. 905, 909, 112 L.Ed.2d 1112, 1119 (1991). Here, participation and acquiescence in arbitration constituted a “clear waiver” of Tribe’s sovereign immunity.
[¶ 28.] Tribe waived any objections to arbitration by participating without objection. Tribe’s Chairman and its accountant both testified, and Tribe apparently turned over financial records. Tribe contends that as soon as its General Council learned of the arbitration on September 27, 1993 (three days after it occurred), it passed a resolution that the tribal attorney was not authorized to participate in arbitration. The tribe further claims: “Following this instruction, the Tribal attorney withdrew from any further activity concerning the arbitration.” Tribe’s Br. at 8.
[¶ 29.] The accuracy of this latter claim is questionable in light of the arbitrator’s note that Tribe’s attorney contacted him sometime after October 26; Calvello filed’ a post-hearing brief on October 26,1993. In its opinion, the arbitrator notes:
Legal Counsel for the Employer, James Abourezk, had thirty business days in which to file a response brief to the Employee’s brief if he deemed it appropriate. Mr. Abourezk advised the undersigned shoHly before the expiration date that it was not necessary for the Employer to file a response brief as his closing statements at the arbitration hearing adequately covered the arguments raised in the Employee’s post hearing brief, after which the record was considered closed.
(Emphasis added).
[¶ 30.] If Tribe attempted to “revoke” the agreement to arbitrate following arbitration hearing, it should have alerted the arbitrator and Calvello and then persisted in its position. There is nothing in the record to docu*118ment any notice to the arbitrator. In any event, once the arbitrator issued a decision, Tribe should have brought a motion to vacate. See 9 U.S.C. §§ 10, 12; Mian v. Donaldson, Lufkin & Jenrette Sec. Corp., 7 F.3d 1085, 1086 (2nd Cir.1993) (“The procedures established by 9 U.S.C. §§ 10 [grounds for vacating] and 12 [limitations period] are normally'the exclusive remedy to challenge the results of an arbitration proceeding.”).
[¶ 31.] Moreover, Tribe had an earlier option of refusing arbitration. If Tribe had exercised the option to refuse arbitration, Calvello could have brought a motion to compel arbitration. Tribe could have then sought a judicial determination whether arbitration could be compelled and whether there existed any arbitrable issues. See Kansas City S. Transp. Co., Inc. v. Teamsters Local Union # 41, 126 F.3d 1059, 1067 (8th Cir.1997):
[T]he Supreme Court set forth three rules governing a party’s duty to arbitrate. First, “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Second, “the question of arbitrability — whether a collective bargaining agreement creates a duty for the parties to arbitrate the particular grievance — is undeniably an issue for judicial determination.” Third, “in deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims.”
(Quoting AT & T Tech., Inc. v. Communications Workers of Am., 475 U.S. 643, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)). Whether there is an agreement to arbitrate and whether an issue is arbitrable are subject to judicial determination unless the “matter has gone through arbitration and an award has been issued.” Then, “the grounds on which a court asked to confirm (enforce) the award can refuse to do so are limited[.]” Comprehensive Accounting Corp. v. Rudell, 760 F.2d 138, 139-40 (7th Cir.1985).
[¶ 32.] Tribe could also have taken the initiative by seeking declaratory or injunctive relief prior to the commencement of arbitration. Additionally, Tribe could have, subject to its objection on sovereign immunity grounds, proceeded with arbitration, thus reserving its right to challenge the arbitrator’s authority in a later judicial proceeding. See International Ass’n of Machinists & Aerospace Workers, Lodge No. 1777 v. Fansteel, Inc., 900 F.2d 1005, 1009-10 (7th Cir.), cert. denied, 498 U.S. 851, 111 S.Ct. 143, 112 L.Ed.2d 109 (1990). Here, Tribe never asserted sovereign immunity as a bar to arbitration until Calvello sought entry of judgment in federal court, which was too late.
[¶ 33.] The case of VaV-U Construction Co. of South Dakota v. Rosebud Sioux Tribe, 146 F.3d 573 (8th Cir.1998), reiterated that court’s prior holding that an arbitration provision in a contract constituted a waiver of sovereign immunity.7 Although distinguishable because the contract in that case had Council approval, part of that opinion could have been written for this case:
[Trial] Judge Kornmann described the Tribe’s course of conduct best in his opinion on this issue:
[T]he Tribe, represented by counsel of then’ choosing, consciously and intentionally took a reckless and totally ill-conceived course without any substantial legal basis. The Tribe argues that the Eight Circuit decision in this case changed existing law. That argument is rejected. There was no Eighth Circuit case directly on point. While the Tribe obviously did not correctly anticipate the appellate ruling as to sovereign immunity, they had no way of knowing or even forecasting what that decision would ultimately be. There is no dispute that the Tribe had repeated notices from the arbitrator and a great deal of time to carefully decide what to do. * * ⅜ The extremely high risk strategy used by the Tribe and their attorneys (and it is important to note that the Tribe’s present attorneys had no part in such decisions) was akin to being served with process in a lawsuit and ignoring the matter, hoping that an appellate court would ultimately *119find lack of jurisdiction. This is inexcusable neglect.
Val-U Const, 146 F.3d at 578. Likewise, here the Tribe acquiesced in arbitration by-permitting its attorney to actively participate in arbitration and by failing to make sure he withdrew from further proceedings when Tribe purportedly “learned” of the arbitration.
[¶ 34.] Tribe’s active participation, in the absence of objection, constitutes waiver of sovereign immunity. Cf. Comprehensive Accounting, 760 F.2d at 140:
No one should be forced into arbitration without an opportunity to show that he never agreed to arbitrate the dispute that is the subject of the arbitration. The Ru-dells had that opportunity when they were notified of the arbitration, and they let it pass by. It was then too late for them to sit back and allow the arbitration to go forward, and only after it was all done, and enforcement was sought, say: oh by the way, we never agreed to the arbitration clause. That is a tactic that the law of arbitration, with its commitment to speed, will not tolerate.
See also Fortune, Alsweet & Eldridge, Inc. v. Daniel, 724 F.2d 1355, 1357 (9th Cir.1983) (confirming arbitration award over defendant’s objection):
We have long recognized a rule that a party may not submit a claim to arbitration and then challenge the authority of the arbitrator to act after receiving an unfavorable result.
Daniel’s conduct demonstrated he agreed to submit this conflict to arbitration and waived any right to object.
See Ficek v. Southern Pac. Co., 338 F.2d 655, 656-57 (9th Cir.1964), cert. denied, 380 U.S. 988, 85 S.Ct. 1362, 14 L.Ed.2d 280 (1965):
Even if the initial arbitration clause was not broad enough to include Ficek’s claim, by voluntarily submitting the dispute to arbitration, Ficek and the railway evinced a subsequent agreement for private settlement which would cure any defect in the arbitration clause.
The rule is sometimes stated in terms of waiver: A claimant may not voluntarily submit his claim to arbitration, await the outcome, and, if the decision is unfavorable, then challenge the authority of the arbitrators to act.
Ficek’s suggestion that the subject-matter “jurisdiction” of the arbitrators could not be enlarged by the conduct of the parties misapplies the analogy — the authority of the arbitrators, unlike that of a court, was rooted in the parties’ consent.
(Citations omitted).
[¶ 35.] It further appears that Tribe’s counterclaim8 is barred by the doctrine of res judicata. It is clear from the arbitrator’s opinion that he considered tribal financial records in arriving at the award for profits owed to Calvello. Tribe participated fully in arbitration; Tribe’s accountant testified; both parties presented the joint exhibits upon which the arbitrator based the award. See Printy v. Dean Witter Reynolds, Inc., 110 F.3d 853, 860-61 (1st Cir.1997) (“[W]here a party had the full power to press its claim in the arbitration proceeding, the arbitration decision, therefore, stands as a res judicata bar to these claims.”) (citations & internal quotations omitted).
[¶ 36.] Tribe waived sovereign immunity by participation and acquiescence in arbitration and it did not challenge arbitration in accordance with the Arbitration Act; therefore, we should reverse the order granting summary judgment to Tribe and remand for proceedings consistent with this dissent.9

. See Rosebud Sioux Tribe v. Val-U Constr. Co. of South Dakota, Inc., 50 F.3d 560 (8th Cir.1995), cert. denied, 516 U.S. 819, 116 S.Ct. 78, 133 L.Ed.2d 37 (1995).

. Tribe alleges in its counterclaim that Calvello manipulated profit percentages in order to fraudulently increase his share of the profit, thereby converting tribal funds and breaching his fiduciary duty to Tribe.

. This matter has dragged on for over four years. After the proceedings in the federal district and appellate courts, suit was brought in state court and presided over by two different circuit court judges. Tribe made four motions to dismiss and attempted to take a discretionary appeal on at least two occasions. Tribe petitioned for a writ of prohibition to this court, which we granted but quashed after oral argument. Tribe next made its motion for summary judgment, the subject of this appeal.
Under similar circumstances in Bruce H. Lien Co. v. Three Affiliated Tribes, 93 F.3d 1412, 1419 *120(8th Cir.1996), the Eighth Circuit Court of Appeals commented:
So here we are. These parties, initially associated for the purposes of mutual profit and well being, are now fighting it out on three fronts (tribal court, federal court, and the NIGC [National Indian Gaming Commission]) over a number of issues, with perceptively little hope of a quick or inexpensive resolution. Two courts have this dispute on active status; the NIGC continues its review and continues in its attempt to bring the contract and gaming operation into compliance with IGRA [Indian Gaming Regulatory Act]; arbitrators, once chosen, presumably await notification that their activity is, to resume. The vessel which is the orderly administration of justice is leaking all over and making a big mess.
In this case, the leak should stop here.