William H. Orrick, United States District Judge.
Plaintiff Duanna Knighton, the former Tribal Administrator for defendant Cedarville Rancheria of Northern Paiute Indians ("the Tribe"), seeks declaratory and injunctive relief against the Tribe, Cedarville
Cedarville Rancheria of Northern Paiute Indians ("the Tribe") is a federally recognized Indian tribe located in Medoc County, California. Id. ¶ 2; Duran Decl. ¶ 3 (Dkt. No. 10-2). It has approximately 12 voting members
In February 2011, the Tribe's voting membership adopted by election the Constitution and Bylaws of the Cedarville Rancheria, which was approved in March 2011 by the Regional Director of the United States Department of the Interior, Bureau of Indian Affairs. Compl. ¶ 24; see Cedarville Rancheria Constitution and Bylaws (Dkt. No. 1-2 at 43). Article II of the Tribe's constitution provides that the "jurisdiction of [the Tribe] shall extend to the
The Tribe's governing body is the Community Council composed of all qualified voters of the Rancheria who are 18 years of age or older. Id. (Dkt. No. 1-2 at 46). Every three years the Community Council elects three of its members to serve on the Executive Committee — the Tribal Chairperson, Vice Chairperson, and Secretary. Id. (Dkt. No. 1-2 at 46-47). The Executive Committee is empowered to enforce the Community Council's ordinances, resolutions, and other enactments, and represents the Tribe in all negotiations with tribal, federal, state, and local governments. Id. The Tribal Chairperson functions as the "chief executive officer" of the Tribe, oversees all Rancheria matters including signing checks on behalf of the Tribe for tribal expenses, and is the "authorized point-of-contact, along with the Tribal Secretary or Tribal Administrator, to sign Tribal documentation, including grant applications, MOUs [memoranda of understanding], supply orders, trip requests, etc." Id. (Dkt. No. 1-2 at 50).
Duanna Knighton is a non-Indian California resident who was employed by the Tribe from July 1996 until she resigned in March 2013. Compl. ¶¶ 1, 9. She is not a member of the Tribe and has never resided on nor owned tribal land. Id. ¶¶ 10-11. The Tribe hired her in 1996 as a part-time office assistant. Tribal Compl. ¶ 10 (Dkt. No. 1-3 at 4). In 1999, she became a salaried tribal employee eligible for employment benefits, and she was later promoted to Tribal Administrator — the position she held at the time of her resignation. Compl. ¶ 9; Tribal Compl. ¶¶ 13-15 (Dkt. No. 1-3 at 4). As Tribal Administrator, Knighton was "responsible for over-all supervision and management of the Cedarville Rancheria," and oversaw the Tribe's "payroll, taxes, and expenses, financial statements/reports for audit, expenditures, and ledgers under direct supervision of the Chairperson." Compl. ¶ 18; Cedarville Rancheria Constitution and Bylaws (Dkt. No. 1-2 at 26).
From 2009 until at least October 2016, Knighton was also employed by Resources for Indian Student Education ("RISE"), a California nonprofit that provides education services and programs to Indian children.
During Knighton's employment, the Tribe regulated its employees pursuant to the Cedarville Rancheria Personnel Policies and Procedures Manual ("Personnel Manual"). It set forth disciplinary and grievance procedures for tribal employees prior to the creation of the Tribal Court, which will be discussed later. Compl. ¶¶ 18-23. Under the Personnel Manual — which Knighton helped develop when she was Tribal Administrator — all tribal employees subjected to disciplinary action were entitled to file a grievance with the Tribal Administrator and could appeal certain disciplinary actions after exhausting available administrative remedies. Id.
In mid-2009,
Within 12 months of the sale, RISE moved its business operations out of the building, contrary to Knighton's representation that it would remain a rent-paying tenant. Tribal Court Compl. ¶¶ 18, 49 (Dkt. No. 1-3 at 6, 12). At the time of the purchase, Knighton failed to disclose to the Tribe that: (1) she was an officer or agent of RISE; (2) RISE was close to insolvency; (3) she and RISE would split the proceeds of the sale after paying off the building loan; and (4) the building's actual market value was $150,000, not $300,000. Tribal Court Compl. ¶¶ 49-55 (Dkt. No. 1-3 at 12). The Tribe did not learn about her conflict of interest and other omissions regarding the purchase of the RISE building until after she resigned in March 2013. Tribal Court Compl. ¶ 19 (Dkt. No. 1-3 at 6).
In March 2013, Knighton resigned from her position as Tribal Administrator. Compl. ¶ 9; Tribal Court Compl. ¶ 19 (Dkt. No. 1-3 at 6). Immediately before she resigned, Knighton cashed-out $29,925
In December 2013, nine months after Knighton's resignation, the Tribe enacted the Cedarville Rancheria Judicial Code and established the Cedarville Rancheria Tribal Court ("Tribal Court"). Compl. ¶¶ 15-16. The Tribal Court, including a trial and appellate division, was created "for the purpose of protecting and promoting tribal sovereignty, strengthening tribal self-government, [and] providing for the judicial needs of the Cedarville Rancheria." Cedarville Rancheria Judicial Code (Dkt. No. 1-2 at 2). Tribal Court proceedings are governed by the Federal Rules of Civil Procedure and Rules of Evidence, and the court can apply tribal, federal, and state laws, issue orders and judgments, and award monetary damages and injunctive relief. Compl. ¶ 25; Cedarville Rancheria Judicial Code (Dkt. No. 1-2 at 15).
Pursuant to Section 201 of the Tribe's Judicial Code, the Tribal Court has subject matter jurisdiction over "[a]ll persons outside the exterior boundaries of the Cedarville Rancheria Reservation ... within the jurisdiction of the Rancheria pursuant to federal or tribal law, including all persons whose activity on or off reservation threatens the Rancheria, government or its membership," and to "[a]ll other persons whose actions involve or affect the Rancheria, or its members, through commercial dealings, contracts, leases or other arrangements." Cedarville Rancheria Judicial Code (Dkt. No. 1-2 at 3-4). The Code further provides that the Tribal Court's judicial power extends to "[a]ll civil causes of action arising at common law including, without limitation, all contract claims (whether the contract at issue is written or oral or existing at law), all tort claims (regardless of the nature), all property claims (regardless of the nature), all insurance claims, and all claims based on commercial dealing with the Band, its agencies, sub-entities, and corporations chartered pursuant to its laws, and all nuisance claims." Cedarville Rancheria Judicial Code (Dkt. No. 1-2 at 4).
On February 20, 2014, during the first hearing in the first case before the Tribal Court, former Tribal Chairperson Cherie Lash Rhoades (Knighton's former boss) opened fire and killed four Tribe members. Compl. ¶ 26; Tribal Court Compl. ¶ 23 (Dkt. No. 1-3 at 7). Rhoades and the victims were all linked to the underlying dispute between Knighton and the Tribe. Compl. ¶ 26. Among those murdered were the Tribal Administrator and Rhoades' brother, who was Tribal Chairman and an outspoken critic of Knighton's handling of the Tribe's finances. Tribal Court Compl. ¶ 23 (Dkt. No. 1-3 at 7).
In the aftermath of this tragic shooting, the Tribe conducted a forensic accounting of its finances. Tribal Court Compl. ¶ 24 (Dkt. No. 1-3 at 7). The investigation revealed that during Knighton's tribal employment, she made various unauthorized high-risk investment decisions on behalf of the Tribe, which resulted in the loss of $1.2 million in tribal investments between 2007 and 2008. Tribal Court Compl. ¶¶ 16-17 (Dkt. No. 1-3 at 5). The Tribe was unaware of its high risk investment portfolio and $1.2 million in investment losses because Knighton concealed the annual audit reports and investment documents from
On September 25, 2014,
On October 1, 2014, the Tribal Court issued a temporary restraining order against Knighton, RISE, and Oppenheimer, freezing all funds on deposit with Oppenheimer held in Knighton's name. Id. ¶ 31; Compl. Ex. 5, Tribal Court Order Re TRO (Dkt. No. 1-3 at 20).
On October 28, 2014, Knighton filed a Rule 12(b)(6) motion to dismiss the complaint, and the Tribal Court heard argument on January 8, 2015. Compl. ¶ 32. The Tribal Court, Chief Judge Lenzi presiding, ruled that it had authority to adjudicate the case and denied Knighton's motion to dismiss on March 11, 2015. Id. ¶ 32; Compl. Ex. 6, Tribal Court Order Denying Knighton's Mot. to Dismiss (Dkt. No. 1-3 at 24). On February 24, 2015, RISE filed a separate Rule 12(b)(2) motion challenging the Tribal Court's jurisdiction. Compl. Ex. 9, Order Granting Mot. to Dismiss as to RISE (Dkt. No. 1-3 at 42). On April 21, 2015, the parties
Knighton filed a notice of appeal on July 20, 2015, asserting that the Tribal Court lacks jurisdiction over her, and that the tribal complaint must be dismissed because
On October 12, 2016, Knighton filed this action against the Tribe, Tribal Court, and Tribal Judge Lenzi.
On December 16, 2016, defendants moved to dismiss Knighton's complaint pursuant to Rule 12(b)(1) and (6), on the following grounds: (1) the complaint fails to establish federal subject matter jurisdiction; (2) the Tribal Court has jurisdiction over Knighton under Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981); (3) sovereign immunity shields defendants from suit; (4) Knighton's complaint fails to state a claim upon which relief can be granted; (5) defendants are not necessary parties to federal review of Tribal Court jurisdiction; and (6) this case will never be ripe for federal review. Mot. (Dkt. No. 10).
"[A] federal court may determine under § 1331 whether a tribal court has exceeded the lawful limits of its jurisdiction" over a nonmember. Nat'l Farmers Union Ins. Companies v. Crow Tribe of Indians, 471 U.S. 845, 852-53, 105 S.Ct. 2447, 85 L.Ed.2d 818 (1985). "Non-Indians may bring a federal common law cause of action under 28 U.S.C. § 1331 to challenge tribal court jurisdiction." Boozer v. Wilder, 381 F.3d 931, 934 (9th Cir. 2004). However, as a matter of comity, a plaintiff must first exhaust tribal court remedies before seeking relief in federal court.
"Tribes maintain considerable authority over the conduct of both tribal members and nonmembers on Indian land, or land held in trust for a tribe by the United States." McDonald v. Means, 309 F.3d 530, 536 (9th Cir. 2002). "To exercise its inherent civil authority over a [non-member] defendant, a tribal court must have both subject matter jurisdiction — consisting of regulatory and adjudicative jurisdiction — and personal jurisdiction." Water Wheel Camp Recreational Area, Inc. v. LaRance, 642 F.3d 802, 809 (9th Cir. 2011). A tribe's regulatory authority concerns its power to regulate nonmember conduct while adjudicative authority relates to the tribal court's jurisdictional power to adjudicate certain disputes. See Strate v. A-1 Contractors, 520 U.S. 438, 442, 117 S.Ct. 1404, 137 L.Ed.2d 661 (1997). The Supreme Court has made clear, however, that a tribe's adjudicative authority over nonmembers is confined by the bounds of its regulatory authority. Id.
Montana v. United States is "the pathmarking case concerning tribal civil authority over nonmembers." Strate, 520 U.S. at 445, 117 S.Ct. 1404. The Montana Court announced "the general proposition that the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe[,]" while simultaneously recognizing that "Indian tribes retain inherent sovereign power to exercise some forms of civil jurisdiction over non-Indians on their reservations, even on non-Indian fee lands." Montana v. United States, 450 U.S. 544, 565, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981). The Court identified two circumstances, known as the Montana exceptions, in which the exercise of jurisdiction over a non-Indian might be appropriate. Id. 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. And second, "[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 tribe." Id. at 566, 101 S.Ct. 1245.
In the Ninth Circuit, Montana's exceptions "do[] not apply to jurisdictional questions" over nonmembers for claims arising on tribal land within a reservation, except "where a state has a competing interest in executing a warrant for an off-reservation crime." Water Wheel, 642 F.3d at 813 (citing Nevada v. Hicks, 533 U.S. 353, 121 S.Ct. 2304, 150 L.Ed.2d 398 (2001)).
Both parties focused exclusively on Montana, while neither party addressed Water Wheel's explicit direction not to apply Montana to jurisdictional questions over nonmembers for claims arising on Indian land. Neither party argues that Knighton's activities occurred on non-Indian fee land within the reservation, which would justify Montana's application. Rather, the parties acknowledge that the conduct at issue occurred on trust land within the reservation and at the tribal headquarters building,
The Tribal Court and Tribal Court of Appeals, however, proceeded to apply Montana and determined that subject matter jurisdiction exists under both Montana exceptions, as Knighton had a longstanding consensual employment relationship with the Tribe and her activities in question directly harmed the Tribe's economic security. Tribal Court of Appeals Order Re Knighton's Mot. to Dismiss (Dkt. No. 1-3 at 55). In reaching this conclusion, the Tribal Court of Appeals relied on the lower court's factual findings that "[s]ome of [] Knighton's duties and actions at issue in this case were carried out on the [Tribe's] trust lands," and "some were carried out at the fee-owned tribal headquarters building of the tribe in the town of Alturas, CA, and not on trust lands of the tribe." Id. The Tribal Court also noted that "some of [Knighton's] duties carried out at Tribal Headquarters in Alturas involved actions and effects on the Tribal trust lands in Cedarville." Id.
In regards to RISE, the Tribal Court described the ownership status of the lands at issue and presented a detailed analysis of why the Tribe does not have jurisdiction under Montana:
Tribal Court Order Granting RISE's Mot. to Dismiss (Dkt. No. 1-3 at 48). The Tribal Court went on to note that, with respect to RISE, the Tribe's complaint "fails to allege the condition precedent of the location of [RISE's tortious] activity within the boundaries of the reservation, and the timing of the same activity being concurrent with R.I.S.E.'s alleged tortious conduct." Id. (Dkt. No. 1-3 at 49). It subsequently confirmed the fee status of the tribal headquarters land in June 2016, noting that the Tribe "is in the process of seeking fee-to-trust status of the land on which the Tribal headquarters sit." Tribal Court Order Denying Knighton's Mot. to Dismiss Under Rule 19 (Dkt. No. 1-3 at 61).
This record demonstrates that Knighton's activities in question did not occur on non-Indian fee lands within the Tribe's reservation, and thus under Water Wheel, the Montana exceptions do not apply.
A tribe's regulatory authority over nonmembers must derive "from the tribe's inherent sovereign authority to set conditions on entry, preserve self-government, or control internal relations." Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 128 S.Ct. 2709, 171 L.Ed.2d 457 (2008). A "tribe is able fully to vindicate its sovereign interests in protecting its members and preserving tribal self-government by regulating non-member activity on the land, within the limits set forth in [Supreme Court] cases." Id. at 336, 128 S.Ct. 2709 (emphasis omitted); see Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 144, 102 S.Ct. 894, 71 L.Ed.2d 21 (1982) (finding that the power to exclude nonmembers from reservation trust lands "necessarily includes the lesser power to place conditions on entry, on continued presence, or on reservation conduct."). To the extent a nonmember's activities "may intrude on the internal relations of the tribe or threaten tribal self-rule," such activities may be regulated. Plains Commerce, 554 U.S. at 335, 128 S.Ct. 2709.
Knighton explicitly acknowledges in her complaint that the Tribe has regulatory authority over its employees and their conduct: "At the time of Knighton's employment, the Tribe regulated its employees" and "[Knighton] is subject to the regulatory procedures that existed at the time of her employment." Compl. ¶¶ 18-19, 51. These admissions alone establish the Tribe's regulatory authority over Knighton's employment.
Furthermore, as Tribal Administrator, Knighton directly immersed herself in, and had considerable oversight of, nearly all aspects of the Tribe's day-to-day government. She was "responsible for over-all supervision and management of the Cedarville Rancheria, including contract negotiations, wages, and compliance; and supervision of employees according to the salaried job description." Id. ¶ 18; Cedarville Rancheria Policies (Dkt. No. 1-2 at 26). Her other job duties included "[p]lanning, development, management, and supervision of all projects contracted by Cedarville Rancheria;" meeting with government agencies and other tribal offices on behalf of the Tribe; "[r]eporting to the Tribal Council (Board) and all funding agencies on a timely and regular basis"; and managing "payroll, taxes, and expenses, financial statements/reports for audit, expenditures, and ledgers under direct supervision of the Chairperson." Id. She also had significant discretion in hiring, disciplining, and terminating tribal employees, both members and nonmembers. Id. Knighton's employment activities directly affected the Tribe's inherent powers to protect the welfare of its members and preserve the integrity of its government.
The Tribe's sovereign interest in ensuring its economic survival further supports its regulatory jurisdiction here. During her tenure as Tribal Administrator, Knighton was extensively involved in the Tribe's finances and was responsible for the Tribe's "payroll, taxes, and expenses, financial
The Tribe's regulatory jurisdiction over Knighton's on-reservation activities as Tribal Administrator is unassailable. Not only does Knighton concede that the Tribe has authority to regulate her employment, but her alleged activities on the Rancheria directly interfered with the Tribe's sovereign powers to control internal relations and protect the welfare of its members.
"Where tribes possess authority to regulate the activities of nonmembers, civil jurisdiction over disputes arising out of such activities presumptively lies in the tribal courts." Strate, 520 U.S. at 453, 117 S.Ct. 1404 (citation and brackets omitted). However, a tribe's adjudicative authority over nonmembers may not exceed its regulatory authority. Id. at 438, 117 S.Ct. 1404. In Water Wheel, after concluding that the tribe had regulatory jurisdiction over nonmembers for trespass on reservation trust land, the Ninth Circuit determined that adjudicative authority also existed. 642 F.3d at 816. Factors that supported a finding of adjudicative jurisdiction included "the important sovereign interests at stake [i.e., inherent power to exclude nonmembers and manage reservations lands], the existence of regulatory jurisdiction, and long-standing Indian law principles recognizing tribal sovereignty." Id. The circumstances here present an even more compelling basis for adjudicative jurisdiction than those in Water Wheel — Knighton was a longtime employee of the Tribe who was entrusted with the responsibility of overseeing all aspects of tribal operations.
Knighton's due process argument, that "because the Tribal Court did not exist at the time of her employment, [the] Tribe is exceeding its authority to regulate her employment through ex post facto application of its tribal judicial system," is unconvincing. Opp'n at 8 (Dkt. No. 14). The Tribe is not attempting to "create new regulations and impose them on Knighton ex post facto" as she alleges; Knighton's alleged conduct violated the Tribe's regulations that were in place — and that she wrote — during her employment with the Tribe. Id. at 9; see Compl. ¶¶ 20-22. The Tribe is simply seeking to adjudicate its claims against her in its chosen forum — the Tribal Court. Knighton's assertion that "any dispute between [her] and the Tribe is subject to the regulatory procedures that existed at the time of employment, to wit.: the disciplinary and grievance procedures enumerated in ... the Tribe's Personnel Policy and Procedure Manual" is simiilarly unpersuasive. Compl. ¶ 51. Defendants correctly note that the "Tribe's Administrative Policies and Procedures confer jurisdiction not only to the Tribe, but more importantly, to the Tribal Council [which is comprised of the Tribe's adult voting membership] in cases where the Tribal Administrator is the focus of discipline." Mot. at 8 (Dkt. No. 10). Even if the Tribal Court did not presently exist, then the Tribal Council would have jurisdiction over the claims at issue.
Because the Tribe has both regulatory and adjudicative jurisdiction over Knighton, the Tribal Court has subject matter jurisdiction over the underlying action.
Defendants argue that "[w]hether non-party R.I.S.E. is an indispensable party has no bearing on Defendants' motion to dismiss," because "the threshold question" is whether the Tribal Court has jurisdiction over the underlying action. Reply at 8 (Dkt. No. 15). I agree. And Knighton seemingly concedes that the two issues are unrelated: "the arguments in [defendants'] Motion to Dismiss are limited to the former issue of subject-matter jurisdiction and do not address the latter issue of joinder of RISE...." Opp'n at 13. But my precise task must be limited to the question of the Tribal Court's jurisdiction. Knighton has submitted no authority establishing that the Tribal Court's lack of jurisdiction over RISE divests it of jurisdiction over the action. Because the Tribal Court has jurisdiction over the underlying action pending against Knighton, I do not address Knighton's indispensable party argument.
As a separate and independent reason for denying Knighton's indispensable party argument, she has failed to exhaust her tribal remedies. Although the Tribal Court certified as ripe for federal review "the question of jurisdiction over Defendant Knighton, as this question has already been appealed to the Cedarville Rancheria Court of Appeals," it expressly noted that "tribal processes as to only [the jurisdiction] issue, and no other issues, have been exhausted by the parties." Dkt. No. 1-3 at 62. See Nat'l Farmers Union, 471 U.S. at 856, 105 S.Ct. 2447 ("[T]he orderly administration of justice in the federal court will be served by allowing a full record to be developed in the Tribal Court before either the merits or any question concerning appropriate relief is addressed.").
Given the Tribal Court's jurisdiction over the underlying action, defendants' motion to dismiss is GRANTED WITH PREJUDICE.
