Tunica-Biloxi Tribe v. State of La. ( 1992 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 91-3393
_______________
TUNICA-BILOXI TRIBE,
A Sovereign Indian Nation, et al.,
Plaintiffs-Appellants,
VERSUS
STATE OF LOUISIANA, et al.,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Middle District of Louisiana
_________________________
(June 24, 1992)
Before WISDOM, JONES, and SMITH, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
The state of Louisiana imposes a retail sales tax on the off-
reservation purchase of new vehicles by Indian tribes and tribal
members. Concluding that the imposition of the tax is proper, we
affirm the district court's judgment in favor of the state.
I.
The state of Louisiana imposes a sales tax upon the retail
sale of motor vehicles within the state. La. R.S. 47:302(A).
Payment of the tax is a prerequisite to registering and obtaining
a license plate for the vehicle. Id. 47:303(B)(1). The Tunica-
Biloxi Tribe ("the Tribe")1 purchased a van off-reservation with
federal grant money for the exclusive use of the Tribal health
department. The van was taken to the reservation and has been
permanently garaged there since then. The state sought payment of
the sales tax on the van, and the Tribe paid "under protest."2
Fred Gonzales, Jr., an enrolled member of the Tribe, also
purchased a vehicle off-reservation; the vehicle was taken to the
reservation and has been garaged there since then. Larry Burgess,
an enrolled member of the Chitimacha Tribe3 who is employed by the
Tunica-Biloxi Tribe, similarly purchased two vehicles off-reserva-
tion; these vehicles were taken to the Chitimacha reservation and
have been garaged there since then. Both Gonzales and Burgess paid
the sales tax; according to the plaintiffs, neither "formally
protested the payment of these taxes."4
1
The Tunica-Biloxi reservation is located in Avoyelles Parish, Louisiana,
and consists of approximately 130 acres of land. The status of the Tribe and
the reservation was a disputed issue in the early stages of the litigation.
It is now apparently undisputed, however, that the land was taken into trust
on March 28, 1990, by the United States for the purpose of creating the
Tunica-Biloxi reservation and that the Tribe is an Indian tribe with a
governing body duly recognized by the Secretary of the Interior.
2
The Tribe states that it paid the tax "under protest" by including a
letter with its payment. It does not appear, however, that the Tribe availed
itself of the state's statutory protest system. See La. R.S. 47:1401 et seq.
3
The Chitimacha Tribe has a 261-acre reservation located in St. Mary's
Parish, Louisiana. This land was taken into trust by the United States for
the benefit of that tribe in 1919.
The Chitimacha Tribe is not a party to this suit. It was permitted to
file an amicus curiae brief in the matter and to participate at oral argument.
4
The plaintiffs allege that the vehicles in question were "delivered" to
the reservations. It is unclear, however, whether the purchasers took
possession of the vehicles at the dealership and brought them to the reserva-
tion or whether, instead, the dealers actually "delivered" the vehicles to the
reservation. This ambiguity is not critical to our analysis.
2
The Tribe, Burgess, and Gonzales brought individual and
official-capacity suits against various state officers in addition
to suing the state. The two individual plaintiffs sought class
certification and claimed to represent a class of tribal members
who own vehicles that are taken to and garaged on the reservation.
The plaintiffs sought (1) a declaration that the tax was invalid,
(2) a refund of the tax they paid, and (3) an injunction compelling
the state to refund sales tax payments to similarly-situated
persons and/or organizations that had paid such tax within the last
three years.
The district court dismissed the individual-capacity suits,
refused to certify the class, held that it did not have jurisdic-
tion over the claims by the individual plaintiffs by virtue of the
Tax Injunction Act, 28 U.S.C. § 1341, and awarded summary judgment
in favor of the state.
II.
The tax provision at issue in this case is La. R.S. 47:302(A),
which provides as follows:
There is hereby levied a tax upon the sale at retail, the
use, the consumption, the distribution, and the storage
for use or consumption in this state, of each item or
article of tangible personal property . . . .
According to the plaintiffs, the state has run afoul of Supreme
Court jurisprudence by taxing the off-reservation sale of vehicles
3
taken to and garaged on the reservation.5
The Supreme Court has crafted a per se rule with regard to the
"special area" of taxation of Indian tribes and members. See
California v. Cabazon Band of Mission Indians, 480 U.S. 202, 215
n.17 (1987). The rule permits a state to tax lands, activities,
and property "within the boundaries of the reservation" only where
there has been a "cession of jurisdiction or other federal statutes
permitting it." Id. (quoting Mescalero Apache Tribe v. Jones, 411
U.S. 145, 148 (1973)). When such tribal activities are conducted
"outside the reservation," however, the situation "present[s]
different considerations." Mescalero, 411 U.S. at 148.
5
Although we begin by addressing the merits, we note that the state has
raised a question as to our jurisdiction to consider the individual plain-
tiffs' claims based upon the Tax Injunction Act, 28 U.S.C. § 1341, which
provides that
[t]he district courts shall not enjoin, suspend or restrain the
assessment, levy or collection of any tax under State law where a
plain, speedy and efficient remedy may be had in the courts of
such State.
It is settled that the Tax Injunction Act does not bar our consideration of
the claims of the Tribe. See Moe v. Confederated Salish & Kootenai Tribes,
425 U.S. 463, 474-75 (1976) (act does not divest district court of jurisdic-
tion over claims by Indian tribes to enjoin enforcement of state tax laws, as
a more recent jurisdictional statute, 28 U.S.C. § 1362, gives district courts
jurisdiction to hear "all civil actions, brought by any Indian tribe . . .
wherein the matter in controversy arises under the Constitution, laws, or
treaties of the United States"). In Moe, the Court did not reach the question
of whether there would be jurisdiction over the individual tribal members'
challenge to the imposition of the state tax, noting that it could reach "all
the substantive issues raised on appeal" by "deciding the claims of the Tribe
alone." Id. at 475 n. 14. See also id. at 468 n. 7.
That is the case here as well. We therefore do not need to reach the
jurisdictional question as to the individual tribal members. Nor do we need
to reach the question of class certification. We do note, however, that there
appears to be a serious question as to jurisdiction over the individual
claims. See Osceola v. Florida Dep't of Revenue, 893 F.2d 1231 (11th Cir.
1990) (Tax Injunction Act bars consideration of individual tribal members'
claims where state provides "plain, speedy and efficient remedy"), cert.
denied, 111 S. Ct. 674 (1991); Assiniboine & Sioux Tribes v. Montana, 568 F.
Supp. 269, 276-79 (D. Mont. 1983) (same). See also United States v. State Tax
Comm'n, 505 F.2d 633, 638 (5th Cir. 1974) (noting that § 1362 "contains no
general grant of jurisdiction for a suit merely because an Indian is a
party").
4
Indeed, as the Court has stated, "[a]bsent express federal law
to the contrary, Indians going beyond reservation boundaries have
generally been held subject to non-discriminatory state law
otherwise applicable to all citizens of the State." Id. at 148-49.
This principle applies to a state's tax laws. Id. at 149. Thus,
there are two presumptions at work here: State taxation of on-
reservation tribal activities is presumptively invalid; state
taxation of off-reservation tribal activities is presumptively
valid.
The plaintiffs first argue that their situation falls within
the on-reservation presumption. They then argue that regardless of
which presumption applies in this case, the tax in question is
preempted by federal regulation (at least with regard to the
purchase of the health service van).
A.
The plaintiffs contend that the imposition of the sales tax
falls within the on-reservation presumption because the "taxable
event" occurred when the vehicles were taken to and garaged on the
reservation.6 In making this argument, they rely upon three of the
6
At oral argument, counsel for the Chitimacha Tribe agreed with the
plaintiffs that the tax was improper but disagreed with their theory that the
permanent location of the vehicles was the key to the inquiry. The Chitimacha
Tribe's theory is that the states are simply without any power to tax reserva-
tion Indians. For this proposition, it cites the Court's recent statement
that "{absent cession of jurisdiction or other federal statues permitting it,z
we have held, a State is without power to tax reservation lands and reserva-
tions [sic] Indians." County of Yakima v. Confederated Tribes & Bands of
Yakima Indian Nation, 112 S. Ct. 683, 688 (1992) (quoting Mescalero, 411 U.S.
at 148) (emphasis added).
The Court's statement plainly was made in the context of considering on-
reservation activity, which was at issue in the case. See infra n.9. As
noted above, the Court in Mescalero explicitly stated, 411 U.S. at 148-49,
5
Court's principal Indian tax law cases.
The first is Moe v. Confederated Salish & Kootenai Tribes, 425
U.S. 463 (1976), which they claim is "substantially identical" to
the case at bar. In Moe, the Court invalidated the imposition of
an annual "personal property tax on personal property [motor
vehicles] located within the reservation . . . . " Id. at 481
(emphasis added). The "tax event," then, was the ownership of a
motor vehicle as of January 1 of each year, and that "event"
occurred on-reservation. See Washington v. Confederated Tribes of
Colville Indian Reservation, 447 U.S. 134, 163 (1980) (describing
holding in Moe).
Similarly, the situs of the tax event in the next case the
plaintiffs cite SQ Colville SQ was on-reservation. In Colville, the
Court invalidated the state's excise tax on motor vehicles imposed
for the privilege of using such vehicles within the state. The
Court held that the excise tax and the tax at issue in Moe were
"quite similar": "Each is denominated an excise tax for the
{privilegez of using the covered vehicle in the State, each is
assessed annually at a certain percentage of fair market value, and
each is sought to be imposed upon vehicles own by the Tribe or its
members and used both on and off the reservation." Id. at 162
(footnote omitted).
The state in Colville attempted to distinguish Moe, noting
that while the tax event in Moe was the ownership of an on-
that reservation Indians going beyond the reservation generally have been
subject to state tax law, and County of Yakima states nothing to the contrary.
6
reservation vehicle (i.e., a personal property tax), the event in
the case at bar was "use within the State of the vehicle in
question." Id. at 163. The Court rejected this distinction,
noting that "[w]hile [the state] may well be free to levy a tax on
the use outside the reservation of Indian-owned vehicles," it could
not tax on-reservation use. Id. The tax in question was invalid
because it taxed both on- and off-reservation activities, rather
than apportioning between the two types of activity. Id. The key
was that the tax event in both Moe and Colville was the use and
ownership of a vehicle on the reservation SQ a tax event the state
could not reach.
The third and final case upon which the plaintiffs rely is
Ramah Navajo School Bd. v. N.M. Bureau of Revenue, 458 U.S. 832
(1982). There, the Court held that the state gross receipts tax
was invalid where it was imposed upon a non-Indian contractor that
built a school on reservation land. The Court noted that the tax
was "intended to compensate the State for granting {the privilege
of engaging in business.z" Id. at 844 (citations to state statute
omitted). According to the Court, the state failed to explain "the
source of its power to levy such a tax in this case where the
{privilege of doing businessz on an Indian reservation is exclu-
sively bestowed by the Federal Government." Id.
Again, as in Moe and Colville, the "taxable event" in Ramah
was the on-reservation construction of a school SQ an activity
beyond the taxing power of a state. Significantly, the Mescalero
Court upheld the imposition of a similar gross receipts tax upon a
7
tribe-owned ski resort located off-reservation. 411 U.S. at 157-
58.7
The instant case is unlike Moe, Colville, and Ramah in that
the state of Louisiana has not reached into the reservation and
taxed an on-reservation activity.8 It does not attempt to tax the
privilege of using or owning motor vehicles on the reservation.
Rather, it taxes the retail sale of those vehicles off-reservation.
A tax on the sale of tangible property is not a tax on the property
itself; rather, it is a tax on the sales transaction.9
The plaintiffs do not contest the fact that the sale took
place off-reservation. They contend, rather, that the "taxable
incident was the delivery of the vehicle to its permanent garage on
7
In Mescalero the Court did invalidate the "compensating use tax imposed
on the personalty installed in the construction of the ski lifts." 411 U.S.
at 158. This holding, however, was based upon § 5 of the Indian Reorganiza-
tion Act, which exempts "any lands . . . acquired" by Indian tribes from state
taxation. 25 U.S.C. § 465. The gross receipts tax was imposed on income from
land, not on the land itself, and thus was valid. Mescalero, 411 U.S. 157-58.
The personal property subject to the use tax had become "permanently attached
to the realty" and thus was a tax on land. Id. at 158. The Court therefore
held that the tax fell within the § 5 exemption. Id. at 158-59.
8
See Osceola v. Florida Dep't of Revenue, 705 F. Supp. 1552, 1555 (S.D.
Fla. 1989) (noting in dicta that taxation of off-reservation purchases falls
within Mescalero's presumption of validity), aff'd on other grounds, 893 F.2d
1231 (11th Cir. 1990), cert. denied, 111 S. Ct. 674 (1991); Felix S. Cohen,
Handbook of Federal Indian Law at 430 (1982) ("The reasoning of [Mescalero]
seems to apply to other state business and consumption taxes, such as taxes on
. . . sales . . . .").
9
See Sullivan v. United States, 395 U.S. 169, 175 (1969) ("A tax on the
privilege of selling or buying property has long been recognized as distinct
from a tax on the property itself.") (footnote omitted). Cf. County of
Yakima, 112 S. Ct. at 693 (tax upon sale of property is not tax on subject of
that sale).
In County of Yakima, the county imposed an ad valorem tax on so-called
"fee patented" land located on the reservation, as well as an excise tax on
the sale of such land. The Court held that "the General Allotment Act [24
Stat. 388, as amended, 25 U.S.C. § 331 et seq.] explicitly authorizes only
{taxation of . . . landz" by the state. Thus, because "a tax upon the sale of
property is not a tax upon the subject matter of that sale," 112 S. Ct. at 693
(citation omitted), the county could tax the fee-patented land (the ad valorem
tax) but not the sale of that land (the excise tax). Id. at 694.
8
Indian lands, not the transfer of possession taking place off-
reservation "if the property in question is not permanently made a
part of the Louisiana property mass, or if it has not somehow . . .
affixed itself in the state on a long-term . . . ." The plain-
tiffs, however, confuse the jurisprudence interpreting the state's
use tax with that interpreting the sales tax.
As noted above, Louisiana assesses a sales tax on the "{sales
pricez of items sold in the state" such as the vehicles involved in
this case. Pensacola Constr. Co. v. McNamara, 558 So. 2d 231, 232
(La. 1990).10 The state also imposes a "use tax" at the same rate
on out-of-state purchases of tangible property brought into
Louisiana. La. R.S. 47:302(A)(2). The use tax "is designed to
compensate the State for sales tax that is lost when goods are
purchased out-of-state and brought for use into Louisiana," D.H.
Holmes Co. v. McNamara, 486 U.S. 24, 27-28 (1988), and "to make all
tangible property sold or used subject to a uniform tax burden
regardless of whether it is acquired inside the state and subject
to a sales tax or acquired outside the state and subject to a use
tax." Pensacola, 558 So. 2d at 233.11
The "taxable moment" of such use tax is when the property has
been withdrawn from interstate commerce and has become part of the
mass of the property of the taxing state. McNamara v. D.H. Holmes
10
According to state law, a sale "is considered to be perfect between the
parties, and the property is of right acquired to the purchaser with regard to
the seller, as soon as there exists an agreement for the object and for the
price thereof, although the object has not been delivered or the price paid."
La. Civ. Code art. 2456 (emphasis added).
11
The state provides a credit against the use tax for sales taxes that
already have been paid out-of-state. La. R.S. 47:303(A).
9
Co., 505 So. 2d 102, 105 (La. App.), writ denied, 506 So. 2d 1224
(1987), aff'd, 486 U.S. 24 (1988).12 The ultimate destination of
the tangible property in question thus is important in the use tax
context, as it provides the taxable nexus with the state. By
contrast, in the sales tax context, the ultimate destination of the
property is not crucial,13 as the sales transaction SQ the taxable
event SQ provides the nexus with the state. The plaintiffs'
reliance upon use tax cases therefore is misplaced.14
12
The Court in D.H. Holmes noted that although it makes no difference for
Commerce Clause purposes whether an item of tangible property is still in
interstate commerce or, instead, has come to rest in a state, this distinction
is "of some importance for other purposes (in determining, for instance,
whether a {taxable momentz has occurred . . . )." 486 U.S. at 31 (quoting the
Louisiana court of appeal's decision).
13
The only circumstance in which the ultimate destination is important in
the sales tax context is with regard to the "first use" exemption. Louisiana
law provides that "[t]here should be no sales or use tax due upon the sale at
retail or use of tangible personal property . . . purchased within or imported
into Louisiana for first use exclusively beyond the territorial limits of
Louisiana." La. R.S. 47:305.10(A).
The plaintiffs do not claim that they would meet the requirements of
Louisiana's first use exemption. See, e.g., id. 305:10(B)(1), (2), and (3)(a)
(in order for first use exemption to apply, the purchaser must be "properly
registered for sales and use tax purposes in the state of use and regularly
reports and pays sales and use tax in such other state," "[t]he state in which
the first use occurs grants on a reciprocal basis a similar exemption on
purchases within that state for use in Louisiana," and "[t]he purchaser [must]
obtain from [Louisiana] a certificate authorizing him to make the nontaxable
purchases . . . ."). The plaintiffs, however, do contend that the state has
discriminated against them in violation of the Equal Protection Clause in that
it "has not afforded [them] even the opportunity of entering into" a recipro-
cal agreement with it. This claim is wholly unsupported and thus without
merit.
14
The plaintiffs contend that the state has conceded that the ultimate
destination of the vehicle is determinative for imposition of the sales tax by
virtue of its promulgation of Policy/Procedure Statement #49.3 ("PPS #49.3"),
which provides the following:
According to the Department of Revenue and Taxation, Motor Vehicle
Audit Unit, for State sales/use tax purposes, a federally recog-
nized Indian reservation is to be treated as if it were another
state or foreign country. This means that State sales/use taxes
will not be collected on motor vehicles to be domiciled *and used
exclusively on a reservation. *Vehicles used on Louisiana high-
ways and/or for which a Louisiana license plate is required will
be subject to any applicable State sales/use tax. Vehicles used
exclusively on a reservation and/or for which a plate is not
acquired will be exempt from State sales tax.
10
B.
The plaintiffs' next argument focuses upon the purchase of the
van for the tribal health service. Essentially, they argue that
regardless of the situs of the taxable event (off- or on-reserva-
tion), the sales tax in this case is preempted by federal regula-
tion. Relying upon Ramah, the plaintiffs assert that the federal
regulation of Indian health care is so pervasive that it has left
no room for the additional burden of the state sales tax.
The plaintiffs focus upon the following language in Ramah as
support for their contention:
Federal regulation of the construction and financing of
Indian educational institutions is both comprehensive and
pervasive. . . . The direction and supervision provided
by the Federal Government for the construction of Indian
schools leave no room for the additional burden sought to
be imposed by the State through its taxation of the gross
receipts . . . . This burden, although nominally falling
on the non-Indian contractor, necessarily impedes the
clearly expressed federal interest in promoting the
"quality and quantity" of educational opportunities for
According to the plaintiffs, prior to January 12, 1989, the state did not
collect sales taxes on vehicles "garaged on a reservation." On January 12,
the state promulgated PPS #49.3 and began imposing the tax.
PPS #49.3 does not constitute a concession by the state that the
ultimate destination of the vehicle determines the taxable event for sales tax
purposes. As the state noted at oral argument, the only way in which the
state can collect its sales tax on vehicles sold within the state is to refuse
to issue a license plate to a vehicle owner who has not paid the tax. When a
vehicle is not used on the highways of Louisiana, there is no need for a
license plate to be issued. Thus, it is reasonable for the state to exempt
from the sales tax those vehicles that are to be "used exclusively on a
reservation . . . for which a plate is not acquired."
We therefore agree with the district court that "[i]f anything, Pol-
icy/Procedure Statement [#] 49.3 carves out a beneficial exception to Indians
where they make purchases outside of Indian country" for exclusive use in
Indian country. This exemption does not affect the state's power to tax off-
reservation sales as a general matter. Therefore, because the plaintiffs do
not contend that they use the vehicles in question exclusively on-reservation,
they do not fall within the exemption of PPS #49.3.
11
Indians by depleting the funds available for the con-
struction of Indian schools.
458 U.S. at 839, 841-42 (footnote omitted).15 The plaintiffs argue
that the state sales tax, at least insofar as it was collected from
the Tribe on the purchase of the van, is preempted by the Indian
Self-Determination and Education Assistance Act, 25 U.S.C. § 450 et
seq., and the Indian Health Care Improvement Act, 25 U.S.C. § 1601
et seq. The plaintiffs point to the fact that the Tribe purchased
the van with federal grant money; they argue that federal regula-
tion of Indian health care is at least as pervasive as federal
regulation of education.
While the argument has some superficial attractiveness, it is
based upon a flawed reading of Ramah, in which the Court's analysis
is premised on the fact that the state was seeking to regulate an
on-reservation activity. The Court remarked that the state could
not explain the source of its power to tax the privilege of doing
business "on an Indian reservation" when that power "is exclusively
bestowed by the Federal Government." 458 U.S. at 837. The state's
only justification for the tax was that it "provide[d] services to
[the non-Indian contractor] for its activities off the reserva-
tion." Id. at 844.
Moreover, the fact that Indian health care is subject to
pervasive federal regulation does not defeat the general principle
15
The Ramah Court did not employ Mescalero's on-reservation "presumption
of invalidity"; presumably this is because the case did not involve state
taxation of on-reservation activities of Indians but rather on-reservation
activities of non-Indians. In fact, the Ramah Court refused to create a
presumption in this area, relying instead upon the traditional preemption
analysis. See 458 U.S. at 845-46.
12
of Mescalero, which requires "express federal law" in order for
Indian tribes going off-reservation to be exempt from state
taxation. 411 U.S. at 148-49 (emphasis added). The plaintiffs
point to no "express" federal exemption from a state's general
sales tax. Thus, like the Court in Mescalero, we refuse to imply
an exemption for the Tribe's off-reservation activity. See
Mescalero, 411 U.S. at 157.
V.
In sum, we find that the imposition of the Louisiana sales tax
on the off-reservation purchase of vehicles does not violate
Supreme Court authority and is not preempted by federal
regulation.16 We therefore AFFIRM.
16
Because we find that the imposition of the tax was proper, we need not
reach the issue of qualified immunity for the state officials. We also agree
with the district court that the plaintiffs' arguments that the imposition of
the tax violates the right to travel, the Equal Protection Clause, substantive
due process, the Commerce Clause, and the Indian Commerce Clause are unsup-
ported and wholly without merit.
13