Court Opinion

ID: 4181685
Source: CourtListenerOpinion
Date Created: 2017-06-28 17:02:08.756274+00
Date Added: 2024-06-11T14:38:38.536676
License: Public Domain

FOR PUBLICATION

 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

WINDOW ROCK UNIFIED SCHOOL              No. 13-16259
DISTRICT; PINON UNIFIED SCHOOL
DISTRICT,                                  D.C. No.
                Plaintiffs-Appellees,   3:12-cv-08059-
                                             PGR
                 v.

ANN REEVES; KEVIN REEVES;
LORETTA BRUTZ; MAE Y. JOHN;
CLARISSA HALE; MICHAEL COONSIS;
BARBARA BEALL,
                     Defendants,

                and

RICHIE NEZ; CASEY WATCHMAN;
BEN SMITH; WOODY LEE; JERRY
BODIE; EVELYN MEADOWS;
UNKNOWN PARTIES, named as John
and Jane Does I–V (Current or
former members of the Navajo
Nation Labor Counsel),
             Defendants-Appellants.
2                 WINDOW ROCK USD V. NEZ

    WINDOW ROCK UNIFIED SCHOOL                No. 13-16278
    DISTRICT; PINON UNIFIED SCHOOL
    DISTRICT,                                   D.C. No.
                    Plaintiffs-Appellees,    3:12-cv-08059-
                                                  PGR
                     v.

    ANN REEVES; KEVIN REEVES;                   OPINION
    LORETTA BRUTZ; MAE Y. JOHN;
    CLARISSA HALE; MICHAEL COONSIS;
    BARBARA BEALL,
                Defendants-Appellants,

                    and

    RICHIE NEZ; CASEY WATCHMAN;
    BEN SMITH; WOODY LEE; JERRY
    BODIE; EVELYN MEADOWS;
    UNKNOWN PARTIES, named as John
    and Jane Does I–V (Current or
    former members of the Navajo
    Nation Labor Counsel),
                            Defendants.

         Appeal from the United States District Court
                  for the District of Arizona
      Paul G. Rosenblatt, Senior District Judge, Presiding

          Argued and Submitted September 17, 2015
            Submission Vacated January 5, 2016
                 Resubmitted June 28, 2017
                  San Francisco, California

                      Filed June 28, 2017
                  WINDOW ROCK USD V. NEZ                            3

      Before: Consuelo M. Callahan, Morgan Christen,
         and Michelle T. Friedland, Circuit Judges.

                  Opinion by Judge Friedland;
                   Dissent by Judge Christen

                          SUMMARY *

                       Tribal Jurisdiction

    The panel reversed the district court’s decision enjoining
tribal forum proceedings on employment-related claims
against two Arizona public school districts operating schools
on leased tribal land.

    The panel held that it was “colorable or plausible” that
the tribal adjudicative forum, the Navajo Nation Labor
Commission, had jurisdiction because the claims arose from
conduct on tribal land over which the Navajo Nation had the
right to exclude nonmembers, and the claims implicated no
state criminal law enforcement interests. Well-established
exhaustion principles therefore required that the tribal forum
have the first opportunity to evaluate its own jurisdiction,
including the nature of the state and tribal interests involved.

    The panel reaffirmed that there exist two distinct
frameworks for determining whether a tribe has jurisdiction
over a case involving a non-tribal-member defendant: (1)
the right to exclude, which generally applies to nonmember

    *
      This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
4               WINDOW ROCK USD V. NEZ

conduct on tribal land; and (2) the exceptions articulated in
Montana v. United States, 450 U.S. 544 (1981), which
generally apply to nonmember conduct on non-tribal land.
The panel held that Nevada v. Hicks, 533 U.S. 353 (2001)
(addressing concerns related to enabling state officers to
enforce state criminal laws for crimes that occurred off the
reservation), did not eliminate the right-to-exclude
framework, such that jurisdiction over a nonmember exists
only if a Montana exception applies, regardless of whether
the relevant conduct occurred on tribal or non-tribal land.
The panel held that the court’s caselaw left open the question
of what state interests might be sufficient to preclude tribal
jurisdiction over disputes arising on tribal land; therefore,
tribal jurisdiction was plausible enough that exhaustion was
required.

   The panel reversed the district court’s summary
judgment in favor of the plaintiff school districts and
remanded with instructions to dissolve the injunction and
dismiss the case for failure to exhaust.

    Dissenting, Judge Christen wrote that the majority’s
opinion created a split with the Seventh, Eighth, and Tenth
Circuits. She wrote that tribal jurisdiction was neither
colorable nor plausible because Montana and the Supreme
Court authority that followed it make clear that the inherent
sovereign powers of Indian tribes generally do not extend to
the activities of nonmembers. Judge Christen wrote that she
disagreed with the majority’s holding that unless a state is
seeking to enforce its criminal laws, Montana does not apply
to nonmember conduct on tribal land even in the presence of
clear competing state interests. In addition, the majority
gave short shrift to the school districts’ obligation to operate
public schools within the Navajo Reservation’s boundaries.
                WINDOW ROCK USD V. NEZ                       5

                         COUNSEL

Paul Spruhan (argued), Navajo Nation Department of
Justice, Window Rock, Arizona, for Defendants-Appellants
Richie Nez, Casey Watchman, Ben Smith, Woody Lee, Jerry
Bodie, and Evelyn Meadows.

David R. Jordan, Law Offices of David R. Jordan P.C.,
Gallup, New Mexico, for Defendants-Appellants Ann
Reeves, Kevin Reeves, Loretta Brutz, Mae Y. John, Clarissa
Hale, Michael Coonsis, and Barbara Beall.

Eileen Dennis GilBride (argued) and Georgia A. Staton,
Jones Skelton & Hochuli P.L.C., Phoenix, Arizona; Patrice
M. Horstman, Hufford Horstman Mongini Parnell & Tucker
P.C., Flagstaff, Arizona; for Plaintiffs-Appellees.

Josephine Foo, Office of the Chief Justice, Judicial Branch
of the Navajo Nation, Window Rock, Arizona, for Amicus
Curiae Navajo Nation Supreme Court.

                         OPINION

FRIEDLAND, Circuit Judge:

    This appeal requires us to decide whether it is “colorable
or plausible” that a tribal adjudicative forum has jurisdiction
over employment-related claims against two public school
districts operating schools on leased tribal land. Because the
claims arise from conduct on tribal land and implicate no
state criminal law enforcement interests, we conclude that
tribal jurisdiction is colorable or plausible under our court’s
interpretation of Nevada v. Hicks, 533 U.S. 353 (2001).
Well-established exhaustion principles therefore require that
6                   WINDOW ROCK USD V. NEZ

the tribal forum have the first opportunity to evaluate its own
jurisdiction over this case, including the nature of the state
and tribal interests involved. We thus reverse the district
court’s decision enjoining tribal forum proceedings.

                                   I.

    The question of tribal jurisdiction arose when a group of
current and former employees (the “Employees”) of two
Arizona public school districts, Window Rock Unified
School District and Pinon Unified School District (the
“Districts”), filed complaints with the Navajo Nation Labor
Commission (the “Commission”).

    The Districts both operate schools on land leased from
the Navajo Nation (the “Nation”). Window Rock’s lease
requires the school district to abide by Navajo laws, to the
extent that they do not conflict with Arizona or federal law,
and it further provides that the agreement to abide by Navajo
laws does not forfeit any rights under state or federal laws.
Pinon’s lease with the Nation does not mention Navajo law.

    In their complaints before the Commission, some of the
Employees alleged that the Districts owed them merit pay
under Arizona law and others alleged that the Districts had
violated their rights under the Navajo Preference in
Employment Act. 1          The Commission eventually
consolidated all of the Employees’ complaints.

    The Districts moved to dismiss the complaints on the
ground that the Commission lacked jurisdiction over
personnel decisions made by Arizona public school districts.
Following a motion hearing, the Commission ordered

    1
        Most of the Employees are members of the Navajo Nation.
                WINDOW ROCK USD V. NEZ                        7

additional discovery on the relationship between the Nation
and the Districts.

    Before the Commission could hold an evidentiary
hearing on the additional discovery, the Districts filed suit in
federal district court seeking a declaration that “the
[Commission] and the Navajo tribal courts lack jurisdiction
over public school districts’ employment decisions and
practices conducted on the Navajo Reservation.” The
Districts also sought an injunction “to bar further
prosecution of those claims in the tribal courts due to the lack
of jurisdiction.” The Commission, joined by the Employees,
moved to dismiss for failure to exhaust tribal remedies. The
Districts countered with a motion for summary judgment,
asserting that tribal jurisdiction was so plainly lacking that
the Districts did not need to exhaust tribal remedies. The
Commission responded that summary judgment was
unwarranted, particularly in the absence of fact-finding by
the Commission. The Employees similarly argued that
summary judgment was improper, and they also filed a Rule
56(f) motion to stay summary judgment proceedings to
allow discovery.

    The district court held that tribal jurisdiction was so
plainly lacking that exhaustion in the tribal forum was not
required. Accordingly, it denied the Commission and
Employees’ motion to dismiss and the Employees’ motion
to stay summary judgment proceedings. It also granted
summary judgment to the Districts and enjoined further
tribal proceedings. The Commission and Employees timely
appealed.

                              II.

   “We review questions of tribal court jurisdiction and
exhaustion of tribal court remedies de novo and factual
8                  WINDOW ROCK USD V. NEZ

findings for clear error.” Grand Canyon Skywalk Dev., LLC
v. ‘Sa’ Nyu Wa Inc., 715 F.3d 1196, 1200 (9th Cir. 2013),
cert. denied sub nom. Grand Canyon Skywalk Dev., LLC v.
Grand Canyon Resort Corp., 134 S. Ct. 825 (2013). The
merits of the Employees’ complaints were not before the
district court, nor are they before us—the only question
presented here is whether tribal jurisdiction is so plainly
lacking that the district court properly enjoined tribal
proceedings. 2

                                   III.

   A tribal adjudicative body generally must have the first
opportunity to evaluate its jurisdiction over a matter pending

      2
        The dissent discusses the merits of the Employees’ claims. But the
Districts asked the district court to enjoin the tribal proceedings on the
ground that “the Navajo tribal courts lack jurisdiction over public school
districts’ employment decisions and practices conducted on the Navajo
Reservation, when the Districts are fulfilling their state responsibilities
to provide education for all Arizona citizens,” and the district court
entered the requested injunction after agreeing as a matter of law with
that broad legal principle, without discussing the merits of any particular
employee’s claim. Similarly, in defending the district court’s judgment
on appeal, the Districts argue that “[t]he facts material to the
jurisdictional issue are (1) the status of the [school districts] as non-
Indians—i.e., Arizona political subdivisions who were haled into tribal
court as defendants; and (2) the fact that the [school] districts’ conduct
at issue—employment decisions made in the scope of their constitutional
obligation to provide a general and uniform public school system—is not
connected to tribal lands.” (citations omitted). Even if we were to
consider the merits issues raised by the dissent and agreed that some of
the employees’ claims should likely fail, the dissent offers no reason to
believe that Michael Coonis’s claim lacks merit. So, even assuming a
merits evaluation were relevant to the exhaustion question, there exists
no merits-based justification for dismissing the entire consolidated
action.
                   WINDOW ROCK USD V. NEZ                                9

before it. In National Farmers Union Insurance Cos. v.
Crow Tribe of Indians, 471 U.S. 845 (1985), the Supreme
Court explained the importance of this exhaustion
requirement: “[Congress’s] policy of supporting tribal self-
government and self-determination . . . favors a rule that will
provide the forum whose jurisdiction is being challenged the
first opportunity to evaluate the factual and legal bases for
the challenge.” Id. at 856. The Court reasoned that requiring
exhaustion of jurisdictional questions in a tribal forum would
not only appropriately respect “tribal self-government and
self-determination,” but would also serve “the orderly
administration of justice in the federal court . . . by allowing
a full record to be developed in the Tribal Court before either
the merits or any question concerning appropriate relief is
addressed.” Id. Moreover, “[e]xhaustion of tribal court
remedies . . . will encourage tribal courts to explain to the
parties the precise basis for accepting jurisdiction, and will
also provide other courts with the benefit of their expertise
in such matters in the event of further judicial review.” Id.
at 857. 3

    In light of the importance of exhaustion, federal courts
will excuse the failure to exhaust in only four circumstances.
See Elliott v. White Mountain Apache Tribal Court, 566 F.3d
842, 847 (9th Cir. 2009). The Districts argue that one of
these circumstances exists here: “when it is ‘plain’ that tribal
court jurisdiction is lacking, so that the exhaustion
requirement ‘would serve no purpose other than delay.’” Id.

    3
      The dissent criticizes us for not explaining why the policy purposes
the Supreme Court set forth in National Farmers favor exhaustion in this
case. But those policy purposes reflect a respect for the sovereignty of
tribes and are therefore not dependent on the particular facts of any case.
That is why we have held that exhaustion is always required unless
certain limited circumstances are present. See Elliott v. White Mountain
Apache Tribal Court, 566 F.3d 842, 847 (9th Cir. 2009).
10              WINDOW ROCK USD V. NEZ

(quoting Nevada v. Hicks, 533 U.S. 353, 369 (2001)). We
have explained that the “plainly lacking” exception to the
exhaustion requirement does not apply when “jurisdiction is
‘colorable’ or ‘plausible.’” Id. at 848 (quoting Atwood v.
Fort Peck Tribal Court Assiniboine, 513 F.3d 943, 948 (9th
Cir. 2008)). We must therefore decide whether tribal
jurisdiction in this case is colorable or plausible.

                             IV.

    Our caselaw has long recognized two distinct
frameworks for determining whether a tribe has jurisdiction
over a case involving a non-tribal-member defendant: (1) the
right to exclude, which generally applies to nonmember
conduct on tribal land; and (2) the exceptions articulated in
Montana v. United States, 450 U.S. 544 (1981), which
generally apply to nonmember conduct on non-tribal land.
The Commission and Employees argue that tribal
jurisdiction is colorable in this case under either framework.
The Districts respond that Nevada v. Hicks, 533 U.S. 353
(2001), eliminated the first framework such that jurisdiction
over a nonmember exists only if a Montana exception
applies, regardless of whether the relevant conduct occurred
on tribal or non-tribal land.

    We have repeatedly rejected the Districts’ reading of
Hicks, and today we reaffirm that the right-to-exclude
framework continues to exist. Our court has read Hicks as
creating only a narrow exception to the general rule that,
absent contrary provisions in treaties or federal statutes,
tribes retain adjudicative authority over nonmember conduct
on tribal land—land over which the tribe has the right to
exclude. We have held that Hicks applies “only when the
specific concerns at issue in that case exist.” Water Wheel
Camp Recreational Area, Inc. v. LaRance, 642 F.3d 802,
813 (9th Cir. 2011). The specific concerns at issue in Hicks
                   WINDOW ROCK USD V. NEZ                            11

related to enabling state officers to enforce state criminal
laws for crimes that occurred off the reservation. 533 U.S.
at 358 n.2. Because Arizona’s interest in the enforcement of
state criminal laws is not implicated here, we reject the
Districts’ argument that any state interest in this case plainly
defeats jurisdiction under Hicks. 4 Contrary to the dissent’s
arguments, however, this is not to say that state interests
beyond those in criminal law enforcement could never
trigger application of Hicks. Rather, we hold only that
because our caselaw leaves open the question of what state
interests might be sufficient to preclude tribal jurisdiction
over disputes arising on tribal land, tribal jurisdiction is
plausible enough here that exhaustion is required.

                                  A.

   To understand what Hicks did and did not do, it is
important to situate that case in the context of other Supreme
Court precedent.

                                  1.

   We begin with the general principle that a tribe’s right to
exclude non-tribal members from its land imparts regulatory
and adjudicative jurisdiction over conduct on that land.

    The Supreme Court has long recognized that Indian
tribes have sovereign powers, including the power to
exclude non-tribal members from tribal land. See, e.g., New
Mexico v. Mescalero Apache Tribe, 462 U.S. 324, 333

    4
      Because we hold that jurisdiction is colorable under the right-to-
exclude framework, we need not reach Appellants’ arguments about the
second framework.
12                 WINDOW ROCK USD V. NEZ

(1983). A tribe’s regulatory authority derives from these
sovereign powers. As the Supreme Court has explained:

         This power [to exclude] necessarily includes
         the lesser power to place conditions on entry,
         on continued presence, or on reservation
         conduct, such as a tax on business activities
         conducted on the reservation. When a tribe
         grants a non-Indian the right to be on Indian
         land, the tribe agrees not to exercise its
         ultimate power to oust the non-Indian as long
         as the non-Indian complies with the initial
         conditions of entry. However, it does not
         follow that the lawful property right to be on
         Indian land also immunizes the non-Indian
         from the tribe’s exercise of its lesser-included
         power to tax or to place other conditions on
         the non-Indian’s conduct or continued
         presence on the reservation.

Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 144–45
(1982).

      In Strate v. A-1 Contractors, 520 U.S. 438 (1997), the
Supreme Court tied the scope of adjudicative jurisdiction to
regulatory jurisdiction by holding that “[a]s to nonmembers,
. . . a tribe’s adjudicative jurisdiction does not exceed its
legislative jurisdiction.” 5 Id. at 453. This suggested that,
because tribes generally maintain the power to exclude and

     5
       Whether a tribe’s adjudicative jurisdiction equals its legislative
jurisdiction remains an open question. See Hicks, 533 U.S. at 358; Philip
Morris USA, Inc. v. King Mountain Tobacco Co., 569 F.3d 932, 940 (9th
Cir. 2009) (“[I]t is unclear whether . . . tribal adjudicative jurisdiction
extends to the boundary of tribal legislative jurisdiction.”).
                   WINDOW ROCK USD V. NEZ                              13

thus to regulate nonmembers on tribal land, tribes generally
also retain adjudicative jurisdiction over nonmember
conduct on tribal land.

    The federal government may, however, limit a tribe’s
power either by treaty or by statute. See Iowa Mut. Ins. Co.
v. LaPlante, 480 U.S. 9, 18 (1987). In interpreting the extent
of any such limits, courts do not “lightly assume that
Congress . . . intend[ed] to undermine Indian self-
government.” Michigan v. Bay Mills Indian Cmty., 134 S.
Ct. 2024, 2032 (2014). Thus, “[c]ivil jurisdiction over . . .
activities [of non-Indians on tribal land] presumptively lies
in the tribal courts unless affirmatively limited by a specific
treaty provision or federal statute.” Iowa Mut. Ins. Co.,
480 U.S. at 18. On the other hand, criminal jurisdiction over
non-Indians for offenses committed on tribal land does not
presumptively lie in the tribal courts. See Oliphant v.
Suquamish Indian Tribe, 435 U.S. 191, 195, 206–08 (1978). 6
The Supreme Court has made clear that this distinction rests
largely on the difference between Congress’s traditional
approach to tribal criminal jurisdiction, which Congress has
historically limited, and its approach to tribal civil

    6
        The decision in Oliphant that tribal courts lack criminal
jurisdiction over non-Indians was based partly on the Supreme Court’s
conclusion that relevant legislation and treaties at the time required this
outcome. 435 U.S. at 203–08. Since Oliphant, Congress has expanded
tribal jurisdiction to criminal cases involving nonmember Indians’
conduct on tribal land, see United States v. Lara, 541 U.S. 193, 196
(2004) (citing 25 U.S.C. § 1301(2)), and it has authorized tribal courts
“to ‘exercise special domestic violence criminal jurisdiction’ over
certain domestic violence offenses committed by a non-Indian against an
Indian,” United States v. Bryant, 136 S. Ct. 1954, 1960 n.4 (2016)
(quoting 25 U.S.C. § 1304). Nevertheless, it remains true that “[t]ribal
governments generally lack criminal jurisdiction over non-Indians who
commit crimes in Indian country.” Id. (citing Oliphant, 435 U.S. at 195).
14              WINDOW ROCK USD V. NEZ

jurisdiction, which it has not so limited. See Nat’l Farmers,
471 U.S. at 854–55.

    Supreme Court precedent prior to Hicks thus indicated
that tribes generally have civil but not criminal adjudicative
jurisdiction over nonmember conduct on tribal land.

                              2.

    By contrast, the Supreme Court has held that a tribe does
not possess any inherent sovereign right to regulate
nonmembers on non-tribal land, even if the land falls within
the boundaries of a reservation. For nonmember conduct on
non-tribal land, therefore, the Supreme Court has applied a
different framework for analyzing the scope of tribal
adjudicative authority.

    In Montana v. United States, 450 U.S. 544 (1981), the
Court held that the Crow Tribe did not have the sovereign
right to regulate nonmember fishing and hunting on land that
was within the boundaries of the Crow Reservation but was
owned by nonmembers (commonly referred to as “non-
Indian fee land” or “fee land”). See id. at 563–67. The Court
then set forth two exceptions to this general rule. First, “[a]
tribe may regulate, through taxation, licensing, or other
means, the activities of nonmembers who enter consensual
relationships with the tribe or its members, through
commercial dealing, contracts, leases, or other
arrangements.” Id. at 565. Second, “[a] tribe may . . . retain
inherent power to exercise civil authority over the conduct
of non-Indians on fee lands within its reservation when that
conduct threatens or has some direct effect on the political
integrity, the economic security, or the health or welfare of
the tribe.” Id. at 566.
                    WINDOW ROCK USD V. NEZ                              15

    The Court analyzed both exceptions and found that
neither was satisfied on the facts presented. See id. at 566.
Thus, the Tribe did not have the right to regulate nonmember
fishing or hunting on fee land. Instead, the Tribe could
prohibit or regulate fishing or hunting by nonmembers only
on tribal land within the reservation, “land on which the
Tribe exercises ‘absolute and undisturbed use and
occupation.’” 7 Id. at 559 (quoting Second Treaty of Fort
Laramie, Crow Indians-U.S., May 7, 1868, 15 Stat. 649,
650).

    As the Supreme Court has summarized, then, “tribes
retain considerable control over nonmember conduct on
tribal land.” Strate, 520 U.S. at 454 (emphasis added).
“[W]ith respect to non-Indian fee lands,” however,
“[s]ubject to controlling provisions in treaties and statutes,
and the two exceptions identified in Montana, the civil
authority of Indian tribes and their courts . . . generally ‘does
not extend to the activities of nonmembers of the tribe.’” 8

    7
        We note one apparent inconsistency in the Supreme Court’s
caselaw. Although National Farmers post-dated Montana, and although
the conduct at issue in National Farmers—like that in Montana—took
place on non-tribal land within the boundaries of a reservation, the
Supreme Court in National Farmers did not analyze the question of
jurisdiction pursuant to Montana. Instead, the Court stated that “the
existence and extent of a tribal court’s jurisdiction will require a careful
examination of tribal sovereignty, the extent to which that sovereignty
has been altered, divested, or diminished, as well as a detailed study of
relevant statutes, Executive Branch policy as embodied in treaties and
elsewhere, and administrative or judicial decisions,” and that this
“examination should be conducted in the first instance in the Tribal Court
itself.” Nat’l Farmers, 471 U.S. at 855–56 (footnote omitted).
    8
     The dissent suggests that Plains Commerce Bank v. Long Family
Land & Cattle Co., 554 U.S. 316 (2008), demonstrates that the Montana
exceptions should govern the jurisdictional question in this case. But
16                  WINDOW ROCK USD V. NEZ

Id. at 453 (alteration omitted) (emphasis added) (quoting
Montana, 450 U.S. at 565).

                                    B.

    In Hicks, the Supreme Court modified this general
framework to what our court has understood to be a limited
extent.

    The jurisdictional question in Hicks arose after state
game wardens executed a search warrant on tribal land at the
home of a tribal member suspected of committing a crime
outside the reservation. See Hicks, 533 U.S. at 356. The
suspect alleged that his property was damaged during the
search and asserted civil rights claims against the state game
wardens in tribal court. See id. at 356–57.

    To resolve whether the tribal court had jurisdiction, the
Supreme Court examined “the principle that Indians have the
right to make their own laws and be governed by them[,
which] requires ‘an accommodation between the interests of
the Tribes and the Federal Government, on the one hand, and
those of the State, on the other.’” Id. at 362 (quoting
Washington v. Confederated Tribes of Colville Reservation,
447 U.S. 134, 156 (1980)). The Court explained that “tribal
authority to regulate state officers in executing process
related to the violation, off reservation, of state laws is not
essential to tribal self-government or internal relations—to
the right to make laws and be ruled by them.” Id. at 364
(internal quotation marks omitted). The Court reasoned that,
by contrast, “[t]he State’s interest in execution of process is

Plains Commerce Bank involved “a non-Indian’s sale of non-Indian fee
land,” id. at 330, and thus does not control this case, in which the conduct
at issue occurred on tribal land.
                WINDOW ROCK USD V. NEZ                       17

considerable.” Id. Accordingly, the Court concluded that
the tribal court lacked jurisdiction, even though the events
giving rise to the claim had transpired on tribal land. See id.
at 374.

    The Supreme Court recognized in Hicks that its earlier
cases suggested that tribal jurisdiction over civil suits
depended on land ownership, but the Court stated that “[t]he
ownership status of land, . . . is only one factor to consider
in determining whether regulation of the activities of
nonmembers is ‘necessary to protect tribal self-government
or to control internal relations.’” Id. at 360 (quoting
Montana, 450 U.S. at 564). The Court reaffirmed, however,
that the ownership status of land is a “significant” factor, id.
at 370, that “may sometimes be . . . dispositive,” id.

    Although the Court further suggested in Hicks that “the
general rule of Montana applies to both Indian and non-
Indian land,” id. at 360, it also stated in a footnote: “Our
holding in this case is limited to the question of tribal-court
jurisdiction over state officers enforcing state law. We leave
open the question of tribal-court jurisdiction over
nonmember defendants in general.” Id. at 358 n.2.

                              C.

    Although the Districts and the dissent would have us
read Hicks to eliminate the right-to-exclude framework, our
court has repeatedly rejected this interpretation. We have
held that “Hicks is best understood as the narrow decision it
explicitly claims to be,” and we have emphasized that
Hicks’s “application of Montana to a jurisdictional question
arising on tribal land should apply only when the specific
concerns at issue in [Hicks] exist.” Water Wheel, 642 F.3d
at 813. When other concerns have been present in civil cases
involving nonmember conduct on tribal land, we have held
18                WINDOW ROCK USD V. NEZ

that tribal courts have jurisdiction unless a treaty or federal
statute provides otherwise—regardless of whether the
Montana exceptions would be satisfied.

    In McDonald v. Means, 309 F.3d 530 (9th Cir. 2002), for
example, we held that a tribal court had jurisdiction over a
tort suit arising from an accident on a road within a
reservation because it was a tribal road—even though neither
Montana exception applied. See id. at 535–40, 536 n.2. We
explained that Hicks did not preclude jurisdiction because its
holding was limited to “the question of tribal-court
jurisdiction over state officers enforcing state law.” Id. at
540 (quoting Hicks, 533 U.S. at 358 n.2). In doing so, we
explicitly rejected the argument that Hicks modified or
overruled Montana such that it would “bar tribal jurisdiction
not only over the conduct of nonmembers on non-Indian fee
land but on tribal land as well.” Id. at 540 n.9.

    Similarly, in Water Wheel Camp Recreational Area, Inc.
v. LaRance, 642 F.3d 802 (9th Cir. 2011), we reaffirmed that
narrow interpretation of Hicks. We held that the Tribe’s
right to exclude implied tribal civil jurisdiction over an
eviction proceeding that arose after a nonmember, private
lessee of tribal land failed to pay rent. Id. at 805–06, 812–
13. We explained that the Montana framework was
inapplicable because the conduct at issue occurred on tribal
land. Id. at 809–14. We also reiterated that Hicks is limited
to situations in which “the specific concerns at issue in that
case exist.” 9 Id. at 813.

     Although our decision in Philip Morris USA, Inc. v. King Mountain
     9

Tobacco Co., 569 F.3d 932 (9th Cir. 2009), could arguably be read to
extend the Montana framework more broadly, we explained in Water
Wheel that “Philip Morris’s comments regarding jurisdiction are best
                    WINDOW ROCK USD V. NEZ                                19

    We again adhered to our narrow reading of Hicks in
Grand Canyon Skywalk Development, LLC v. ‘Sa’ Nyu Wa
Inc., 715 F.3d 1196 (9th Cir. 2013). We held that tribal
jurisdiction was not plainly lacking over a property and
contract dispute involving a company that was operating a
tourist attraction on tribal land. See id. at 1199, 1205. We
held instead that the right-to-exclude framework applied
because the dispute arose on tribal land, and we
characterized Montana as “consider[ing] tribal jurisdiction
over nonmember activities on non-Indian land, held in fee
simple, within a reservation.” Id. at 1205. Given the lack of
any “obvious state interests at play” we concluded that, “[a]t
the very least, it [could] not be said that the tribal court
plainly lack[ed] jurisdiction” under Hicks. 10 Id. We

understood as a reiteration of the Supreme Court’s rule that a tribe’s
adjudicative jurisdiction may not exceed its regulatory jurisdiction.”
642 F.3d at 815. “Furthermore,” we continued, “Philip Morris did not
involve a question related to the tribe’s authority to exclude or its interest
in managing its own land. To the contrary, the activity in question
occurred off reservation.” Id. Similarly, although Smith v. Salish
Kootenai College, 434 F.3d 1127 (9th Cir. 2006) (en banc), could
arguably be read to extend the Montana framework, the jurisdictional
question in Smith arose in a different context from the one presented
here. In Smith, a nonmember challenged a tribal court’s authority to
adjudicate a claim that he had filed as a plaintiff in tribal court. Id. at
1128, 1133. We held that by filing the claim, the nonmember had
consented to tribal jurisdiction. Id. at 1136. By contrast, nonmember
defendants—not plaintiffs—challenge the tribal forum’s jurisdiction in
this case.

    10
       The dissent here describes Water Wheel and Grand Canyon as
“acknowledge[ing] that Hicks requires application of the Montana
framework when there are ‘competing state interests at play.’” In fact,
in both cases we identified the lack of competing state interests as a
reason why the Montana framework did not apply, Grand Canyon,
715 F.3d at 1205; Water Wheel, 642 F.3d at 805, but we did not say that
the presence of competing state interests—whatever their nature—would
20                  WINDOW ROCK USD V. NEZ

therefore held that exhaustion of tribal remedies was
required. See id. at 1200–01.

    Our precedent thus makes clear that the right-to-exclude
framework survives the narrow carve out effected by
Hicks. 11

automatically cause Montana to apply. Indeed, in Grand Canyon, we
stated that “when a competing state interest exists courts balance that
interest against the tribe’s” to determine whether there is tribal
jurisdiction. 715 F.3d at 1205. Here, the tribal tribunal had ordered
discovery on the nature of the tribal and state interests at stake, but the
district court enjoined the tribal proceedings before that discovery or any
hearing about it could occur. We thus do not know the full contours of
the tribal and state interests at stake, including whether or how, as the
dissent contends, Arizona’s “interest in complying with a statutory and
constitutional directive to provide a uniform system of public education
to all the State’s children” is implicated by the individual employment
disputes in this case. Indeed, the parties dispute whether the Districts are
traditional school districts controlled by state or local government, or
whether they are “special-purpose governments with a separately elected
governing body” that are “legally separate, and fiscally independent of
other state and local governments,” and thus dispute how directly the
State’s policies are involved. Nor do we know how the tribal tribunal
would have balanced the interests at stake here if exhaustion had run its
course.

     11
       The dissent apparently disagrees with our precedents in this area.
But we as a three-judge panel are bound by those precedents absent an
intervening irreconcilable Supreme Court decision. See Miller v.
Gammie, 335 F.3d 889, 892–93 (9th Cir. 2003) (en banc). The dissent
points to no such Supreme Court decision. Indeed, every Supreme Court
case that the dissent discusses was decided before Water Wheel and
Grand Canyon and thus cannot be described as an intervening decision.
The dissent refers without citation to “all existing authority” that
establishes that when “there are competing state interests at stake, tribal
jurisdiction over nonmembers only exists if at least one of the two
Montana exceptions is satisfied.” We are unaware of any such authority
from our court or the Supreme Court.
                 WINDOW ROCK USD V. NEZ                       21

                               V.

    Tribal jurisdiction is plausible in this case because (a) the
schools operated by the Districts are located on tribal land
over which the Navajo Nation maintains the right to exclude,
and (b) state criminal law enforcement interests are not
present here. We need not decide whether Hicks could be
expanded to cover state interests other than those in criminal
law enforcement because the only issue here is whether
jurisdiction is colorable or plausible under our current
precedent.

                               A.

    The 1868 treaty that established the Navajo Reservation
makes clear that the Navajo Nation has the right to exclude
nonmembers from the land on which the Districts’ schools
are now located. Article II of the treaty defines the
reservation’s boundaries and contains an “exclusion” clause:

        [T]he United States agrees that no persons
        except those herein so authorized to do, and
        except such officers, soldiers, agents, and
        employe[e]s of the government, or of the
        Indians, as may be authorized to enter upon
        Indian reservations in discharge of duties
        imposed by law, or the orders of the
        President, shall ever be permitted to pass
        over, settle upon, or reside in, the territory
        described in this article.

Treaty between the United States of America and the Navajo
Tribe of Indians, Navajo Tribe of Indians-U.S., art. II, June
1, 1868, 15 Stat. 667. In Article VI of the treaty, the Navajo
tribe agreed “to compel their children . . . to attend school,”
and the United States committed to providing teachers who
22                 WINDOW ROCK USD V. NEZ

would “reside among” the tribe. Although this provision
suggests that the Navajo Nation may have waived its right to
exclude federal teachers and schools, it says nothing about
the Navajo Nation’s authority to exclude state officials. 12

    Indeed, interpreting that treaty in a case involving
Arizona’s right to tax Navajo tribe members on tribal land,
the Supreme Court held that “it cannot be doubted that the
reservation of certain lands for the . . . Navajos and the
exclusion of non-Navajos from . . . [those lands] was meant
to establish the lands as within the exclusive sovereignty of
the Navajos.” McClanahan v. State Tax Comm’n of Ariz.,
411 U.S. 164, 174–75 (1973). Absent explicit congressional
action to modify or eliminate tribal rights granted by a treaty,
those rights remain. See South Dakota v. Yankton Sioux
Tribe, 522 U.S. 329, 343 (1998) (“Congress possesses
plenary power over Indian affairs, including the power to
modify or eliminate tribal rights. Accordingly, only
Congress can alter the terms of an Indian treaty by
diminishing a reservation, and its intent to do so must be
‘clear and plain.’” (citations omitted) (quoting United States
v. Dion, 476 U.S. 734, 738–39 (1986))).

    Thus, as the treaty makes clear, the land at issue here is
“within the exclusive sovereignty of the Navajos,” and from
this sovereignty, regulatory and adjudicative authority
follow. See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130,

     12
        The dissent states that Arizona “became subject to the Treaty’s
specific requirement of government schools on Indian land” without
citing any authority for that proposition. As discussed infra, the
Enabling Act required Arizona to establish a system of public education,
but it said nothing about Arizona taking over the federal government’s
treaty relationship with the Navajo, as the dissent seems to suggest.
                WINDOW ROCK USD V. NEZ                     23

144–45 (1982); Strate v. A-1 Contractors, 520 U.S. 438, 453
(1997).

    The Districts argue, however, that the treaty is not broad
enough to support jurisdiction over state school districts.
Instead, according to the Districts, the treaty protects only
the Navajo Nation’s authority over tribal lands and internal
affairs. But it is at least plausible that the Tribe has
adjudicative jurisdiction here because the conduct occurred
on tribal land, where the Navajo Nation has the right to
exclude. See McClanahan, 411 U.S. at 174 (“[T]his Court
in interpreting Indian treaties, [has] adopt[ed] the general
rule that ‘[d]oubtful expressions are to be resolved in favor
of [the Tribe].’” (third alteration in original) (quoting
Carpenter v. Shaw, 280 U.S. 363, 367 (1930))).

    The Districts next argue that whatever rights the treaty
originally preserved for the Navajo Nation, Congress
eliminated the Nation’s right to exclude, and thus its
regulatory and adjudicative authority, by enacting the New
Mexico-Arizona Enabling Act (the “Enabling Act”), ch. 310,
36 Stat. 557 (1910). The Enabling Act authorized the
creation of the State of Arizona, and it required, as a
condition of admission to the United States, the adoption of
a constitution requiring the establishment and maintenance
of a public school system. Id. at 570. It also specifically
mandated that “the schools, colleges, and universities
provided for in this Act shall forever remain under the
exclusive control of the said State.” Id. at 573–74. The
Districts argue that, under this congressional enactment,
even schools located on tribal land must remain under the
exclusive control of the State, including for purposes of
adjudicative jurisdiction. But “courts will not lightly assume
that Congress in fact intends to undermine Indian self-
government.” Michigan v. Bay Mills Indian Cmty., 134 S.
24                 WINDOW ROCK USD V. NEZ

Ct. 2024, 2032 (2014). And nothing in the Enabling Act
specifically addresses state schools on tribal land. In fact,
the Enabling Act required Arizona, as a condition of
admission, to disclaim any right to tribal land within its
boundaries. See 36 Stat. at 569. Thus there are at least
colorable arguments on both sides of the question whether
the Enabling Act eliminated the Nation’s right to exclude.
The Districts’ argument is therefore not strong enough to
render tribal jurisdiction implausible. 13

    The Districts further argue that Congress abrogated the
treaty when it authorized, with the Navajo Nation’s consent,
enforcement of state compulsory school attendance laws.
But this argument likewise fails to demonstrate that tribal
jurisdiction is clearly lacking. It is true that Congress
authorized state officials to enter tribal land for the limited
purpose of enforcing compulsory school attendance laws,
and that the Navajo Nation consented to the enforcement on
tribal land of such laws. See Act of Feb. 15, 1929, ch. 216,
45 Stat. 1185; Act of Aug. 9, 1946, ch. 930, 60 Stat. 962
(amending the Act of Feb. 15, 1929); 10 Navajo Nation Code
§ 503. But, beyond officers enforcing truancy laws, such
authorization and consent do not abrogate the right to
exclude state public schools and their employees more
generally—or the regulatory and adjudicative jurisdiction
attendant to that right. Indeed, the fact that the Districts had
to sign leases with the Navajo Nation to operate schools on

     13
         To the extent that the Districts argue that Arizona is under a
federal mandate to provide a free public education to Navajo children,
any such mandate does not necessarily require that schools be located on
tribal land as opposed to, for example, land located within the boundaries
of the reservation but owned by the State or nonmembers.
                   WINDOW ROCK USD V. NEZ                              25

Navajo land suggests that the Navajo Nation maintains the
right to exclude state schools.

    Furthermore, the leases themselves cannot be understood
as a surrender of tribal jurisdiction. “[U]nless expressly
waived ‘in unmistakable terms’ within [a] contract, a tribe
retains its inherent sovereignty, and as such, the tribe may
have jurisdiction.” Grand Canyon Skywalk Dev., LLC v.
‘Sa’ Nyu Wa Inc., 715 F.3d 1196, 1205 (9th Cir. 2013)
(quoting Merrion, 455 U.S. at 148). Neither lease “expressly
waive[s] in unmistakable terms” tribal jurisdiction. Window
Rock’s lease requires the school district to abide by Navajo
laws, to the extent that they do not conflict with Arizona or
federal law, and it further provides that the agreement to
abide by Navajo laws does not forfeit any rights under state
or federal laws. Pinon’s lease does not mention Navajo law
or jurisdiction. At most, the Window Rock and Pinon leases
are ambiguous as to their effect on tribal jurisdiction, which
leads us to conclude that tribal jurisdiction is not plainly
lacking. 14

                                    B.

    The Districts argue in the alternative that Arizona’s
interest in this case is important enough that Hicks applies to
deprive the tribal courts of jurisdiction. But as discussed
above, our court has taken Hicks at its word that its “holding

    14
       Although the employment contracts of two employees state that
jurisdiction for matters arising out of the contract lie with Arizona state
courts and federal courts, most of the contracts provided only that the
employees agreed to abide by state and federal law and were silent as to
the laws that would govern the contractual relationship and as to where
disputes about the employment relationship would be litigated. Most of
the contracts, including Michael Coonis’s, see n.2 supra, lack any
provisions that even arguably bear on the tribal jurisdiction question.
26               WINDOW ROCK USD V. NEZ

. . . is limited to the question of tribal-court jurisdiction over
state officers enforcing state law.” Nevada v. Hicks,
533 U.S. 353, 358 n.2 (2001). Because “the specific
concerns at issue in that case,” Water Wheel Camp
Recreational Area, Inc. v. LaRance, 642 F.3d 802, 813 (9th
Cir. 2011), are not present here, it is at least plausible that
tribal jurisdiction exists. Exhaustion is therefore required.

    Our conclusion is bolstered by National Farmers Union
Insurance Cos. v. Crow Tribe of Indians, 471 U.S. 845
(1985). There, a tribal member student was injured at a
school on state land within the boundaries of an Indian
reservation. Id. at 847. The Supreme Court required tribal
court exhaustion in the resulting tort suit. See id. at 847,
856–57. This case arguably presents even stronger reasons
to require tribal court exhaustion, because, unlike the school
in National Farmers, the schools operated by the Districts
are located on tribal land, not state-owned land.

    In sum, because the conduct at issue here occurred on
tribal land over which the Navajo Nation has the right to
exclude nonmembers, and because state criminal law
enforcement interests are not present, we hold that tribal
jurisdiction is at least colorable or plausible and that
exhaustion in the tribal forum is therefore required.

                       CONCLUSION

    For the foregoing reasons, we REVERSE the grant of
summary judgment and REMAND to the district court with
instructions to DISSOLVE the injunction and DISMISS the
case for failure to exhaust.
                WINDOW ROCK USD V. NEZ                       27

CHRISTEN, Circuit Judge, dissenting:

    The opinion issued today creates a circuit split and is
notable for what it leaves out. First, the majority does not
explain that, before they filed claims in tribal court, five out
of the seven employee claimants had already received
adverse state-court rulings on their claims against the school
districts. The majority also overlooks that two of the
employee claimants had employment contracts specifying
that jurisdiction for any employment disputes would
exclusively lie in state or federal court. The majority
nominally recognizes the pathmarking case on tribal
jurisdiction over nonmembers, Montana v. United States,
450 U.S. 544 (1981), only to flip its seminal holding.
Montana, and the Supreme Court authority that followed it,
make clear that the inherent sovereign powers of Indian
tribes generally do not extend to the activities of
nonmembers. See Nevada v. Hicks, 533 U.S. 353, 358–59
(2001).

    The majority takes refuge primarily in two entirely
distinguishable cases from our circuit, Water Wheel Camp
Recreational Area, Inc. v. LaRance, 642 F.3d 802 (9th Cir.
2011) (per curiam), and Grand Canyon Skywalk
Development, LLC v. ‘Sa’ Nyu Wa Inc., 715 F.3d 1196 (9th
Cir. 2013), which purport to limit Montana’s framework to
cases where there are competing state interests. Water
Wheel and Grand Canyon are already recognized as outliers,
but the majority goes much farther, striking out on its own
and holding that unless a state is seeking to enforce its
criminal laws, Montana does not apply to nonmember
conduct on tribal land even in the presence of clear
competing state interests.

   Finally, in my view, the majority gives short shrift to the
school districts’ obligation to operate public schools within
28                WINDOW ROCK USD V. NEZ

the Navajo Reservation’s boundaries, treating Window Rock
and Pinon Unified School Districts as private parties
engaged in consensual, private-sector contractual
relationships on the Navajo Reservation. In fact, the districts
are non-tribal-member political subdivisions of the State of
Arizona with statutory and state constitutionally imposed
mandates to provide a uniform public school system to all
Arizona’s children. For these reasons, tribal jurisdiction
over these consolidated disputes is neither colorable nor
plausible, and I must respectfully dissent.

                        BACKGROUND

    This appeal addresses seven cases consolidated by the
Navajo tribal court, the Navajo Nation Labor Commission.1
The claimants are not similarly situated. The first four,
Loretta Brutz, Mae John, and Ann and Kevin Reeves, are
employees of Window Rock Unified School District.
Respectively, they work as a speech therapist and
pathologist, a speech language pathologist, a school
psychologist, and a physical therapist. None of them are
certified teachers. Brutz and John are members of the
Navajo Nation; Ann and Kevin Reeves are not. These four
claimants (the Brutz claimants) filed a complaint in state
superior court challenging Window Rock’s determination
that they are not entitled to the merit pay that Arizona’s
public school teachers receive pursuant to Arizona’s
Proposition 301. See Ariz. Rev. Stat. § 15-977(A), (B). The
state superior court agreed with the school district that non-
teachers are not entitled to Proposition 301 merit pay, and

     1
       The tribal court consolidated the separately filed complaints of
Loretta Brutz, Mae John, and Ann and Kevin Reeves in 2009. The tribal
court later consolidated these complaints with those of Michael Coonis,
Clarissa Hale, and Barbara Beall.
                 WINDOW ROCK USD V. NEZ                          29

the Arizona Court of Appeals affirmed that decision. See
Reeves v. Barlow, 251 P.3d 417 (Ariz. Ct. App. 2011).
Rather than seek review in the Arizona Supreme Court, the
Brutz claimants pressed their argument for teacher merit pay
by filing new complaints, this time in tribal court.

   The next two claimants, Michael Coonis and Clarissa
Hale, are members of the Navajo Nation and former
employees of Window Rock. Coonis and Hale allege that
Window Rock violated the Navajo Preference in
Employment Act (NPEA). 2 They contend that Window
Rock failed to promote them to positions for which they
were the most qualified Navajos. After filing employment
charges with the Office of Navajo Labor Relations (ONLR),
Coonis and Hale filed complaints with the tribal court.

     The final claimant, Barbara Beall, is a member of the
Navajo Nation and a former employee of Pinon Unified
School District. Pinon terminated Beall for unprofessional
conduct and continual and repeated failure to comply with
school-district policies. Beall appealed her termination to a
state administrative hearing officer, and lost. Instead of
filing an appeal in superior court, Beall filed an employment
charge with the ONLR and a complaint in tribal court. Both
allege that Pinon violated the NPEA by firing Beall without
just cause.

    All seven claimants signed employment contracts with
the school districts agreeing to abide by applicable laws of
the United States and the State of Arizona, as well as the

    2
     The NPEA requires employers to give preference in employment
to Navajos and dictates that employers may not fire Navajo employees
without just cause. See 15 Navajo Nation Code §§ 601, et seq.
30                 WINDOW ROCK USD V. NEZ

State Board of Education’s policies, rules, and regulations.
Hale’s and Beall’s contracts further specified that “Arizona
State and federal courts shall exercise exclusive jurisdiction
over any and all matters arising out of this contract.” 3

    In tribal court, Window Rock and Pinon filed motions to
dismiss these claims for lack of tribal-court jurisdiction,
giving the tribal court first crack at resolving this
jurisdictional dispute. Without ruling on the motion to
dismiss, the tribal court consolidated the employees’ claims,
and ordered an evidentiary hearing for the school districts to
present detailed evidence concerning the history of
government-to-government compacts between the Navajo
Nation and the State of Arizona and the ethnic composition
of the districts. Only then did the school districts file this
action in federal court seeking to enjoin the tribal-court
proceedings and arguing that exhaustion was not required
because the tribal court plainly lacked jurisdiction. The
school districts named as defendants the seven claimants
identified above, and members of the tribal court assigned to
the consolidated case.

   In federal court, the defendants filed a motion to dismiss,
and the school districts filed a motion for summary
judgment. The district court granted Window Rock and
Pinon’s motion for summary judgment. In doing so, the
court began with the touchstone authority concerning tribal-

     3
       By providing this background, I do not suggest that the merits of
the claimants’ disputes with the school districts are before us. The nature
of the claims, not the merits of the claims, gives context to the
jurisdictional question we must decide. It also shows that: (1) several of
the claimants are actually challenging the jurisdiction of the state courts
that already rendered verdicts on the same claims they raise here; and
(2) unlike many cases involving challenges to tribal jurisdiction, comity
concerns in this case weigh heavily against exhaustion.
                   WINDOW ROCK USD V. NEZ                             31

court jurisdiction over non-tribal members, Montana v.
United States, 450 U.S. 544 (1981). The court recognized
that Montana’s general rule governed these claims due to
“the state’s considerable interest, arising from outside of the
reservation, in providing for a general and uniform public
education.”       The court considered Montana’s two
exceptions, but decided that neither of them established
tribal jurisdiction over these employment-related disputes
between the school districts and their present and former
employees, and that further factual development was not
necessary because tribal jurisdiction was plainly lacking.
The panel majority reverses, deciding that tribal-court
jurisdiction is plausible and exhaustion is thus required. 4 I
would affirm the district court’s ruling in all respects.

                           DISCUSSION

I. Although Indian Tribes Retain Inherent Sovereign
   Powers, They Do Not Possess the Full Attributes of
   Sovereignty.

     “Indian tribes are ‘unique aggregations possessing
attributes of sovereignty over both their members and their
territory.’” Montana, 450 U.S. at 563 (quoting United States
v. Wheeler, 435 U.S. 313, 323 (1978), superseded by statute
on other grounds as recognized in United States v. Lara,
541 U.S. 193, 199–207 (2004)). They possess inherent

    4
      The majority describes several reasons behind the policy favoring
exhaustion, see Nat’l Farmers Union Ins. Cos. v. Crow Tribe of Indians,
471 U.S. 845, 856–57 (1985), but does not explain why the policy
weighs in favor of exhaustion in this case. Strate v. A–1 Contractors,
520 U.S. 438, 450 (1997), makes clear that the exhaustion preference is
based on prudential considerations and is not required if tribal
jurisdiction is plainly lacking. See id. at 450–51. This inquiry is highly
case specific.
32               WINDOW ROCK USD V. NEZ

“powers of self-government.” 25 U.S.C. § 1301. “Thus, in
addition to the power to punish tribal offenders, the Indian
tribes retain their inherent power to determine tribal
membership, to regulate domestic relations among
members, and to prescribe rules of inheritance for
members.” Montana, 450 U.S. at 564. Tribes “may also
exclude outsiders from entering tribal land,” Plains
Commerce Bank v. Long Family Land & Cattle Co.,
554 U.S. 316, 328 (2008), and “place conditions on entry, on
continued presence, or on reservation conduct, such as a tax
on business activities conducted on the reservation,”
Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 144 (1982).
Tribes retain these inherent sovereign powers in the absence
of contrary treaties or federal statutes. See Nevada v. Hicks,
533 U.S. 353, 365 (2001).

     But “Indian tribes are . . . no longer ‘possessed of the full
attributes of sovereignty.’” Wheeler, 435 U.S. at 323
(quoting United States v. Kagama, 118 U.S. 375, 381
(1886)). “Their incorporation within the territory of the
United States, and their acceptance of its protection,
necessarily divested them of some aspects of the sovereignty
which they had previously exercised.” Id. “[E]xercise of
tribal power beyond what is necessary to protect tribal self-
government or to control internal relations . . . cannot survive
without express congressional delegation.” Montana,
450 U.S. at 564.

II. Tribal Jurisdiction Generally Does Not Extend to
    Non-Tribal Members.

    The panel majority concludes that absent contrary
treaties or federal statutes, Indian tribes’ inherent sovereign
right to exclude generally affords tribal-court jurisdiction
over nonmember conduct on tribal land. Not so. Supreme
Court precedent and our own case law makes clear that at
                   WINDOW ROCK USD V. NEZ                              33

least where there are competing state interests, tribes
generally lack jurisdiction over the conduct of non-tribal
members within the boundaries of a reservation, regardless
of the status of the land on which nonmember conduct
occurs.

    In Montana v. United States, the Supreme Court
addressed whether the Crow Tribal Council had jurisdiction
to regulate non-Indian hunting and fishing on non-Indian
land located within the Crow Reservation. 5 450 U.S. at 547.
Finding no treaties or statutes that conferred tribal authority
to regulate such conduct on non-Indian land within the
reservation, the Supreme Court discussed whether such
regulatory authority existed by virtue of the Crow Tribe’s
inherent sovereign authority. Id. at 557–66. The Supreme
Court stated that as a “general proposition[,] . . . the inherent
sovereign powers of an Indian tribe do not extend to the
activities of nonmembers of the tribe.” Id. at 565. “[T]he
Indian tribes have lost any ‘right of governing every person
within their limits except themselves.’” Id. (quoting
Fletcher v. Peck, 10 U.S. 87, 147 (1810)).

   The Montana Court nonetheless articulated two
exceptions to the general rule of no tribal jurisdiction over
nonmembers: (1) “[a] tribe may regulate, through taxation,

     5
       The State of Montana owned this land in fee simple. See Montana,
450 U.S. at 547–48, 556. Reservation land generally falls into three
categories: (1) unallotted lands held in trust by the United States for the
Tribe; (2) allotted land held in trust by the United States for individual
Indians; and (3) fee lands now owned by non-Indians. See id. at 458; see
also Big Horn Cty. Elec. Co-op., Inc. v. Adams, 219 F.3d 944, 948 (9th
Cir. 2000) (“There is a checkerboard pattern of land ownership on the
Reservation composed of fee land owned by non-Indians and members
of the Tribe and trust land held by the United States in trust for the
Tribe.”).
34              WINDOW ROCK USD V. NEZ

licensing, or other means, the activities of nonmembers who
enter consensual relationships with the tribe or its members,
through commercial dealing, contracts, leases, or other
arrangements”; and (2) “[a] tribe may also retain inherent
power to exercise civil authority over the conduct of non-
Indians on fee lands within its reservation when that conduct
threatens or has some direct effect on the political integrity,
the economic security, or the health or welfare of the tribes.”
Id. at 565–66. The Supreme Court then held that regulating
non-Indian hunting and fishing on non-Indian land did not
fall into either exception and, as such, was not within the
Crow Tribe’s jurisdiction. Id. at 566.

    Montana was directed at tribal regulatory authority, but
in Strate v. A–1 Contractors, the Supreme Court extended
Montana’s rule to tribal adjudicative authority. 520 U.S.
438, 442 (1997). Strate arose when two non-Indians were
involved in a car accident on a highway that crossed the Fort
Berthold Indian Reservation in North Dakota. Id. at 442–43.
The state operated the highway pursuant to a federally
granted right of way, but the tribal court determined it had
jurisdiction to hear a suit for damages between the drivers,
one driver’s employer, and the employer’s insurer. Id. at
443–44. The tribal-court defendants sued in federal court to
enjoin the tribal-court proceedings, id. at 444, eventually
leading to the Supreme Court’s first statement that while
Montana applies to questions of tribal adjudicative
jurisdiction, “[a]s to nonmembers, . . . a tribe’s adjudicative
jurisdiction does not exceed its legislative jurisdiction,” id.
at 453. Applying this holding to the accident in Strate, the
Court held that neither Montana exception afforded tribal-
court jurisdiction over “run-of-the-mill” car-accident suits
occurring on state-operated highways. Id. at 456–59.
                WINDOW ROCK USD V. NEZ                       35

    In these decisions, the Supreme Court broadly stated the
general rule of no tribal jurisdiction over nonmembers, but
the Court only had occasion to apply the rule to conduct on
land owned or controlled by non-Indians. That changed in
Nevada v. Hicks, where the Supreme Court addressed tribal-
court jurisdiction over a claim for damages arising from a
state game warden’s service of process on tribal land.
533 U.S. 353, 356–57 (2001). In Hicks, Nevada state game
wardens allegedly damaged property of tribal member Floyd
Hicks and exceeded the bounds of a search warrant while
searching Hicks’ home for evidence that he unlawfully killed
a bighorn sheep off the reservation. Id. The Supreme Court
held that the tribal court did not have jurisdiction over Hicks’
civil claims against the state game wardens. Id. at 364–69.

     The Hicks Court further held that the State of Nevada
was not required to exhaust tribal remedies before bringing
its jurisdictional challenge in federal court because the tribal
court plainly lacked jurisdiction. Id. at 369. The decision
expressly extended Montana’s general rule of no tribal
jurisdiction to non-Indian conduct on Indian land. Id. at 360
(stating that “the general rule of Montana applies to both
Indian and non-Indian land” and “[t]he ownership status of
the land . . . is only one factor to consider”). The Court was
clear that its ruling did not contravene “the principle that
Indians have the right to make their own laws and be
governed by them,” but equally clear that this right must be
balanced against the State’s “interests outside the
reservation.” Id. at 362.

    The Supreme Court reaffirmed the Hicks holdings in
Plains Commerce Bank v. Long Family Land & Cattle Co.,
554 U.S. 316 (2008). Plains Commerce Bank involved
allegations that a non-Indian bank sold fee land that it owned
on a reservation to non-Indians under terms that were more
36                 WINDOW ROCK USD V. NEZ

favorable than terms the bank offered to an Indian couple.
See id. at 320–24. The couple sued the bank for
discrimination in tribal court, and they were awarded a
$750,000 general verdict. Id. at 323. The bank sought a
declaratory judgment in federal district court that the tribal
judgment was null and void due to lack of jurisdiction over
the couple’s discrimination claim. Id. Applying Montana,
the Supreme Court agreed with the bank. Id. at 324.

    The Court began its analysis with the principle that
“tribes do not, as a general matter, possess authority over
non-Indians who come within their borders.” Id. at 328. The
Supreme Court reiterated that although this principle applies
with particular strength to “non-Indian fee land,” the
ownership of the land is just one factor, and tribal authority
over nonmember conduct on all land within a reservation is
restricted. See id. at 327–28. Plains Commerce Bank
recognized the continuing validity of the two Montana
exceptions, but held that neither exception conferred
jurisdiction on the tribal court under the facts of that case.
Id. at 329–30, 340–41. 6

     6
       The panel majority relies heavily on the fact that the school
districts are located on tribal land, whereas the conduct in Plains
Commerce Bank occurred on non-Indian fee land. Boiled down, the
majority announces a rule that tribal jurisdiction is plausible any time
nonmember conduct occurs on tribal land unless state criminal law
enforcement interests are implicated. (“But it is at least plausible that
the Tribe has adjudicative jurisdiction here because the conduct occurred
on tribal land, where the Navajo Nation has the right to exclude.”). In
doing so, the majority overlooks the general directives in Plains
Commerce Bank. “[T]he inherent sovereign powers of an Indian tribe
do not extend to the activities of nonmembers of the tribe.” 554 U.S. at
328 (alteration in original) (quoting Montana, 450 U.S. at 565). “This
general rule restricts tribal authority over nonmember activities taking
place on the reservation, and is particularly strong when the
                WINDOW ROCK USD V. NEZ                      37

    Our court has recognized that, apart from the two
Montana exceptions, “the tribes’ inherent sovereignty does
not give them jurisdiction to regulate the activities of
nonmembers.” See Philip Morris USA, Inc. v. King
Mountain Tobacco Co., 569 F.3d 932, 938–39 (9th Cir.
2009) (“As a general rule, tribes do not have jurisdiction,
either legislative or adjudicative, over nonmembers, and
tribal courts are not courts of general jurisdiction.”). But in
two recent cases, our circuit case law purports to limit
Montana’s expansive general rule: Water Wheel Camp
Recreational Area, Inc. v. LaRance, 642 F.3d 802 (9th Cir.
2011) (per curiam), and Grand Canyon Skywalk
Development, LLC v. ‘Sa’ Nyu Wa Inc., 715 F.3d 1196 (9th
Cir. 2013).

    In Water Wheel, our court considered a dispute arising
from the lease of a resort located on land held in trust by the
United States for the Colorado River Indian Tribes. 642 F.3d
at 805. After leasing the land for twenty-five years, the
resort stopped making the required lease payments to the
Tribes but continued to operate essentially rent-free for
another seven years. Id. The resort operators refused to
vacate the land even after the lease expired, so the Tribes
sued to evict the resort operator, collect unpaid rent, and
recover damages for their lost use of the property. Id.

    It was in this context that our court stated, “[Hicks’s]
application of Montana to a jurisdictional question arising
on tribal land should apply only when the specific concerns
at issue in that case exist. Because none of those
circumstances exist here, we must follow precedent that

nonmember’s activity occurs on land owned in fee simple by non-
Indians . . . .” Id. (emphasis added).
38              WINDOW ROCK USD V. NEZ

limits Montana to cases arising on non-Indian land.” Id. at
813. Water Wheel went on:

       In this instance, where the non-Indian activity
       in question occurred on tribal land, the
       activity interfered directly with the [T]ribe’s
       inherent powers to exclude and manage its
       own lands, and there are no competing state
       interests at play, the [T]ribe’s status as
       landowner is enough to support regulatory
       jurisdiction without considering Montana.

Id. at 814 (emphasis added). Water Wheel did not precisely
identify what it meant by the “specific concerns” at issue in
Hicks that warranted application of Montana’s general rule
to jurisdictional questions arising on tribal land, but it did
expressly recognize that “competing state interests” would
change the analysis. There were no competing state interests
in Water Wheel, and the court concluded that the Tribes had
both regulatory and adjudicative jurisdiction over the resort
operator’s conduct. See id. at 816.

    Notably, Water Wheel also concluded that Montana’s
two exceptions would allow for jurisdiction over the Tribes’
dispute with the resort operator. Id. at 816–19. In particular,
the second Montana exception established tribal jurisdiction
over the Tribes’ trespass claim because the resort operator’s
“unlawful occupancy and use of tribal land not only deprived
[the Tribes’] of [their] power to govern and regulate [their]
own land, but also of [their] right to manage and control an
asset capable of producing significant income.” Id. at 819.
In keeping with Hicks’ admonition that land ownership
status “may sometimes be a dispositive factor,” see Hicks,
533 U.S. at 360, Water Wheel concluded that the Tribes’
assertion of jurisdiction was proper in light of their
                WINDOW ROCK USD V. NEZ                      39

significant interest in securing occupancy and control of
tribal land and the absence of competing state interests,
642 F.3d at 819.

    In Grand Canyon, our court considered a situation
similar to Water Wheel. Grand Canyon involved the glass-
bottomed “Skywalk,” a viewing platform overlooking the
Grand Canyon built on land held in trust for the Hualapai
Tribe. 715 F.3d at 1198–99. A non-tribal developer, Grand
Canyon Skywalk Development, entered into a revenue
sharing agreement with a tribal corporation in order to build
and operate the Skywalk, and the Tribe later passed a
resolution to exercise eminent domain over the developer’s
contractual interests. Id. at 1199.

    Alleging that the Tribe had no authority to condemn its
private contract rights, the developer filed a motion for a
temporary restraining order in district court seeking to enjoin
the eminent domain action. Id. Grand Canyon held that the
developer was required to exhaust its remedies in tribal
court. See id. at 1203–04. In so ruling, the court looked to
Water Wheel and noted that, as in Water Wheel, Grand
Canyon involved a non-tribal-member who entered into a
consensual agreement “to develop and manage a tourist
location on tribal land in exchange for a fee” and “it was
access to the valuable tribal land that was the essential basis
for the agreement.” Id. at 1204. Grand Canyon reasoned,
“as the dispute centers on Hualapai trust land and there are
no obvious state interests at play, the Hicks exception is
unlikely to require Montana’s application. At the very least,
it cannot be said that the tribal court plainly lacks
jurisdiction.” Id. at 1205 (emphasis added). Like Water
Wheel, Grand Canyon concluded that the Montana
exceptions, if applied, would also provide for tribal
jurisdiction. Id. at 1205–06.
40                 WINDOW ROCK USD V. NEZ

    The results in Water Wheel and Grand Canyon were a
function of the Tribes’ significant interests in managing
exceptionally valuable tribal land and the lack of any
competing state interests. See, e.g., Water Wheel, 642 F.3d
at 814 (emphasizing that “the activity interfered directly with
the [T]ribe’s inherent powers to exclude and manage its own
lands, and there are no competing state interests at play”).
Nevertheless, our court’s narrow interpretation of Hicks and
Montana has been criticized. The dissent in Dolgencorp,
Inc. v. Mississippi Band of Choctaw Indians observed, “Both
the Choctaw Supreme Court and the district court a quo have
ruled, in light of dicta in Hicks and Plains Commerce Bank,
that the Ninth Circuit’s narrow application of Montana is
incorrect, a ruling that the tribal defendants do not
challenge.” 746 F.3d 167, 180 n.8 (5th Cir. 2014) (Smith,
J., dissenting), aff’d by an equally divided court sub nom.
Dollar Gen. Corp. v. Miss. Band of Choctaw Indians, 136 S.
Ct. 2159 (2016) . 7 And in Stifel, Nicolaus & Co. v. Lac du
Flambeau Band of Lake Superior Chippewa Indians, the
Seventh Circuit expressed its view that Water Wheel’s
reasoning cannot be reconciled “with the language that the
Court employed in Hicks and Plains Commerce Bank.”
807 F.3d 184, 207 n.60 (7th Cir. 2015). But even assuming
Water Wheel and Grand Canyon correctly interpreted Hicks
to mean that Montana need not be applied in every case
involving tribal land, all existing authority points to the rule
that when there are no contrary treaties or statutes and there

     7
       The majority in Dolgencorp applied Montana and held that the
Tribe had jurisdiction over a nonmember based on the first Montana
exception. See 746 F.3d at 169. The dissent agreed that Montana
applied, but disagreed with the majority’s conclusion that the tribe had
met the requirements of the first exception. See id. at 177–80 (Smith, J.,
dissenting).
                   WINDOW ROCK USD V. NEZ                            41

are competing state interests at stake, tribal jurisdiction over
nonmembers only exists if at least one of the two Montana
exceptions is satisfied. 8

III. The Tribe Does Not Have the Right to Exclude
     Nonmember School Districts from the Reservation.

    The panel majority further errs by concluding that the
Treaty of 1868 secured the Navajo Nation’s unqualified right
to exclude the school districts, and by disregarding the
compelling state interests at play here. The Treaty of 1868
carved out and reserved specific rights for the Navajo
Nation. By virtue of its inherent tribal sovereignty, the
Navajo Nation also retained other rights necessary to self-
government and control of internal relations, see Strate v. A–
1 Contractors, 520 U.S. 438, 445–46 (1997) (discussing
what powers the tribes retain), but the right to exclude
nonmember school districts from the Navajo Reservation is
not among them. 9

    8
       The panel majority states that neither Water Wheel nor Grand
Canyon decided that Montana applies where there are competing state
interests, only that Montana does not apply where there are no competing
state interests. But both decisions skirt Montana and Hicks based on the
lack of competing state interests and both acknowledge that Montana
would otherwise be the rule. See Water Wheel, 642 F.3d at 804–05; see
also Grand Canyon, 715 F.3d at 1205 (“Here, as the dispute centers on
Hualapai trust land and there are no obvious state interests at play, the
Hicks exception is unlikely to require Montana’s application.” (emphasis
added)).

    9
       Defendants argue that the school districts may be tribal members
for purposes of responding to employment claims in tribal court because
tribal members sit on the school district boards. But this argument
disregards Arizona law. See Ariz. Rev. Stat. § 15-101(23) (“‘School
district’ means a political subdivision of this state . . . .”).
42              WINDOW ROCK USD V. NEZ

     A. The Tribe Ceded Any Inherent Right to Exclude
        the School Districts from the Reservation.

    “[A] portion of what had once been [the Navajo
Nation’s] native country” was set apart as the Navajo
people’s “permanent home” by the Treaty of 1868. Williams
v. Lee, 358 U.S. 217, 221 (1959). Article II of the Treaty
“provided that no one, except United States Government
personnel, was to enter the reserved area.” Id. According to
Article II:

        [T]he United States agrees that no persons
        except those herein so authorized to do, and
        except such officers, soldiers, agents, and
        employees of the government, or of the
        Indians, as may be authorized to enter upon
        Indian reservations in discharge of duties
        imposed by law, or the orders of the
        President, shall ever be permitted to pass
        over, settle upon, or reside in, the territory
        described in this article.

Treaty between the United States of America and the Navajo
Tribe of Indians, Navajo Tribe of Indians-U.S. (Treaty of
1868), art. II, June 1, 1868, 15 Stat. 667. Though the
majority suggests otherwise, this provision does not grant
the Navajo Nation an absolute right to exclude. In fact, the
Treaty of 1868 expressly allows for entry of federal
government agents for various purposes and specifically
obligates the government to provide compulsory education
of Navajo children in schoolhouses created by the
government, by schoolteachers furnished by the government
and “resid[ing] among” the Tribe. See Treaty of 1868,
art. VI.
                WINDOW ROCK USD V. NEZ                     43

    When the Treaty of 1868 was executed, the State of
Arizona did not exist, but Arizona took on the obligation to
provide compulsory education to Navajo children as a
condition of Arizona’s statehood. In the Arizona Enabling
Act, Congress mandated that Arizona shall establish and
maintain “a system of public schools[,] which shall be open
to all the children of [Arizona],” Act of June 20, 1910, ch.
310, 36 Stat. 557, 570 (1910), and that this public school
system “shall forever remain under [Arizona’s] exclusive
control,” id. at 573–74. In its constitution, Arizona both
agreed to disclaim all rights to Indian land within its
boundaries, Ariz. Const. art. XX, § 4, and affirmed its
obligation to provide a system of public schools “open to all
the children of the state,” id. § 7.

    In 1929, Congress authorized “the agents and employees
of any State to enter upon Indian tribal lands, reservations,
or allotments therein . . . to enforce the penalties of State
compulsory school attendance laws against Indian children[]
and parents.” Act of Feb. 15, 1929, ch. 216, 45 Stat. 1185.
Congress amended the act in 1946 to require tribal consent
to such entry, see Act of Aug. 9, 1946, ch. 930, 60 Stat. 962,
and the Navajo Nation consented, see 10 Navajo Nation
Code § 503. Nothing in subsequent legislation, see Indian
Self-Determination and Education Assistance Act,
25 U.S.C. § 5301 (1975), relieved Arizona of its obligation
to provide a uniform, statewide system of public education.

    The panel majority does not acknowledge that the State
of Arizona became subject to the Treaty’s specific
requirement of providing government schools on Indian
land. Nor does it consider that the school districts are
political subdivisions of the State of Arizona, present within
the Navajo Nation for the purpose of carrying out the
expressly contemplated function of educating Navajo
44               WINDOW ROCK USD V. NEZ

children. The panel majority reasons that the Navajo Nation
generally retained its right to exclude after signing the Treaty
of 1868, but it offers no support for its conclusion that the
Tribe may exclude school districts where, as here, the state
officials are performing a governmental function on tribal
land pursuant to a congressional mandate with tribal consent.

    The holding in Strate v. A–1 Contractors, 520 U.S. 438
(1997), is instructive in this context. In that case, a car crash
involving non-Indians occurred on a highway over land that
the United States held in trust for the Three Affiliated Tribes.
Id. at 442–43. The State of North Dakota operated and
maintained the highway pursuant to a federally granted
right-of-way. Id. With the Tribes’ consent, Congress gave
the right-of-way to North Dakota to ensure access to a
federal water-resource project controlled by the Army Corps
of Engineers. Id. at 454–56. Given these circumstances, the
Supreme Court held that the highway was the “equivalent,
for nonmember governance purposes, to alienated, non-
Indian land,” over which “the Tribes [could not] assert a
landowner’s right to occupy and exclude.” Id. at 454, 456;
see also Cty. of Lewis v. Allen, 163 F.3d 509, 514 (9th Cir.
1998) (en banc) (holding that the Nez Perce Tribe ceded the
right to exclude county law enforcement officers by
“consenting to and receiving the benefits of state law
enforcement protection”). So too here. Like the tribe in
Strate, the Navajo Nation has ceded the right to exclude the
school districts from the Navajo oftlineReservation by:
(1) expressly agreeing that the federal government must
enter to provide a system of compulsory education for
Navajo children; and (2) consenting to state enforcement of
compulsory education on the Navajo Reservation.
                   WINDOW ROCK USD V. NEZ                             45

    B. The Significant State Interests Present Here
       Render Water Wheel and Grand Canyon
       Inapplicable.

    The panel majority asserts that our court interprets Hicks,
533 U.S. 353, “as creating only a narrow exception to the
general rule that, absent contrary provisions in treaties or
federal statutes, tribes retain adjudicative authority over
nonmember conduct on tribal land—land over which the
tribe has the right to exclude.” (Emphasis added). This flips
Montana’s general rule on its head. The majority primarily
looks to Water Wheel and Grand Canyon to support this
interpretation of Supreme Court precedent, but even those
outlier decisions do not permit such a cramped reading of
Hicks, and no existing authority supports the newly minted
rule that the panel majority dubs “general.”10

    First, as noted, Water Wheel and Grand Canyon
recognized that Montana’s exceptions allowed for tribal

    10
       The panel majority also cites one of our cases that followed close
on the heals of Hicks: McDonald v. Means, 309 F.3d 530 (9th Cir. 2002).
The majority describes McDonald as “explicitly reject[ing] the argument
that Hicks modified or overruled Montana such that it would ‘bar tribal
jurisdiction not only over the conduct of nonmembers on non-Indian fee
land but on tribal land as well.’” (Quoting McDonald, 309 F.3d at 540
n.9). In McDonald, a minor member of the Cheyenne Tribe hit a horse
owned by a nonmember. 309 F.3d at 535–36. The accident happened
on a road that the McDonald court determined was Indian land. Id. at
537–40. McDonald treated ownership of the land as dispositive and
concluded that the Tribe had jurisdiction over the dispute. Id. at 539–40.
The holding was expressly limited to a tort claim involving an accident
occurring on a tribal road: “We hold that the nature and purpose of the
grant [of a right-of-way over the road to the Bureau of Indian Affairs],
the continuing control exercised by the Tribe over the road, and the
Supreme Court’s previous treatment of BIA roads supports the
conclusion that the tribal court had jurisdiction to entertain [the minor
46                 WINDOW ROCK USD V. NEZ

jurisdiction in what respectively amounted to a landlord-
tenant dispute and an eminent domain action involving
prime tribal land. As such, the disputes arose from
“activit[ies] [that] interfered directly with the [T]ribe’s
inherent powers to exclude and manage its own lands.”
Water Wheel, 642 F.3d at 814. Second, both cases
acknowledged that Hicks requires application of the
Montana framework when there are “competing state
interests at play.” See Water Wheel, 642 F.3d at 810–14;
Grand Canyon, 715 F.3d at 1204–05. Those interests were
entirely absent in Water Wheel and Grand Canyon. To the
contrary, the non-tribal-members in Water Wheel and Grand
Canyon were private businesses engaged in consensual, for-
profit transactions with the Tribes and the Tribes had
overwhelming interests in the use and disposition of their
tribal assets (“prime” tribal land on the banks of the
Colorado River in one case, and tribal land overlooking the
Grand Canyon in the other). See Water Wheel, 642 F.3d at
817; Grand Canyon, 715 F.3d at 1198. In this way, Water
Wheel and Grand Canyon were consistent with Hicks’
observation that the ownership of land is only one factor to
consider in analyzing whether tribal-court jurisdiction exists,
but in some circumstances land ownership may be
dispositive.

   The case at bar stands in stark contrast. For starters, the
employees’ disputes with Window Rock and Pinon School

Indian’s suit] against the McDonald family.” Id. at 540. McDonald
predates our en banc decision in Smith v. Salish Kootenai College, where
we applied the Montana framework to a dispute arising on tribal land
and stressed that in deciding whether a tribal court has jurisdiction over
a nonmember “[o]ur inquiry is not limited to deciding precisely when
and where the claim arose.” 434 F.3d 1127, 1135 (9th Cir. 2006) (en
banc). McDonald and Smith are consistent with Hicks’ rule that
ownership of the land is only one factor to consider.
                    WINDOW ROCK USD V. NEZ                                 47

Districts have nothing to do with occupancy of the tribal land
or buildings in which the school districts operate. These
disputes involve entitlement to teacher merit pay provided
by a state ballot measure and the rights and obligations
arising from the claimants’ employment contracts. The
Navajo Nation Supreme Court’s amicus brief asserts
interests in protecting Navajo employees and students, and
the tribal court’s opening brief asserts interests in hearing
complaints arising from employment decisions of all-Navajo
school boards.       But the school boards are political
subdivisions of the State of Arizona, and Arizona has vitally
important competing interests in the finality of its state-court
judgments and its ability to enforce them. Further, Arizona’s
constitution mandates “the establishment and maintenance
of a general and uniform public school system,” Ariz. Const.
art. 11, § 1, a requirement of the Arizona Enabling Act, ch.
310, 36 Stat. 557, 570 (1910). It cannot be questioned that
Arizona has a compelling interest in complying with its
statutory and state constitutional mandate. With these state
interests at issue, Hicks requires us to apply Montana
notwithstanding the holdings in Water Wheel and Grand
Canyon.11

   Our circuit is already an outlier in this area of the law.
Only our circuit interprets Hicks to mean that the Montana

     11
        The panel majority opines that there are factual disputes that the
tribal court should decide to determine what state interests exist in this
case. In my view, the state interests at issue are already clear and no
further factual development is necessary to determine whether these state
interests are sufficient to preclude tribal jurisdiction. If a State’s interest
in executing legal process to enforce its criminal laws was sufficient in
Nevada v. Hicks, 533 U.S. 353, 364 (2001), it is hard to imagine how a
State’s interest in complying with a statutory and constitutional directive
to provide a uniform system of public education to all the State’s children
would be insufficient.
48              WINDOW ROCK USD V. NEZ

framework need not be applied to questions of tribal
jurisdiction over nonmembers in the absence of competing
state interests. Today, the panel majority goes one giant step
farther, interpreting Hicks to authorize dodging Montana
even when there are exceptionally strong competing state
interests, so long as those interests do not involve state
criminal law enforcement and the dispute arises on tribal
land. No case law, from any circuit, suggests this is the
correct analysis.

    The panel majority puts our court at odds with every
other circuit that has addressed tribal jurisdiction over
nonmembers after Hicks. Recently, the Seventh Circuit
unanimously rejected the argument that notwithstanding
Hicks and Plains Commerce Bank, “Montana only applies to
situations in which tribes attempt to regulate nonmember
conduct on non-Indian fee land, as opposed to tribal trust
land.” Stifel, Nicolaus & Co. v. Lac du Flambeau Band of
Lake Superior Chippewa Indians, 807 F.3d 184, 206 (7th
Cir. 2015). In two cases specifically involving school
districts, the Eighth Circuit did not find ownership of the
land dispositive, analyzed the contours of tribal jurisdiction
over nonmembers within the Montana framework, and held
that the tribal court lacked jurisdiction over tribal members’
claims against the districts. See Belcourt Pub. Sch. Dist. v.
Davis, 786 F.3d 653, 660 n.5, 661 (8th Cir. 2015); Fort Yates
Pub. Sch. Dist. No. 4 v. Murphy ex rel. C.M.B., 786 F.3d 662,
670 & n.6 (8th Cir. 2015).

    The Tenth Circuit is in accord with the Seventh and
Eighth Circuits. It considered a case in which the Navajo
Nation asserted jurisdiction over county employees and
concluded: “The notion that Montana’s applicability turns,
in part, on whether the regulated activity took place on non-
Indian land was finally put to rest in Hicks.” MacArthur v.
                WINDOW ROCK USD V. NEZ                      49

San Juan Cty., 497 F.3d 1057, 1069 (10th Cir. 2007).
Striking out on its own, the panel majority today announces
a decision that pits our circuit’s case law against Tenth
Circuit precedent, subjecting the Navajo Nation’s tribal
courts to different rules governing their assertion of
jurisdiction. See id. at 1069–70.

    Nor does the panel majority’s reading of Hicks find
support in the Supreme Court case itself. Hicks began its
analysis with “the general proposition that the inherent
sovereign powers of an Indian tribe do not extend to the
activities of nonmembers of the tribe.” 533 U.S. at 358–59
(quoting Montana, 450 U.S. at 565). The panel majority
characterizes Hicks as “suggest[ing] . . . ‘the general rule of
Montana applies to both Indian and non-Indian land.’”
(Quoting Hicks, 533 U.S. at 360). But the Supreme Court
left nothing to suggestion. Hicks’ holding on this point is
express:

       While it is certainly true that the non-Indian
       ownership status of the land was central to the
       analysis in both Montana and Strate, the
       reason that was so was not that Indian
       ownership       suspends       the     “general
       proposition” . . . that “the inherent sovereign
       powers of an Indian tribe do not extend to the
       activities of nonmembers of the tribe” except
       to the extent “necessary to protect tribal self-
       government or to control internal relations.”

533 U.S. at 359 (quoting Montana, 450 U.S. at 564–65).

    In fact, two concurring Justices in Hicks emphasized
their agreement with the Supreme Court majority that
Montana governs the question of tribal civil jurisdiction over
nonmembers’ conduct no matter who holds title to the land
50                 WINDOW ROCK USD V. NEZ

on which the conduct occurs. See id. at 375 (Souter, J.,
concurring) (“Like the Court, I take Montana v. United
States . . . to be the source of the first principle on tribal-court
civil jurisdiction . . . .”); id. at 387 (O’Connor, J.,
concurring) (“Today, the Court finally resolves that
Montana v. United States . . . governs a tribe’s civil
jurisdiction over nonmembers regardless of land
ownership. . . . This is done with little fanfare, but the
holding is significant because we have equivocated on this
question in the past.”).

    Essentially, the panel majority decides that the Supreme
Court did not mean what it said. It relies entirely on a
strained reading of the second footnote in Hicks where the
Court explained, “Our holding in this case is limited to the
question of tribal-court jurisdiction over state officers
enforcing state law. We leave open the question of tribal-
court jurisdiction over nonmember defendants in general.”
Id. at 358 n.2.

    In this footnote, the Supreme Court focused on the status
of the nonmember, not the land, foreseeing a case such as
Dolgencorp, Inc. v. Mississippi Band of Choctaw Indians,
746 F.3d 167, 180 (5th Cir. 2014), where the Fifth Circuit
was called upon to address tribal jurisdiction over a
nonmember private actor rather than a government agent.12

     12
        In Dolgencorp, the nonmember over whom the tribal court
asserted jurisdiction was the operator of a Dollar General store on the
Choctaw Reservation. See 746 F.3d at 169. The store sat on Indian land
and operated pursuant to a lease agreement and business license issued
by the Mississippi Band of Choctaw Indians. Id. After the store entered
into a consensual agreement to participate in a tribal job training program
that placed young tribal members in internships with local businesses,
the store manager allegedly molested one of the interns on store
                  WINDOW ROCK USD V. NEZ                            51

Footnote two lends no support to the panel majority’s thesis;
it only establishes that Hicks stopped short of announcing a
bright line rule concerning tribal jurisdiction over all
nonmembers. The footnote does not excuse our court from
applying Montana.

    At best, under our existing circuit precedent and
Supreme Court authority, what the panel majority calls “the
right-to-exclude framework” applies to nonmember conduct
on tribal land only if there are no contrary treaties or statutes
and no competing state interest at play. Here, Arizona
possesses obvious competing and compelling interests. The
panel majority insists that it need not decide whether Hicks
covers state interests other than those in criminal law
enforcement. But in light of the state interests in this case,
Hicks already requires us to begin with Montana’s general
rule that tribes lack civil jurisdiction over nonmembers
unless one of the Montana exceptions is satisfied.

IV. The Tribe         Plainly     Lacks     Jurisdiction      Under
    Montana.

    Where no treaty or statute confers tribal jurisdiction and
competing state interests are at play, federal courts assessing
civil tribal jurisdiction over nonmembers look to the two
exceptions described in Montana, 450 U.S. at 563–66.
Neither exception plausibly justifies the assertion of tribal-
court jurisdiction over the employees’ claims against the
school districts.

   The first Montana exception provides that “[a] tribe may
regulate, through taxation, licensing, or other means, the

premises. Id. The intern brought tort claims against the store operator
for negligent hiring, training, and supervision. Id.
52              WINDOW ROCK USD V. NEZ

activities of nonmembers who enter consensual relationships
with the tribe or its members, through commercial dealing,
contracts, leases, or other arrangements.” Id. at 565. Hicks
explained that in the context of Montana’s first exception,
“‘other arrangement’ is clearly another private consensual
relationship,” and rejected the argument that, by seeking a
search warrant from the tribal court, the state game wardens
entered into a relationship with the Tribe that gave rise to
tribal jurisdiction. Hicks, 533 U.S. at 359 n.3. Courts of
appeal, including this court sitting en banc, have uniformly
interpreted Montana’s first exception as inapplicable to
relationships between tribes or tribal members and
governmental entities. See Belcourt Pub. Sch. Dist. v. Davis,
786 F.3d 653, 659 (8th Cir. 2015) (operating agreement
between Tribe and school district); Fort Yates Pub. Sch.
Dist. No. 4 v. Murphy ex rel. C.M.B., 786 F.3d 662, 668 (8th
Cir. 2015) (same); MacArthur v. San Juan Cty., 497 F.3d
1057, 1072–74 (10th Cir. 2007) (employment contracts
between tribal members and county medical clinic); Cty. of
Lewis v. Allen, 163 F.3d 509, 515 (9th Cir. 1998) (en banc)
(law enforcement agreement between the Tribe and county).
Montana’s first exception only applies to private consensual
relationships, not to relationships involving state
subdivisions, such as the Window Rock and Pinon Unified
School Districts.

    Even if Montana’s first exception encompassed tribal
relationships with governmental entities, it does not yield a
plausible argument that assertion of tribal-court jurisdiction
over the school districts’ employment contracts would be
proper. At bottom, the first exception is a recognition that
parties who enter into consensual relationships with tribes or
tribal members can fairly anticipate being subject to tribal-
court jurisdiction. See Plains Commerce Bank v. Long
Family Land & Cattle Co., 554 U.S. 316, 338 (2008). The
                WINDOW ROCK USD V. NEZ                       53

school districts’ contractual relationships with its seven
employees provided that the employees would abide by state
and federal law—and two of the employment contracts
actually specified that jurisdiction for disputes arising from
the contracts would lie in state and federal courts and that the
contracts would be governed by state and federal law. Based
on these contractual provisions, the school districts could not
have anticipated that they would be hailed into Navajo tribal
court.

    The employees’ lawsuits against the school districts and
the school districts’ counter suit for a declaratory judgment
arise from employment contracts. Notably, the Navajo
Nation is not a party to the employment contracts. The panel
majority does not identify a nexus between the school
districts’ contact with the Navajo Nation and “the activity
giving rise to this lawsuit.” See Philip Morris USA, Inc. v.
King Mountain Tobacco Co., 569 F.3d 932, 942 (9th Cir.
2009). The Navajo Nation is a “stranger[]” to these
employment relationships. See Strate v. A–1 Contractors,
520 U.S. 438, 457 (1997) (citation omitted). Some of the
employees are not even members of the Navajo Nation.

    The school districts’ leases with the Navajo Nation do
not provide the missing jurisdictional hook. The Supreme
Court has observed that consensual relationships with tribes
are not “in for a penny, in for a Pound.” See Plains
Commerce Bank, 554 U.S. at 338 (quoting Atkinson Trading
Co. v. Shirley, 532 U.S. 645, 656 (2001)). Non-Indians, such
as the school districts, do not consent to tribal-court
jurisdiction over unrelated transactions by entering into
separate consensual relationships, such as leases, with a
tribe. See id. “[T]he suit must also arise out of those
consensual contacts,” Philip Morris, 569 F.3d at 941
(emphasis added), and there must be “a nexus to the
54              WINDOW ROCK USD V. NEZ

consensual relationship between the nonmember and the
disputed commercial contacts with the tribe,” id. at 942.

    The interest asserted by the Navajo Nation is not the sort
that satisfies the second Montana exception. The second
Montana exception provides that a tribe “retain[s] inherent
power to exercise civil authority over the conduct of non-
Indians . . . when that conduct threatens or 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.
Conduct giving rise to jurisdiction under this exception must
“imperil the subsistence” of the Tribe such that tribal power
is necessary to “avert catastrophic consequences.” Plains
Commerce Bank, 554 U.S. at 341 (citations omitted). For
example, federal courts have concluded that the second
Montana exception was at least plausibly satisfied where a
non-Indian security company forcibly entered a tribal
government building and seized tribal government
documents; where a non-Indian trespassed on Indian land
and started a forest fire; and where non-Indian landowners
exercised riparian rights in a way that threatened
environmental degradation of important tribal resources.
See Attorney’s Process & Investigation Servs., Inc. v. Sac &
Fox Tribe of the Miss. in Iowa, 609 F.3d 927, 932, 941 (8th
Cir. 2010) (document seizure); Elliott v. White Mountain
Apache Tribal Court, 566 F.3d 842, 844–45, 848–51 (9th
Cir. 2009) (forest fire); Confederated Salish & Kootenai
Tribes of the Flathead Reservation, Mont. v. Namen,
665 F.2d 951, 964 (9th Cir. 1982) (riparian rights).

    Courts generally do not find that private transactions,
like the employment relationships here, implicate Montana’s
second exception. In Plains Commerce Bank, tribal
members alleged that a nonmember bank had discriminated
against them in a land sale, 554 U.S. at 322, 338, but the
                WINDOW ROCK USD V. NEZ                     55

Supreme Court held that the Tribe lacked jurisdiction over
the dispute, reasoning, “The sale of formerly Indian-owned
fee land to a third party . . . cannot fairly be called
‘catastrophic’ for tribal self-government.” Id. at 341
(quoting Strate, 520 U.S. at 454). The second Montana
exception is narrow. See Strate, 520 U.S. at 459; State of
Mont. Dep’t of Transp. v. King, 191 F.3d 1108, 1114 (9th
Cir. 1999).

    Defendants argue that the employees’ lawsuits against
the school districts concern the Navajo Nation’s interest in
enforcing the Navajo Preference in Employment Act and
thus lowering unemployment. Certainly, the welfare of a
tribe is harmed by very high levels of unemployment on
reservations. See King, 191 F.3d at 1114. But in a similar
situation, we held that even the Tribe’s interest in promoting
local hire does not justify the assertion of tribal-court
jurisdiction. King considered whether a tribe could regulate
employment practices for hiring construction workers on a
state highway running through a reservation and concluded
the tribe lacked this regulatory authority. See id. at 1110–
12. Notwithstanding the Tribe’s interest in lowering
unemployment, we held:

       The [Tribe] agreed to the right of way, and
       the State of Montana became responsible to
       maintain the road at its own expense. Thus,
       the [Tribe’s] assertion of authority over the
       State’s own employees goes beyond the
       internal functioning of the [T]ribe and its
       sovereignty and instead impinges on one of
       the State of Montana’s sovereign
       responsibilities—maintaining Highway 66
       and the right of way at its own expense.
56              WINDOW ROCK USD V. NEZ

Id. at 1114 (internal quotation marks omitted).

    The panel majority does not explain why a different
outcome is warranted for a dispute seeking merit pay under
a state initiative, or a suit challenging a school district’s
grounds for terminating a teacher for failure to abide by
school-district policies, or a case invoking the Navajo
Preference in Employment Act. The concerns that mandated
the outcome in King require the same result here: under the
Arizona Enabling Act and the Arizona Constitution, the
State bears the sovereign responsibility to maintain
Arizona’s school system and the Navajo Nation cannot
plausibly claim jurisdiction over the contractual
relationships between the school districts and their
employees. The facts of this case fall well beyond the
boundaries of the second Montana exception.

V. Exhaustion in Tribal Court Was Not Required.

    Exhaustion in tribal court is not required if “it is plain”
that tribal court jurisdiction is lacking and the exhaustion
requirement “would serve no purpose other than delay.”
Hicks, 533 U.S. at 369 (quoting Strate, 520 U.S. at 459 n.14).
Under our precedent, “it is ‘plain’ that the tribal court lacks
jurisdiction” if jurisdiction is neither “colorable” nor
“plausible.” Elliott v. White Mountain Apache Tribal Court,
566 F.3d 842, 848 (9th Cir. 2009) (quoting Atwood v. Fort
Peck Tribal Court Assiniboine, 513 F.3d 943, 948 (9th Cir.
2008)). Here, I would hold that jurisdiction is plainly
lacking and that exhaustion in tribal court is not required.

    The majority invokes the Supreme Court’s general
policy in favor of exhaustion, citing National Farmers
Union Insurance Cos. v. Crow Tribe of Indians. See
471 U.S. 845 (1985); National Farmers identified the
factors underpinning this policy: (1) “supporting tribal self-
                 WINDOW ROCK USD V. NEZ                       57

government and self-determination”; (2) allowing “the
forum whose jurisdiction is being challenged the first
opportunity to evaluate the factual and legal bases for the
challenge”; (3) “allowing a full record to be developed in the
Tribal Court before either the merits or any question
concerning appropriate relief is addressed”; and
(4) “provid[ing] other courts with the benefit of [tribal
courts’] expertise in such matters in the event of further
judicial review.” Id. at 856–57. More recently, the Supreme
Court emphasized that exhaustion was required in National
Farmers “based on comity,” Strate, 520 U.S. at 453, and a
preference for “allowing tribal courts initially to respond to
an invocation of their jurisdiction,” id. at 448. The Supreme
Court “d[id] not extract from National Farmers anything
more than a prudential exhaustion rule, in deference to the
capacity of tribal courts ‘to explain to the parties the precise
basis for accepting [or rejecting] jurisdiction.’” Id. at 450
(alteration in original) (quoting Nat’l Farmers, 471 U.S. at
857). Strate also made clear that exhaustion is not required
when “it is plain that no federal grant provides for tribal
governance of nonmembers’ conduct on land covered by
Montana’s main rule.” Id. at 459 n.14.

    The comity concerns at play in National Farmers are not
present here. The school districts did not seek to bypass the
tribal court; they filed suit in federal court only after the
tribal court declined to rule on their motion to dismiss and
sought to impose a costly evidentiary hearing. Importantly,
for five of the seven employees, state-court decisions had
already been entered, and two of the employees’ contracts
with the school districts expressly provided that jurisdiction
shall be in state or federal court, not tribal court. Thus, it is
clearly the state courts’ jurisdiction that is being challenged.
Although these facts alone do not foreclose application of
the preference for exhaustion in tribal court, they easily
58                 WINDOW ROCK USD V. NEZ

distinguish the case at bar from ones in which the Supreme
Court has required exhaustion.13

   Arizona has a compelling interest in ensuring that
Navajo children have access to public education on the
Navajo Reservation, and Montana v. United States, 450 U.S.
544 (1981), is the applicable framework. Because I would
hold that jurisdiction is not colorable or plausible under
Montana, I respectfully dissent.

     13
        Moreover, National Farmers was decided thirty years ago and
predates the Supreme Court’s holdings in Nevada v. Hicks, 533 U.S. 353
(2001), and Strate v. A–1 Contractors, 520 U.S. 438 (1997). See also
State of Mont. Dep’t of Transp. v. King, 191 F.3d 1108, 1112–13, 1115
(9th Cir. 1999) (summarizing circumstances when exhaustion is not
required). Even if tribal jurisdiction was plausible at the time National
Farmers was decided, subsequent developments in the law render tribal
jurisdiction implausible today.