Narragansett Indian v. State of Rhode Islan ( 2005 )

United States Court of Appeals
For the First Circuit
No. 04-1155
NARRAGANSETT INDIAN TRIBE OF RHODE ISLAND,
Plaintiff, Appellant,
v.
STATE OF RHODE ISLAND AND PROVIDENCE PLANTATIONS;
DONALD L. CARCIERI, in his official capacity as GOVERNOR;
PATRICK C. LYNCH, in his official capacity as the
ATTORNEY GENERAL; STEVEN M. PARE, in his official capacity
as Colonel of the Rhode Island State Police; JUSTICES OF
RHODE ISLAND DISTRICT AND SUPERIOR COURTS; TOWN OF
CHARLESTOWN; CHARLESTOWN POLICE DEPARTMENT,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. William E. Smith, U.S. District Judge]
Before
Torruella and Howard, Circuit Judges,
and DiClerico, Jr.,* District Judge.
Douglas J. Luckerman, with whom John F. Killoy, Jr., were on
brief, for appellant.
Joseph S. Larisa, Jr., Assistant Solicitor, was on brief, for
appellee the Town of Charlestown and Charlestown Police Department.
Claire J. Richards, Special Counsel, was on brief, for
appellee Governor Donald L. Carcieri.
Neil F.X. Kelly, Assistant Attorney General, with whom Patrick
C. Lynch, Attorney General, was on brief, for appellee State of
Rhode Island.
May 12, 2005
*
Of the District of New Hampshire, sitting by designation.
TORRUELLA, Circuit Judge. On July 14, 2003, Rhode Island
State Police executed a search warrant and confiscated inventory at
a smoke shop ("the Smoke Shop") located on Narragansett tribal
land. An altercation ensued between members of the Narragansett
Indian Tribe ("the Tribe" or "the Narragansetts") and several State
police officers, resulting in the arrest of eight tribal members,
including the Chief Sachem of the Tribe.
Following this incident, both the Narragansetts and the
State of Rhode Island filed suits disputing the issue of whether
the Tribe's operation of a smoke shop and sale of cigarettes on the
Tribe's settlement lands are exempt from the application and
enforcement of Rhode Island's cigarette tax laws. The State
initially filed its complaint in Rhode Island state court and the
Narragansetts removed the case to federal district court in an
attempt to have it decided together with the Tribe's complaint,
which was brought in federal district court. The district court
found that it did not have jurisdiction over the state case and
remanded it to the state court. However, the district court
treated the State's motion for summary judgment in its case as a
motion for summary judgment in the Tribe's federal case and decided
the federal case accordingly. The district court granted summary
judgment in favor of the State, and the Narragansett Tribe now
brings the instant appeal.
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We must decide three questions related to this incident.
First, we are asked whether the district court could exercize
jurisdiction over the State's complaint. Second, we must decide
whether the Narragansett Tribe has sovereign immunity from the
Rhode Island tax on cigarettes, focusing on whether the legal
incidence of the cigarette tax falls on the tribe or the consumer
of the cigarettes. Finally, we must determine whether the State
exceeded its authority in the enforcement of its cigarette tax on
settlement lands in violation of the Tribe's sovereignty.
I. Background
The parties submitted this case on stipulated facts,
thus, "no evidence contrary to the facts stipulated can be
considered." Gómez v. Rodríguez, 34 F.3d 103, 121 (1st Cir. 2003).
We review the factual findings under the clear-error standard, and
the "ultimate application of the law to those facts" remains
"subject to de novo review." Reich v. John Alden Life Ins., Co.,
126 F.3d 1, 6-7 (1st Cir. 1997).
The Narragansett Indian Tribe is a federally recognized
Indian tribe located in the State of Rhode Island. See Final
Determination for Federal Acknowledgment of Narragansett Indian
Tribe of Rhode Island, 48 Fed. Reg. 6177 (Feb. 10, 1983). The
Tribe is primarily situated on 1800 acres of land known as the
settlement lands, which were given to the Tribe in the Rhode Island
Indian Claims Settlement Act ("the Settlement Act"), 25 U.S.C. §§
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1701-1716. The relationship between the Narragansett Tribe and the
State of Rhode Island is defined, in a number of ways, by the
Settlement Act. In the mid-1970s, the Narragansett Indian Tribe
brought two lawsuits in which they claimed aboriginal entitlement
to 3200 acres of land in Charlestown, Rhode Island. Narragansett
Tribe of Indians v. S. R.I. Land Dev. Corp., 418 F. Supp. 798 (D.
R.I. 1976); Narragansett Tribe of Indians v. Murphy, 426 F. Supp.
132 (D. R.I. 1976). The Settlement Act implemented the Joint
Memorandum of Understanding ("the JMOU") between the Narragansetts
and the State of Rhode Island, H.R. Rep. No. 95-1453, at 25-28
(1978), reprinted in 1978 U.S.C.C.A.N. 1948, 1962-66, that resolved
these lawsuits. See H.R. Rep. No. 95-1453, at 5.
Under the terms of the JMOU and Settlement Act, the State
provided 900 acres to the Narragansetts and the Federal government
agreed to provide funding for the purchase of an additional 900
acres. These lands comprise the 1800 acres we refer to as the
settlement lands. In exchange for this provision of land to the
Tribe, the State negotiated for and received the continued
applicability of State law to the settlement lands. See 25 U.S.C.
§ 1708(a) ("Except as otherwise provided in this subchapter, the
settlement lands shall be subject to the civil and criminal laws
and jurisdiction of the State of Rhode Island.").
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A. The Rhode Island Cigarette Tax Scheme
The sale of cigarettes in Rhode Island is governed by a
number of statutory requirements, including taxation provisions.
See R.I. Gen. Laws §§ 44-20-1 to 44-20-55. The State's cigarette
tax scheme imposes the following requirements:
Every person engaged in the sale of
cigarettes in Rhode Island must first obtain a
license from the State Tax Administrator.
R.I. Gen. Laws § 44-20-2. In addition to this
licensing requirement, Rhode Island imposes an
excise tax on cigarettes sold, distributed,
held, or consumed within its borders. R.I.
Gen. Laws § 44-20-12. The tax is collected
through the sale of cigarette stamps, which
must be affixed to all packages of cigarettes
possessed within the State (with limited
exceptions). R.I. Gen. Laws § 44-20-13, 44-
20-18, 44-20-30. State law also requires a
retailer to add a sales tax to the sale price
of the cigarettes. R.I. Gen. Laws § 44-18-19.
Narragansett Indian Tribe v. Rhode Island, 296 F. Supp. 2d 153, 163
(D. R.I. 2003). The excise tax requires that distributors
affix tax stamps in the proper denominations
at the location where their license is issued.
The stamps may be affixed to a distributor's
cigarettes at any time before transferring the
possession of the cigarettes. R.I. Gen. Laws
§ 44-20-28. When a dealer receives unstamped
cigarettes, he or she must affix stamps within
twenty-four hours after coming into possession
of the cigarettes. R.I. Gen. Laws § 44-20-29.
. . . State law makes it unlawful to sell or
possess unstamped cigarettes, see R.I. Gen.
Laws §§ 44-20-35, 44-20-36, and cigarettes not
bearing stamps that are not exempt are
contraband and subject to seizure by the
State. R.I. Gen. Laws §§ 44-20-37, 44-20-38.
Narragansett Indian Tribe, 296 F. Supp. 2d at 163.
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Moreover, Rhode Island, with the assistance of the
Federal government, has a system by which it collects sales taxes
on cigarettes from consumers who reside in the State and purchase
cigarettes from out-of-state dealers. See The Jenkins Act, 15
U.S.C. § 375-378 (requiring persons shipping or delivering
cigarettes to a state that taxes the sale or use of cigarettes to
comply with various reporting requirements identifying to the state
the monthly cigarette shipments and the consumers who purchased
them).
B. The Dispute
On July 1, 2003, the Narragansett Indian Tribe's Tribal
Council passed a resolution authorizing the opening of a tribally
owned Smoke Shop to sell cigarettes. The Tribe stipulated that the
purpose of opening the Smoke Shop was to provide a means for
economic development for the Tribal Nation. The Tribe imported
unstamped cigarettes from other states and stored them in
anticipation of the Smoke Shop's opening. The Smoke Shop, which
opened on July 12, 2003, was located entirely within the Tribe's
settlement lands. The Shop offered unstamped, untaxed cigarettes
for sale to both tribal and non-tribal members without collecting
Rhode Island's seven percent retail sales tax from any of its
customers. As stipulated before the court below, "a large
proportion of the Shop's customers were not members of the Tribe."
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Narragansett Indian Tribe, 296 F. Supp. 2d at 158 (referencing the
Joint Stipulations of the parties).
The day the Smoke Shop opened, the Rhode Island State
Police sought a search warrant to search the Smoke Shop for alleged
violations of Rhode Island's cigarette tax laws, specifically, the
possession and sale of unstamped cigarettes, which is a misdemeanor
offense. See R.I. Gen. Laws §§ 44-20-35, 44-20-36; see also id. at
§§ 44-20-37, 44-20-38 (allowing for the seizure of such cigarettes
as contraband). The State of Rhode Island District Court issued
the requested warrant to search the Smoke Shop that same day. On
July 14, 2003, Rhode Island State Police entered the Narragansett
Tribe's settlement lands and executed the search warrant on the
Chief Sachem of the Narragansett Indian Tribe. The State Police
confiscated the Tribe's inventory of unstamped cigarettes as well
as various documents and monies. An altercation ensued between the
State Police and some tribal members, resulting in the arrest of
the Chief Sachem and seven other tribal members.
Both the Narragansetts and the State brought suit over
this incident. The district court found that it had jurisdiction
over the Tribe's case, which was originally brought in federal
district court. See 28 U.S.C. § 1362 (providing that "The
[federal] district courts shall have original jurisdiction of all
civil actions, brought by any Indian tribe or band with a governing
body duly recognized by the Secretary of the Interior, wherein the
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matter in controversy arises under the Constitution, laws, or
treaties of the United States."). However, the district court
found that it did not have subject matter jurisdiction over the
State's action, which was originally brought in Rhode Island State
Superior Court and later removed to the federal district court by
the Tribe. The State had brought its action pursuant to Rhode
Island law seeking a declaration that the Tribe's failure to comply
with Rhode Island's cigarette sales and excise tax scheme was
unlawful. The district court therefore remanded the State's suit
back to the Washington County Superior Court, but determined that
it would "treat the State's motion for summary Judgment in the
State's case as a motion for summary judgment in the Tribe's
action." Narragansett Indian Tribe, 296 F. Supp. 2d at 160 n.5.
Faced with cross motions for summary judgment, the
district court granted summary judgment in favor of the State,
holding that: (1) the legal incidence of the State's Cigarette Tax
falls on the consumer, and not the Tribe; (2) the State did not
violate federal law or the Tribe's sovereign rights when it
enforced its criminal statutes by executing a search warrant, and
making arrests pursuant to that warrant, on tribal land; and (3)
the Tribe must comply with the Cigarette Tax if it wishes to
continue selling cigarette products on the settlement lands.
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II. Analysis
We review the district court's grant of summary judgment
de novo, construing the evidence in the light most favorable to the
appellant. Fenton v. John Hancock Mut. Life Ins., 400 F.3d 83, 87
(1st Cir. 2005). We will uphold the grant of summary judgment if
there is no genuine issue of material fact and appellees are
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c).
A. Jurisdiction over the State's Complaint
The Tribe asserts that the well-pleaded complaint rule
did not deprive the district court of jurisdiction over the State's
complaint, which the Tribe removed from state court to federal
district court.1 The federal district court determined that it did
not have subject matter jurisdiction over the State's complaint
because (1) the State did not bring its "claims under the
Settlement Act;" (2) 28 U.S.C. § 1362 does not provide a viable
basis for federal jurisdiction because it "only vests jurisdiction
in a federal court over actions brought by an Indian tribe under
the laws of the United States;" and (3) the district court found
the cases cited by the Tribe in support of removal to be
"unavailing and inapposite." Narragansett Indian Tribe, 296 F.
Supp. 2d at 160.
1
Under the well-pleaded complaint rule, it must be clear from the
plaintiff's complaint that there is a federal question. Louisville
& Nashville R.R. v. Mottley, 211 U.S. 149, 152 (1908).
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The Tribe argues that the district court should have
applied the "artful pleading rule" to the State's complaint.2 But
the alleged federal issue -- whether the State has authority to tax
the Tribe under the Settlement Act –- is a defense. Even had it
been preemptively included and argued against in the State's
complaint, it would not have given rise to federal question
jurisdiction over the State's complaint. See Louisville &
Nashville R.R., 211 U.S. at 152 (holding that the federal court
lacked subject matter jurisdiction under § 1331 because the federal
issue arose only from the plaintiff's anticipation of a defense
based on a federal statute).
It is not enough that the plaintiff alleges
some anticipated defense to his cause of
action, and asserts that the defense is
invalidated by some provision of the
Constitution of the United States. Although
such allegations show that very likely, in the
course of the litigation, a question under the
Constitution would arise, they do not show
that the suit, that is, the plaintiff's
original cause of action, arises under the
Constitution.
Id. Therefore, we find that the court did not err in failing to
apply the artful pleading rule in this instance.
2
The "artful pleading rule" bars a plaintiff from concealing a
necessary federal question by omitting it from the complaint.
Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1,
22 (1983).
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B. The Legal Incidence of the Cigarette Tax
The question of whether the legal incidence of Rhode
Island's cigarette tax scheme falls on the Narragansett Tribe, as
dealers of cigarettes, or merely on the consumer or non-Indian
purchaser of the cigarettes, will likely determine whether the
Narragansetts are required to comply with the tax scheme. The
Narragansetts argue that the legal incidence of Rhode Island's
cigarette tax falls directly on the Tribe and its members, and that
the tax may not be enforced against the Tribe without express
congressional authority. The State, on the other hand, argues that
the legal incidence of the cigarette tax, as stated in the language
of the Rhode Island statute, rests on the consumer rather than the
Tribe. See R.I. Gen. Laws § 44-20-53 ("All taxes paid in pursuance
of this chapter are conclusively presumed to be a direct tax upon
the retail consumer, precollected for the purpose of convenience
and facility only.").
If the legal incidence of the cigarette tax falls on the
Tribe itself, it presents serious tribal sovereignty concerns that
might preclude the State from enforcing its tax due to the United
States' recognition of the Narragansetts as a sovereign Indian
tribe. Oklahoma Tax Comm'n v. Chickasaw Nation, 515 U.S. 450, 458-
59 (1995) (citing Moe v. Confederated Salish and Kootenai Tribes of
Flathead Reservation, 425 U.S. 463, 483 (1976)). Such a "tax
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cannot be enforced absent clear congressional authorization."
Chickasaw Nation, 515 U.S. at 459.
The district court determined that the legal incidence of
Rhode Island's cigarette tax falls on the consumer and not the
Narragansett Tribe, noting that the pass through provision in Rhode
Island's statute was plain. Narragansett Indian Tribe, 296 F.
Supp. 2d at 167. The district court stated that "[w]hile the
Supreme Court has held that a tax scheme does not need to contain
such an express statement to place the legal incidence of the tax
on the consumer, the Court has enforced such provisions when they
are present." Id.In adjudicating matters of state law, federal courts
ordinarily defer to the decisions of state courts. For example, in
Gurley v. Rhoden, 421 U.S. 200 (1975), a gasoline retailer claimed
that because the legal incidence of the state's gasoline excise tax
fell on his consumers and he therefore merely collected the tax for
the state, due process entitled him to deduct the state tax from
the amount of his sales which were subject to a state sales tax.
The Mississippi Supreme Court held that the legal incidence of the
excise tax fell on petitioner. In deciding Gurley, the Supreme
Court observed that "a State's highest court is the final judicial
arbiter of the meaning of state statutes," and said that "[w]hen a
state court has made its own definitive determination as to the
operating incidence, . . . [w]e give this finding great weight in
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determining the natural effect of a statute, and if it is
consistent with the statute's reasonable interpretation it will be
deemed conclusive." Id. at 208 (citing American Oil Co. v. Neill,
380 U.S. 451, 455-456 (1965).
The Narragansett Tribe cites Gurley as the basis for its
argument that the district court should not have made an
independent determination of the legal incidence under Rhode Island
law. Rather than making an independent determination, the Tribe
contends, the district court should have given great weight to
Daniels Tobacco Co. v. Norberg, 114 R.I. 502, 506 (1975), a Rhode
Island State Supreme Court decision regarding the legal incidence
of the cigarette tax. Daniels involves a ruling by the Rhode
Island State Tax Administrator ordering a distributor to pay the
taxes due on cigarettes and tobacco products that were stolen prior
to sale. The distributor appealed the decision in state courts,
arguing that as a distributor he should not be liable for the
imposition of the cigarette tax on the stolen cigarettes because
R.I. Gen. Laws § 44-20-12 does not make a distributor liable for
the cigarette tax, and furthermore, R.I. Gen. Laws § 44-20-53
states that cigarette taxes are a direct tax on the consumer,
precollected for convenience only. Daniels, 114 R.I. at 505. The
Rhode Island State Supreme Court ultimately
determine[d] that the legislative intent in
enacting § 44-20-12(1) was to place the risk
of loss of cigarettes on the distributor and
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not on the state," noting that "§ 44-20-28
. . . requires a distributor to affix tax
stamps to all cigarettes he distributes. In
addition, the mere fact that the ultimate
economic burden of a tax is one [sic] the
consumer does not determine the legal
incidence of the tax.
Id. at 506 (citing Ferrara v. Director, Div. of Taxation, 127 N.J.
Super. 240, 317 A.2d 80 (1974)). Thus, the Tribe argues that
Daniels establishes that the legal incidence falls on the Tribe.
However, "[i]n situations wherein federal immunity is
affected by a determination as to which party to a transaction
bears the legal incidence of a state tax, the federal courts 'are
not bound by the state court's characterization of the tax.'"
Confederated Tribes of Colville Reservation v. State of Washington,
446 F. Supp. 1339 (E.D. Wash. 1978), (quoting First Agric. Bank v.
Tax Comm'n, 392 U.S. 339, 347 (1968), aff'd in part, reversed in
part, 447 U.S. 134, 151 (1980)). Rather, in cases where courts
must determine whether the legal incidence of a tax falls on an
Indian tribe, courts apply federal law. See, e.g., Sac and Fox
Nation v. Pierce, 213 F.3d 566, 578 (10th Cir. 2000) ("For our
purposes, the question of where the legal incidence of the Kansas
motor fuel tax rests is one of federal law."); see also United
States v. Mississippi Tax Comm'n, 421 U.S. 599, 609 n.7 (1974)).
The Narragansett Tribe argues that the district court
should not have applied federal law. Citing Kern-Limerick, Inc. v.
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Scurlock, 347 U.S. 110 (1954), the seminal Supreme Court case
underpinning Gurley and other tax incidence cases, the Tribe notes
that the Supreme Court instructs federal courts to defer to state
courts on questions of where the incidence of a state tax falls,
unless the case involves "federal constitutional issues." Id. at
121. The Tribe asserts that the "federal immunity" at issue in
Kern-Limerick does not encompass tribal immunity because, the Tribe
argues, tribal sovereignty does not arise under federal or
constitutional law, but rather from the inherent sovereignty of the
Tribe. The Narragansetts point to United States v. Lara, 541 U.S.
193 (2004), as confirming that tribal sovereignty does not arise
under the Constitution or federal law. Lara involves a double
jeopardy claim brought in light of recent congressional legislation
that authorizes Indian tribes to prosecute members of other Indian
tribes. The resolution of this claim hinged on whether there was
dual sovereignty, leading the Lara court to consider whether the
source of the power to punish nonmember Indian offenders is
"inherent tribal sovereignty" or delegated federal authority. Id.
at 1632. The Supreme Court determined that "Congress intended the
former" because "the statute says that it 'recognize[s] and
affirm[s]' in each tribe the 'inherent' tribal power (not delegated
federal power) to prosecute nonmember Indians for misdemeanors" and
because "the statute's legislative history confirms that such was
Congress' intent." Id. at 1632-33. Based on this logic, the Tribe
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asserts that federal courts must look first to an existing
interpretation of state law by the state's highest court in cases
such as the instant case.
The Tribe, however, ignores Supreme Court precedent to
the contrary. For example, in Kiowa Tribe v. Manufacturing
Technologies, Inc., the Supreme Court stated that "[l]ike foreign
sovereign immunity, tribal immunity is a matter of federal law."
523 U.S. 751, 759 (1998). The Tribe also ignores the Supreme
Court's precedent where the Court accepted a district court's use
of federal law in determining whether the legal incidence of the
Washington tax fell on the Indian tribe over the state court's
interpretations. See Washington v. Confederated Tribes of Colville
Indian Reservation, 447 U.S. 134, 142 (1980); California State Bd.
of Equalization et al. v. Chemehuevi Indian Tribe, 474 U.S. 9, 11
(1985)(explicitly reiterating that the Court accepted the district
court's conclusion that the legal incidence of Washington state's
cigarette tax fell on purchasers). In addition, other courts have
consistently applied federal law in deciding whether the legal
incidence of a state tax falls on a sovereign Indian tribe. See,
e.g., Sac and Fox Nation, 213 F.3d at 578 (noting that "the
question of where the legal incidence of the Kansas motor fuel tax
rests is one of federal law" in a case regarding whether the State
of Kansas could impose its tax on fuel distributed to tribally
owned and operated retail stations located on Indian lands within
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the State) (citing United States v. Mississippi Tax Comm'n, 421
U.S. 599, 609 n. 7 (1975)); Kern-Limerick, 347 U.S. at 121-22;
Coeur D'Alene Tribe v. Hammond, 384 F.3d 674, 681 (9th Cir. 2004)
("The incidence of a state tax on a sovereign Indian nation
inescapably is a question of federal law that cannot be
conclusively resolved in and of itself by the state legislature's
mere statement.").
Even if we were to consider the Rhode Island Supreme
Court's decision in Daniels, it is not outcome determinative.
Daniels predates the Supreme Court decisions, such as Moe, 425 U.S.
at 482, that held that pass through tax provisions are dispositive
as to who bears the legal incidence of a tax. In Moe, the Supreme
Court evaluated a Montana tax statute that provided that the tax
"shall be conclusively presumed to be [a] direct [tax] on the
retail consumer precollected for the purpose of convenience and
facility only." Id. (quoting Mont. Rev. Code Ann. § 84-5606(1)
(1947)). The Supreme Court determined that "to the extent that the
'smoke shops' sell to those upon whom the State has validly imposed
a sales or excise tax . . . the State may require the Indian
proprietor simply to add the tax to the sales price and thereby aid
the State's enforcement and collection thereof." Id. The Supreme
Court has repeatedly affirmed that cigarette tax schemes containing
pass through provisions place the legal incidence of the tax on the
consumer rather than the distributor. See Chickasaw, 515 U.S. at
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461; Milhelm Attea, 512 U.S. at 64; Chemehuevi, 474 U.S. at 11;
Colville 447 U.S. at 159. Therefore, the holding of Daniels does
not persuade us that the incidence of the Rhode Island cigarette
tax falls on the Narragansetts.
It is not required that the law expressly state that the
tax must be passed on to the ultimate purchaser for a State to
require a tribe to collect cigarette taxes from non-Indian
purchasers and remit it to the State. Chemehuevi, 474 U.S. at 11.
The Supreme Court has instructed that the test we should apply in
determining whether the incidence of a state tax falls on an Indian
tribe is to make "a fair interpretation of the taxing statute as
written and applied." Id. In this case, the Rhode Island tax
statute explicitly states that the cigarette taxes are
"conclusively presumed to be a direct tax upon the retail consumer,
precollected for the purpose of convenience and facility only."
R.I. Gen. Laws § 44-20-53. As the Supreme Court held in Moe,
"[t]he State's requirement that the Indian tribal seller collect a
tax validly imposed on non-Indians is a minimal burden designed to
avoid the likelihood that in its absence non-Indians purchasing
from the tribal seller will avoid payment of a concededly lawful
tax." Moe, 425 U.S. at 483. We therefore find that the legal
incidence of the Rhode Island cigarette tax falls on the consumer,
not the Narragansett Tribe, and we find that the State may require
the Tribe to comply with the cigarette tax in order for the State
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to collect the cigarette taxes that are passed on to the Tribe's
non-Indian consumers.
C. Unanswered Questions
The State posits that it has raised two independently
sufficient grounds on which we might affirm the district court's
judgment, even if the legal incidence of the tax is found to fall
on the Tribe. Since we find that the legal incidence of the tax
does not fall on the Narragansett Tribe, we find it unnecessary and
inappropriate to decide these questions. The grounds put forth by
the State are (1) that the settlement lands are not "Indian
country,"3 and (2) that direct taxation of the Tribe by the State
is allowed pursuant to both section 1708 of the Settlement Act, 25
3
Indian country is usually "the benchmark for approaching the
allocation of federal, tribal, and state authority with respect to
Indians and Indian lands." Narragansett Indian Tribe of R.I. v.
Narragansett Elec. Co., 89 F.3d 908, 915 (1996) (quoting Indian
Country, U.S.A. v. Oklahoma Tax Comm'n, 829 F.2d 967, 973 (10th
Cir. 1987)). Indian country is defined by Congress as including:
(a) all land within the limits of any Indian
reservation under the jurisdiction of the
United States Government, . . . (b) all
dependent Indian communities within the
borders of the United States whether within
the original or subsequently acquired
territory thereof, and whether within or
without the limits of a state, and (c) all
Indian allotments . . . .
18 U.S.C. § 1151; see Narragansett Elec. Co., 89 F.3d at 915. The
Supreme Court has repeatedly applied this definition to issues of
both criminal and civil jurisdiction. Id. at 915; (quoting
California v. Cabazon Band of Mission Indians, 480 U.S. 202, 208
(1987)).
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U.S.C. § 1708(a), and the Tribe's consent,4 implicit in its
agreement to subject the settlement lands to the "full force and
effect" of "all laws of the State of Rhode Island," in the Joint
Memorandum of Understanding between the Narragansett Tribe and the
State of Rhode Island, H.R. Rep. No. 95-1453, at 26, reprinted in
1978 U.S.C.C.A.N. 1948, 1964.
The Narragansetts, on the other hand, want us to declare
that the settlement lands are Indian country and that the State
does not have authority to tax the Tribe directly because Congress
did not expressly and unequivocally consent to state taxation of
the Narragansett Tribe. McClanahan, 411 U.S. at 177-78 (laying to
rest any doubt that taxation of Indian reservation lands or Indian
income from activities carried on within the boundaries of
reservation lands is not permissible absent unmistakably clear
congressional consent); see also Montana v. Blackfeet Tribe, 471
U.S. 479, 765 (1985); Brian v. Itasca County, 426 U.S. 373, 376
(1976).
4
Congress has granted the consent of the United States to States
wishing to assume criminal and civil jurisdiction over reservation
Indians, 25 U.S.C. § 1322(a), and 25 U.S.C. § 1324 confers upon the
States the right to disregard enabling acts which limit their
authority over such Indians. However, "the Act expressly provides
that the State must act 'with the consent of the tribe occupying
the particular Indian country,' 25 U.S.C. § 1322(a), and must
'appropriately (amend its) constitution or statutes.' 25 U.S.C.
§ 1324." McClanahan v. State Tax Comm'n of Arizona, 411 U.S. 164,
177-78 (1973).
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We find it unnecessary and inappropriate to decide these
questions today. Because we affirm the district court's holding
that the legal incidence of Rhode Island's cigarette tax falls on
the consumer and not the tribal distributor, it is unnecessary for
us to consider whether the tax would be valid if it were a direct
tax on the Tribe.
D. Sovereign immunity and the State's enforcement of its laws on
the Tribe's settlement lands
The Narragansetts claim that the State of Rhode Island
exceeded its authority in enforcing its cigarette laws against the
government of the Narragansett Indian Tribe and that the State
thereby violated the Tribe's sovereign immunity. The State argues,
conversely, that since the State's civil and criminal laws and
jurisdiction apply to the settlement lands pursuant to 25 U.S.C.
§ 1708, the State has concomitant ability to enforce its laws
there, including those governing the sale of cigarettes. The State
also argues that the Tribe's sovereign immunity was abrogated by
section 1708, and therefore tribal sovereign immunity does not bar
the State's enforcement of its laws on the settlement lands.
The Tribe asks us to consider six distinct questions
regarding the enforcement of Rhode Island's cigarette laws on the
settlement lands, including (1) whether the State may invoke its
jurisdiction over the settlement lands to enforce its cigarette tax
on the government of the Narragansett Indian Tribe (a Land/Tribe
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distinction); (2) whether the State may issue and serve a search
warrant for property of the tribal government; (3) whether the
State may enter tribal lands to serve a warrant; (4) whether the
State may confiscate Tribal government property while on the
settlement lands; (5) whether the State can require the Tribe to
purchase a license; and (6) whether the State was bound to use less
intrusive means in order to enforce the cigarette tax.
We have determined that, since the legal incidence of
Rhode Island's cigarette tax falls on the consumer, rather than the
tribal distributor, the Narragansetts are obligated to comply with
the State's cigarette tax laws as they pertain to cigarettes sold
to non-Indian consumers. Therefore, by selling unstamped
cigarettes to non-Indian consumers, the Smoke Shop operators
violated Rhode Island tax law, which is a criminal offense. This
brings us to the questions regarding what measures the State may
take to enforce its cigarette tax laws.
Drawing the line between the sovereign rights of the
Narragansett Tribe and the State of Rhode Island is complicated by
the Rhode Island Indian Claims Settlement Act, which provides for
the continued applicability of Rhode Island's civil and criminal
laws and jurisdiction over the settlement lands. See 25 U.S.C.
§ 1708(a). This is an ongoing and overarching question which has
vexed the State and Tribe over the years as various issues have
arisen. As we have stated before, all of the relevant questions
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cannot be answered by an all-encompassing solution. State of Rhode
Island v. Narragansett Indian Tribe, 19 F.3d 685, 695 (1994).
1. Whether 25 U.S.C. § 1708(a) abrogates the Tribe's
Sovereign Immunity on the Settlement Lands
"Indian tribes have long been recognized as possessing
the common-law immunity from suit traditionally enjoyed by
sovereign powers." Santa Clara Pueblo v. Martínez, 436 U.S. 49, 58
(1978) (citations omitted); see also Oklahoma Tax Comm'n v. Citizen
Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 508 (1991);
Bottomly v. Passamaquoddy Tribe, 599 F.2d 1061, 1066 (1st Cir.
1979). This aspect of tribal sovereignty is subject to the
"superior and plenary control of Congress." Santa Clara Pueblo,
436 U.S. at 58. Absent a clear, express waiver of sovereign
immunity by Congress or the Tribe, suits against Indian tribes are
generally barred. Kiowa, 523 U.S. at 755.
The Narragansett Tribe argues that its sovereign immunity
is a complete defense to the State's enforcement of its cigarette
laws against the Tribe. The State responds that Congress, by
granting jurisdiction to the state in 25 U.S.C. § 1708, abrogated
the Tribe's sovereign immunity on the settlement lands. In
Narragansett Indian Tribe, 19 F.3d at 701, we stated that "the
grant of jurisdictional power to the state in the Settlement Act is
valid and rather broad . . . ." We agree with the State that this
grant of jurisdictional power, in addition to the applicability of
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the State's civil and criminal laws, provides the State with the
right, and to some extent the means, to enforce these laws on the
settlement lands.
However, this does not mean that we agree with the State
that Section 1708(a) abrogates the Tribe's sovereign immunity
altogether. On the contrary, we have recognized and enforced the
Tribe's sovereign immunity in the past. See Maynard v.
Narragansett Indian Tribe, 984 F.2d 14, 15-16 (1st Cir. 1993). The
State suggests that Maynard stands only for the proposition that
Congress did not abrogate sovereign immunity for tribal conduct
outside the settlement lands. We disagree. There is nothing in
our analysis of the Settlement Act in that case which suggests that
we have drawn a distinction based on where tribal activities occur.
The fact of the matter is that Section 1708 does not expressly
address the issue of sovereign immunity, and it would be
inappropriate for us to infer that the congressional grant of
jurisdiction to the State acts as a wholesale abrogation of the
Tribe's sovereign immunity. It is well settled that "statutes are
to be construed liberally in favor of the Indians with ambiguous
provisions interpreted to their benefit." Chickasaw Nation v.
United States, 534 U.S. 84, 93-94 (2001). In fact, the language of
Section 1708 does not purport to waive any of the Tribe's rights.
[T]he mere fact that the Settlement Act cedes
power to the state does not necessarily mean
. . . that the Tribe lacks similar power and,
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thus, lacks 'jurisdiction' over the settlement
lands. Although the grant of jurisdictional
power to the state in the Settlement Act is
valid and rather broad, . . . we do not
believe that it is exclusive. To the
contrary, we rule that the Tribe retains
concurrent jurisdiction over the settlement
lands . . . .
Narragansett Indian Tribe, 19 F.3d at 701. The Tribe, therefore,
retains its sovereign immunity despite the grant of jurisdiction to
the State in Section 1708(a).
The Tribe's immunity does not, however, provide a
complete defense to the enforcement of State laws. There remains
a question of the extent to which the State may encroach upon the
Tribe's settlement lands to enforce its criminal laws. Neither
this Court, nor the Supreme Court, has issued definitive guidance
on this question.
2. Whether the State may invoke its jurisdiction over
the settlement lands to enforce its cigarette tax
The district court considered the holdings of Nevada v.
Hicks, 533 U.S. 353 (2001), and Colville "in conjunction with the
conferral of criminal and civil (which includes regulatory)
jurisdiction contained in section 1708," and found it to be "beyond
doubt that criminal law enforcement, including the seizure of
contraband, on the Settlement Lands is permissible." Narragansett
Indian Tribe, 296 F. Supp. 2d at 171. In Hicks and Colville, the
Supreme Court discusses some allowable enforcement by a state
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concerning activities by an Indian tribe which has sovereignty and
does not necessarily share jurisdiction over its tribal lands with
the State. The Hicks Court recognized that "the principle that
Indians have the right to make their own laws and be governed by
them 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.'" Hicks, 533 U.S. at 362 (citing Colville,
447 U.S. at 156). The Court offered the following guidance:
When on-reservation conduct involving only
Indians is at issue, state law is generally
inapplicable, for the State's regulatory
interest is likely to be minimal and the
federal interest in encouraging tribal self-
government is at its strongest. When,
however, state interests outside the
reservation are implicated, States may
regulate the activities even of tribe members
on tribal land, as exemplified by our decision
in [Colville]. . . . It is also well
established in our precedent that States have
criminal jurisdiction over reservation Indians
for crimes committed . . . off the
reservation. While it is not entirely clear
from our precedent whether the last mentioned
authority entails the corollary right to enter
a reservation (including Indian-fee lands) for
enforcement purposes, several of our opinions
point in that direction. In [Colville], we
explicitly reserved the question whether state
officials could seize cigarettes held for sale
to nonmembers in order to recover the taxes
due.
Hicks, 533 U.S. at 362-63 (2001) (citations omitted). Taking the
Supreme Court's discussion of the enforcement issue in Hicks and
Colville, together with Congress' grant of State jurisdiction over
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the settlement lands, the district court concluded that Rhode
Island may enforce its criminal laws on the settlement lands,
including the seizure of contraband.
The Narragansett Tribe argues that the district court
came to the wrong conclusion for several reasons. First, the Tribe
asserts that its sovereign immunity is a complete defense to
enforcement of the State's laws on the settlement lands. The Tribe
relies heavily on a Ninth Circuit decision, Bishop Paiute Tribe v.
County of Inyo, for the argument that even where Congress has
expressly authorized a state to enforce its criminal laws, a
tribe's sovereign immunity bars service of a search warrant against
the tribe itself. 291 F.3d 549, 567 n.6 (9th Cir. 2002) ("[T]he
search warrant was executed against the tribes in order to obtain
information as part of a criminal investigation against individual
Indians . . . . [T]he officers had authority to enforce criminal
law against individual Indians under Public Law 280, but did not
have authority to enforce those criminal laws against tribes as
sovereign entities."). However, this decision is not valid
precedent, as the Supreme Court vacated and remanded the decision,
stating:
The Tribe has not explained, and the trial and
appellate courts have not clearly decided,
what prescription of federal common law, if
any, enables the Tribe to maintain an action
for declaratory relief establishing its
sovereign right to be free from state criminal
processes. This case is therefore remanded
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for focused consideration and resolution of
that jurisdictional question.
Inyo County v. Paiute-Shoshone Indians, 538 U.S. 701, 702 (2003).
Second, the Narragansetts argue that we should not rest
our decision on Colville, because the Supreme Court did not decide
the question of state encroachment onto tribal lands to seize
cigarettes in that case. The Court refused to express an opinion
on the question of whether the state may enter onto a reservation
and seize stocks of cigarettes which are intended for sale to non-
Indian purchasers. Colville, 447 U.S. at 162.
The Court did, however, determine that the State of
Washington's interest in enforcing its valid taxes was sufficient
to justify seizures of shipments of unstamped cigarettes as
contraband while they were in transit, traveling to the
reservations. Id. at 161. "By seizing cigarettes en route to the
reservation, the State polices against wholesale evasion of its own
valid taxes without unnecessarily intruding on core tribal
interests." Id. at 162.
Unlike the State of Washington in Colville, Congress
provided Rhode Island with civil and criminal jurisdiction on the
Narragansetts' settlement lands. 25 U.S.C. § 1708(a). In light of
this authority and the precedent set in Colville, we find that the
State of Rhode Island may have the power to enter onto the
settlement lands and seize unstamped cigarettes as contraband, from
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the Indian distributor, provided that the action does not violate
the Tribe's sovereign immunity.
3. The "Land"/"Tribe" Distinction
The Tribe contends that a distinction should be made
between the jurisdiction the State was given over the settlement
lands and any power the State might have over the Tribe itself.
The Tribe argues that the grant of jurisdiction that Congress gave
to the State of Rhode Island merely subjected "the settlement lands
. . . to the civil and criminal laws and jurisdiction of the
State," 25 U.S.C. § 1708(a), not the Narragansett Tribal
government. The Tribe asserts that Congress intentionally limited
this jurisdiction to the settlement lands, and that it knew how to
write the Act to cover the Tribe as well if it had so intended.
See, e.g., Maine Settlement Act, 25 U.S.C. § 1725 (expressly
providing the State with jurisdiction over "all Indians, Indian
nations, or tribes or bands of Indians in the State of Maine . . .
and any lands or other natural resources owned by any such Indian,
Indian Nation, tribe or band of Indians, and any lands held in
trust by the United States for any such Indian").
In ascertaining the intent of Congress in statutes
regulating Indian tribes, we must read the statutes against a
backdrop of Indian sovereignty. Colville, 447 U.S. at 178 (citing
McClanahan, 411 U.S. at 172). "[T]he [Supreme] Court has held that
retained sovereignty includes the power of Indians to make and
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enforce their own substantive law in internal matters, including
matters such as membership rules, inheritance rules, and the
regulation of domestic relations." Narragansett Indian Tribe, 19
F.3d at 701 (citing Santa Clara Pueblo, 436 U.S. at 56).
Congress did not expressly give the State jurisdiction
over the Narragansett Tribe in Section 1708. While we have said
that the grant of jurisdictional power to the State is broad, we
have also found that "the Tribe retains concurrent jurisdiction
over the settlement lands," Narragansett Indian Tribe, 19 F.3d at
701, and that "any effort by the state to exercise [its] authority
is hedged in by . . . the Tribe's retained rights of sovereignty
. . ." Id. at 705. Therefore, as the district court stated, "when
the Tribe acts 'qua Tribe,' that is, as the political entity
responsible for governing the Narragansetts, it is not subject to
the State's civil and criminal laws and jurisdiction."
The Tribe asserts that the opening and operation of the
Smoke Shop was a tribal government activity. The Narragansetts'
Smoke Shop was opened pursuant to a resolution passed by the
Narragansett Tribal Council with the stated purpose of providing
economic development for the Tribal Nation. The Tribe, therefore,
asserts that sovereign immunity precludes the State of Rhode Island
from entering the settlement lands, serving a warrant on the tribal
activity, and confiscating tribal government property as
contraband.
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While retained tribal sovereignty has never been
precisely defined, the Supreme Court has offered the following
description:
Indian tribes are "distinct, independent
political communities, retaining their
original natural rights" in matters of local
self-government. Worcester v. Georgia, 6 Pet.
515, 559, 8 L.Ed. 483 (1832) . . . Although no
longer "possessed of the full attributes of
sovereignty," they remain a "separate people,
with the power of regulating their internal
and social relations." United States v.
Kagama, 118 U.S. 375, 381-382, 6 S.Ct. 1109,
1112-1113, 30 L.Ed. 228 (1886). See United
States v. Wheeler, 435 U.S. 313, 98 S.Ct.
1079, 55 L.Ed.2d 303 (1978). They have power
to make their own substantive law in internal
matters, see Roff v. Burney, 168 U.S. 218, 18
S.Ct. 60, 42 L.Ed. 442 (1897) (membership);
Jones v. Meehan, 175 U.S. 1, 29, 20 S.Ct. 1,
12, 44 L.Ed. 49 (1899) (inheritance rules);
United States v. Quiver, 241 U.S. 602, 36
S.Ct. 699, 60 L.Ed. 1176 (1916) (domestic
relations), and to enforce that law in their
own forums, see, e.g., Williams v. Lee, 358
U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d 251 (1959).
Santa Clara Pueblo, 436 U.S. at 55-56.
Precedent dictates that the determination of whether the
Tribe's retained rights of sovereignty or the State's residual
authority takes precedence should involve an interest balancing
test that "[t]est[s] the sturdiness" of the barriers each presents
and makes a "particularized inquiry into the nature of the state,
federal, and tribal interests at stake." Narragansett Indian
Tribe, 19 F.3d at 705 (quoting White Mountain Apache Tribe v.
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Bracker, 448 U.S. 136, 145 (1980)).5 In this case, we must balance
the State's interest in enforcing its cigarette laws with the
Tribe's sovereignty interests and related interests in tribal
economic development and self-governance. As we stated previously,
the precedent set in Moe and other cigarette tax cases involving
Indian tribes is that Indian retailers on an Indian reservation may
be required to collect the state cigarette taxes applicable to
sales to non-Indians because the minimal burden imposed by this
requirement is justified by the State's interest in assuring the
payment of these lawful taxes.
The district court applied the test this Court used in
Akins v. Penobscot Nation, 130 F.3d 482 (1st Cir. 1997), to
determine whether the Tribe's operation of the Smoke Shop should be
included in the Tribe's retained right of sovereignty. In so
doing, the district court tightly confined the meaning of sovereign
immunity to apply only when the Tribe acts in "matters of local
governance." Narragansett Indian Tribe, 296 F. Supp. 2d at 175-77.
We find it inappropriate to apply the Akins test in this instance.
5
We recognize that the Supreme Court has recently granted
certiorari for a question regarding whether the Court should
abandon the White Mountain Apache interest-balancing test in favor
of a preemption analysis based on the principle that Indian
immunities are dependent upon congressional intent. Prairie Band
Potawatomi Nation v. Richards, 379 F.3d 979 (10th Cir. 2004), cert.
granted, 73 U.S.L.W. 3513 (U.S. Feb. 28, 2005) (No. 04-631).
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In Akins, we established a multi-factor test for
determining whether a policy or activity is, or is not, an
"internal tribal matter," as that term was used in the Maine state
legislation implementing the federal Maine Indian Claims Settlement
Act of 1980, 25 U.S.C. §§ 1725-1735 ("Maine Settlement Act"). The
Maine Implementing Act makes the Penobscot Nation subject "to all
the duties, obligations, liabilities and limitations of a
municipality . . . provided, however, that internal tribal matters
. . . shall not be subject to regulation by the State." Me. Rev.
Stat. Ann. tit. 30, § 6206(1) (emphasis added).
While Rhode Island and Maine are similar to the extent
that each state has reached a settlement with its Indian tribes
which has been enacted by Congress, the provisions of the Maine
Settlement Act and Implementing Act are very different from the
Rhode Island Settlement Act, which did not limit the jurisdiction
of the Narragansett Tribe, but rather provided the State with
concurrent jurisdiction. In Akins, we repeatedly warned that our
analysis was unique to Maine because of the Maine Settlement Act
and the State's Implementing Act. 130 F.3d 482, 484 ("The
structure of analysis differs here from that which would be used in
claims against the vast majority of other Indian tribes in the
country."). We will not require the Narragansett Tribe to meet the
"internal tribal matter" exception provided in the Maine
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Implementing Act when Congress did not place a similar limitation
on the Narragansetts.
This is not to say that many of the Akins factors are not
generally applicable. Nor do we disagree with the district court's
conclusion that the Tribe's retained right of sovereignty will not
shield the Tribe's unlawful operation of a Smoke Shop that offers
non-Indian consumers a means to bypass the State's cigarette tax
which would not otherwise be available to them off of the
settlement lands.
4. The State's enforcement of its laws against the
Narragansett Tribe
The next question concerns the extent to which the State
may enforce its cigarette laws directly against the Narragansett
Tribal government. We find that it is worthwhile to consider the
fact that the Narragansett Tribe's sovereign immunity has not been
abrogated and that there exist means by which the State could have
enforced its cigarette tax laws which would have been more
respectful of the Tribe's sovereignty.
The doctrine of tribal immunity is settled law today.
The Supreme Court has refused to abandon or narrow this doctrine
despite arguments that tribal businesses have become far removed
from tribal self-governance and internal affairs. See Kiowa, 523
U.S. at 757. The Court stated that it "retained the doctrine . . .
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on the theory that Congress had failed to abrogate it in order to
promote economic development and tribal self-sufficiency." Id.For example, in Potawatomi, the Supreme Court "reaffirmed
that while Oklahoma may tax cigarette sales by a Tribe's store to
nonmembers, the Tribe enjoys immunity from a suit to collect unpaid
taxes." Kiowa, 523 U.S. at 755 (citing Potawatomi, 498 U.S. at
510). "There is a difference between the right to demand
compliance with state laws and the means available to enforce
them." Id. (citing Potawatomi, 498 U.S. at 514 ("There is no doubt
that sovereign immunity bars the State from pursuing the most
efficient remedy, but we are not persuaded that it lacks any
adequate alternatives.")). Some of the alternatives referenced in
Potawatomi include holding individual agents or officers of the
tribe liable for damages in actions brought by the State, see Ex
parte Young, 209 U.S. 123 (1908), collecting the sales tax from
cigarette wholesalers, either by seizing unstamped cigarettes off
the reservation, Colville, 447 U.S. at 161-162, or assessing
wholesalers who supplied unstamped cigarettes to the tribal stores,
City Vending of Muskogee, Inc. v. Oklahoma Tax Comm'n, 898 F.2d 122(10th Cir. 1990). Another option is that the State might enter
into an agreement with the Tribe to adopt a mutually satisfactory
regime for the collection of its cigarette tax.
Today we have held that the State's cigarette tax laws
are applicable to sales to non-Indian customers on the settlement
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lands. The State of Rhode Island has numerous alternatives that it
may use to enforce its cigarette tax on the settlement lands
without violating the Tribe's sovereign immunity. The State's
hands will not be completely tied while the Tribe continues to
operate its Smoke Shop in violation of the State's cigarette laws.
Although the operation of the Smoke Shop without complying with
Rhode Island's cigarette tax laws is certainly not a sovereign
right retained by the Narragansett Tribe, the Tribe does have a
right of sovereign immunity that should be respected the State.
For these reasons, we hold that the State violated the Tribe's
sovereign rights when it enforced the criminal provisions of its
cigarette tax laws by executing a search warrant against the Tribal
government's Smoke Shop, forcibly entering the Shop and seizing the
Tribe's stock of unstamped cigarettes, and arresting tribal
officials who were acting in their official capacity.
III. Conclusion
For the foregoing reasons, the district court's grant of
summary judgment for the State is affirmed in part and, to the
extent that the district court's declaratory judgment regarding the
State's enforcement of its criminal statutes against the Tribal
government is inconsistent with our holdings, reversed in part.
Affirmed in part, Reversed in part.
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