Hwal'bay Ba J Enterprises Inc v. Hon. jantzen/fox

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
____________________________________________
HWAL’BAY BA: J ENTERPRISES, INC.,
Petitioner,
v.
HONORABLE LEE F. JANTZEN, JUDGE OF THE SUPERIOR COURT
OF THE STATE OF ARIZONA, IN AND FOR THE
COUNTY OF MOHAVE,
Respondent Judge,
and
SARA AND WILLIAM FOX,
Real Parties in Interest.
______________________________________________
No. CV-19-0123-PR
Filed February 25, 2020
______________________________________________
Appeal from the Superior Court in Mohave County
The Honorable Lee F. Jantzen, Judge
No. CV2018-00428
AFFIRMED
Order of the Court of Appeals, Division One
1 CA-SA 19-0059
Filed April 03, 2019
______________________________________________
COUNSEL:
D. Samuel Coffman (argued), Mitesh V. Patel, Vail C. Cloar, Dickinson
Wright PLLC, Phoenix; Verrin T. Kewenvoyouma, Kewenvoyouma Law,
PLLC, Tempe, Attorneys for Hwal’Bay Ba: J Enterprises, Inc.
HWAL’BAY BA: J ENTERPRISES, INC. V. HON. JANTZEN/FOX
Opinion of the Court
David L. Abney (argued), Ahwatukee Legal Office, P.C., Phoenix; John P.
Torgenson, Jon T. Drago, Torgenson Law, Phoenix, Attorneys for Sara and
William Fox
William A. Nebeker, John M. Sticht, Koeller, Nebeker, Carlson & Haluck
LLP, Phoenix, Attorneys for Amicus Curiae Grand Canyon Custom Tours,
Inc.
Doreen N. McPaul, Attorney General, Navajo Nation Department of
Justice, Window Rock; Susan B. Montgomery, Jay Tomkus, Montgomery &
Interpreter, PLC, Phoenix; Sam Hirsch, Jenner & Block LLP, Washington,
DC, Attorneys for Amici Curiae The National Congress of American
Indians Fund, The Inter Tribal Association of Arizona, Inc., and The Navajo
Nation
____________________
VICE CHIEF JUSTICE TIMMER authored the Opinion of the Court, in
which CHIEF JUSTICE BRUTINEL and JUSTICES BOLICK, GOULD,
LOPEZ, BEENE and MONTGOMERY joined. JUSTICE BOLICK filed a
concurring opinion.
____________________
VICE CHIEF JUSTICE TIMMER, Opinion of the Court:
¶1 An Indian tribe’s “subordinate economic organization”
serves as an “arm of the tribe” and therefore shares its sovereign immunity.
This tort case affords us an opportunity to identify factors courts should
examine to decide whether a tribal entity serves in that capacity. After
doing so, we conclude the tribal entity here did not prove it is a subordinate
economic organization entitled to share the tribe’s immunity, and the
superior court therefore did not err by denying the entity’s motion to
dismiss.
BACKGROUND
¶2 In April 2016, Sara Fox was seriously injured while white-
water rafting on the Colorado River through the Grand Canyon. Arizona
holds title to the lands beneath the river, and Fox therefore suffered her
injuries on state land. See Morgan v. Colo. River Indian Tribe, 103 Ariz. 425,
427 (1968). The rafting boat was operated by employees of Hwal’Bay Ba: J
Enterprises, Inc., which does business under the trade name Grand Canyon
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Opinion of the Court
Resort Corporation (“GCRC”). GCRC is a tribal corporation whose sole
shareholder is the Hualapai Indian Tribe (the “Tribe”), a federally
recognized Indian tribe. The Hualapai Reservation is contiguous to parts
of the Colorado River.
¶3 Fox and her husband filed suit against GCRC, the Tribe, and
unidentified “John Does” seeking compensatory and punitive damages.
The Foxes also sued Grand Canyon Custom Tours, Inc. (“GCCT”), an
Arizona corporation, which sold them the rafting trip in an online
transaction. GCCT is not affiliated with the Tribe but served as GCRC’s
booking agent. Foxes’ claims against GCCT are not before us.
¶4 The Tribe and GCRC moved to dismiss the complaint
pursuant to Rules 12(b)(2) and (5), Arizona Rules of Civil Procedure,
arguing they possessed sovereign immunity from suit, which precluded the
court from exercising personal jurisdiction, and they were not properly
served. After briefing and argument, the court found that the Foxes had
properly served both defendants. It dismissed the complaint against the
Tribe on sovereign immunity grounds but declined to dismiss the
complaint against GCRC, finding it not protected by sovereign immunity.
The court denied GCRC’s request to reconsider that decision.
¶5 GCRC unsuccessfully petitioned the court of appeals for
special action relief from the superior court’s partial denial of the motion to
dismiss. We granted review to decide the circumstances under which a
tribal entity enjoys sovereign immunity as a “subordinate economic
organization” of the tribe, a recurring issue of statewide importance.
DISCUSSION
I. General principles
A. Sovereign immunity
¶6 Indian tribes, as “domestic dependent nations,” are immune
from lawsuits in state and federal court, unless that immunity is waived by
the tribe or abrogated by Congress. Kiowa Tribe v. Mfg. Techs., Inc., 523 U.S.
751, 754 (1998); Okla. Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498
U.S. 505, 509 (1991). Sovereign immunity applies to a tribe’s commercial
and government activities, conducted both on and off the reservation. See
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Kiowa, 523 U.S. at 760. Sovereign immunity does not shield individual tribal
employees sued in their personal capacities, even if the tribe is obligated to
indemnify them. See Lewis v. Clarke, 137 S. Ct. 1285, 1288 (2017).
B. Subordinate economic organizations
¶7 Sovereign immunity also applies to a subordinate economic
organization, which is considered an arm of the tribe. White Mountain
Apache Indian Tribe v. Shelley, 107 Ariz. 4, 7 (1971); see also Inyo Cty. v. Paiute-
Shoshone Indians of the Bishop Cmty. of the Bishop Colony, 538 U.S. 701, 705 n.1
(2003) (“The United States maintains, and the County does not dispute, that
the Corporation is an ‘arm’ of the Tribe for sovereign immunity
purposes.”). Recognizing immunity for subordinate economic
organizations permits tribes to conduct commercial activities through
subordinate governmental agencies without unintentionally waiving
sovereign immunity. See Dixon v. Picopa Constr. Co., 160 Ariz. 251, 256
(1989); see also Shelley, 107 Ariz. at 7 (concluding “it would defeat the
purpose of Congress in granting immunity to Indian Tribes” if subordinate
economic organizations of a tribe were not cloaked with sovereign
immunity).
¶8 The issue before us is whether GCRC is immune from suit as
a subordinate economic organization of the Tribe, or, as the superior court
ruled, has no immunity because it is an entity separate and distinct from
the Tribe. GCRC bears the burden of demonstrating its immunity by a
preponderance of the evidence. See Williams v. Big Picture Loans, LLC, 929
F.3d 170, 176 (4th Cir. 2019); People v. Miami Nation Enters., 386 P.3d 357, 365
(Cal. 2016). We review the superior court’s denial of GCRC’s motion to
dismiss for an abuse of discretion, although we decide the legal issues
underlying that ruling de novo. See Leach v. Reagan, 245 Ariz. 430, 441 ¶ 53
(2018); Nataros v. Superior Court, 113 Ariz. 498, 499-500 (1976).
¶9 We have not established a test to identify subordinate
economic organizations, and no nationwide consensus exists on the
appropriate inquiry. See Miami Nation Enters., 386 P.3d at 366 (“In the
absence of guidance from the high court, state and federal courts have
articulated a variety of arm-of-the-tribe tests.”). Generally, courts outside
Arizona have relied on one or more factors, such as examining an entity’s
creation, purpose, ownership, governance, and financial relationship with
the tribe and the tribe’s intent concerning the applicability of sovereign
immunity. See id. at 366–67 (summarizing approaches taken by state and
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federal courts). In adopting the appropriate framework for deciding
whether an entity is a subordinate economic organization and thus an arm
of the tribe, we are guided by prior Arizona cases, authorities outside our
state, and the purposes underlying sovereign immunity for Indian tribes.
¶10 This Court first addressed subordinate economic entities in
Shelley, which concerned a breach-of-contract suit filed in superior court
against the Fort Apache Timber Company (“FATCO”). The White
Mountain Apache Indian Tribe created FATCO as an unincorporated
entity. Shelley, 107 Ariz. at 7. Nevertheless, the superior court ruled FATCO
was either a corporation by estoppel or a de facto corporation, making it a
separate legal entity not entitled to share the tribe’s immunity. Id. at 5.
¶11 This Court reversed. Id. at 7–8. We examined FATCO’s
relationship with the tribe to determine whether FATCO shared the tribe’s
sovereign immunity. Id. at 5–6. The Court initially noted that the tribal
constitution authorized the tribe to create FATCO for economic purposes.
Id. It also relied on FATCO’s plan of operation, which provided that
FATCO was created to serve the economic and employment interests of the
tribe and its members, including business training, and authorized the tribe
to establish qualifications for board members, appoint and suspend
members, and set member salaries. Id. at 6. The plan also stated that the
White Mountain Apache owned FATCO, all FATCO property was titled in
the tribe’s name, and all purchases had to be made through the tribal
purchasing agent and in compliance with tribal policies. Id. FATCO’s
board of directors was authorized to act “for and on behalf of” the tribe in
all phases of the business. Id. Based on these facts, the Court concluded
FATCO was “part of the tribe” and thus entitled to share its sovereign
immunity. Id. at 7–8.
¶12 In S. Unique, Ltd. v. Gila River Pima-Maricopa Indian
Community, 138 Ariz. 378 (App. 1983), the court of appeals addressed
whether sovereign immunity barred a breach-of-contract claim against Gila
River Farms (“GRF”), an unincorporated entity. Resolution of the dispute
depended on whether GRF was created and controlled by the Gila River
Indian Community (the “Community”), which was organized for
governmental purposes under section 16 of the Indian Reorganization
(Wheeler-Howard) Act, 25 U.S.C. § 5123, or by the Gila River Pima-
Maricopa Indian Community (the “Indian Corporation”), which was
incorporated for business or commercial purposes under section 17 of that
Act, 25 U.S.C. § 5124, and had waived immunity from suit. Id. at 379–80,
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382, 386. Relying on Shelley, the court concluded GRF was a subordinate
economic organization of the Community, not the Indian Corporation, and
therefore shared the Community’s sovereign immunity. Id. at 381. It cited
evidence that the Community’s constitution and bylaws authorized it to
create subordinate organizations for economic purposes; GRF existed to
serve the Community and its members’ economic and employment
interests; and the Community’s ownership of GRF property and managerial
oversight made GRF “an integral part of the Community.” Id.
¶13 This Court next addressed subordinate economic entities in
Dixon. Dixon was injured off-reservation when a truck owned by Picopa
Construction Company (“Picopa”) rear-ended her car. Dixon, 160 Ariz. at
252. She sued Picopa, which claimed sovereign immunity due to its status
as a tribal corporation created by the Salt River Pima-Maricopa Indian
Community. Id. at 252–53. Contrasting the circumstances with those in
Shelley and S. Unique, the Court concluded Picopa was not a subordinate
economic organization of the tribe entitled to immunity. Id. at 256.
¶14 In reaching its decision, the Dixon Court cited several factors
that differentiated Picopa from FATCO and GRF. Id. at 256–57. Unlike the
latter entities, Picopa was incorporated, making it an “artificial individual,”
which the tribe had imbued with authority to act “to the same extent as
natural persons might or could do.” Id. at 258 (quoting Community
Ordinance No. SRO-85-84 ¶ C). Picopa’s corporate status “weigh[ed]
heavily” against characterizing it as a subordinate economic organization.
Id. Unlike the entities in Shelley and S. Unique, Picopa was managed by a
board of directors rather than the tribal government. Id. at 256. Picopa’s
charter relieved the tribe from any corporate liability, and general liability
insurance covered Picopa’s negligent acts, thereby insulating the tribe’s
assets from Picopa’s debts and evidencing the tribe’s expectation that
Picopa would be liable for torts. Id. at 256–57. The tribe formed Picopa for
“business purposes” but, unlike in Shelley and S. Unique, did not declare an
objective of promoting “general tribal or economic development.” Id. at
257. “Most importantly,” Picopa was not created to help the tribe carry out
its government functions. Id. “Picopa was simply a for-profit corporation
involved in construction projects.” Id.¶15 The Court also found that extending immunity to Picopa
would not further several federal policies underlying sovereign immunity.
See id. at 258–59. Extending immunity to Picopa was not necessary to
protect tribal assets due to the existence of the limited liability clause in the
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corporate charter and liability insurance. Id. at 258. Denying immunity to
Picopa would not hinder tribal cultural autonomy and self-determination
because Picopa was created for purely commercial reasons rather than to
develop tribal interests, and a private lawsuit based on an off-reservation
tort would not limit the tribe’s exercise of its powers. Id. at 258–59. Finally,
the Court found that denying immunity to Picopa would further the federal
government’s policy of promoting commercial dealings between Indian
tribes and non-Indians. Id. at 259 (“Non-Indians will undoubtedly think
long and hard before entering into business relationships with Indian
corporations that are immune from suit.”).
¶16 Sorting through Shelley, S. Unique, Dixon, and cases outside
Arizona, we identify and adopt six non-exclusive factors to examine in
deciding whether an entity is a subordinate economic organization of a
tribe, entitling it to share in the tribe’s sovereign immunity:
¶17 (1) The entity’s creation and business form. The court should
consider who created the entity, under what authority, and the entity’s
structural form, e.g., an unincorporated enterprise, a partnership with a
non-Indian entity, or a corporation. Creation by the section 16
governmental organization of the tribe pursuant to its constitution weighs
in favor of finding that the entity is a subordinate economic organization.
See Shelley, 107 Ariz. at 5–6; S. Unique, 138 Ariz. at 381; see also Miami Nation
Enters., 386 P.3d at 372 (stating that “whether the tribe initiated or simply
absorbed an operational commercial enterprise” is relevant). If the entity
was created by the tribe’s section 17 commercial corporation, which itself
waived immunity, the entity is less likely a subordinate economic
organization of the tribe. See S. Unique, 138 Ariz. at 383-84, 386. Also, if the
entity is a corporation, that fact “weighs heavily” against finding it is a
subordinate economic organization. See Dixon, 160 Ariz. at 258. This is so
because incorporation establishes the entity as “separate and distinct” from
the tribe, Shelley, 107 Ariz. at 5, may imply a waiver of immunity, see Dixon,
160 Ariz. at 258, and itself furthers a policy underlying sovereign immunity
by insulating the tribe’s assets from corporate liability, see id.
¶18 (2) The entity’s purpose. Pertinent here is whether the entity
exists solely as a profit-making venture that merely generates revenue for
the tribe or its members, or whether it also assists the tribe in carrying out
its governmental functions, such as promoting tribal or economic
development, preserving cultural autonomy, or funding governmental
services. See Dixon, 160 Ariz. at 257; Shelley, 107 Ariz. at 6; Miami Nation
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Enters., 386 P.3d at 372. If the entity’s purpose is solely to engage in
commercial activity, this factor weighs against immunity. See Dixon, 160
Ariz. at 257. But if the purpose is to further goals of tribal self-governance,
even if the entity also has a commercial purpose, this factor weighs in favor
of immunity. See id.; Shelley, 107 Ariz. at 6; S. Unique, 138 Ariz. at 381. We
agree with the California Supreme Court that a court should examine both
the entity’s declared purpose “and the degree to which the entity actually
serves that purpose” to determine whether “its activities [are] sufficiently
germane to tribal self-governance.” Miami Nation Enters., 386 P.3d at 372.
The more the entity actually serves the tribe in carrying out governmental
functions, the more likely the entity is a subordinate economic organization.
¶19 (3) The business relationship between the tribe and the entity.
Under this factor, a court examines the structure, management, and
ownership of the entity. This inquiry should illuminate the tribe’s
ownership interest and the amount of control exercised by it over the
entity’s affairs. “Control” does not require directing day-to-day operations
but addresses the tribe’s involvement in the direction and control of the
entity. See id. at 373 (citing Gavle v. Little Six, Inc., 555 N.W.2d 284, 295
(Minn. 1996)). “Evidence that the tribe actively directs or oversees the
operation of the entity weighs in favor of immunity; evidence that the tribe
is a passive owner, neglects its governance roles, or otherwise exercises
little or no control or oversight weighs against immunity.” Id.; see also
Dixon, 160 Ariz. at 256 (stating that unlike the circumstances in Shelley and
S. Unique, “Picopa has a board of directors, separate from the tribal
government, which exercises full managerial control over the corporation”).
¶20 A tribe’s shared ownership of an entity suggests it is not an
“arm of the tribe” entitled to shared immunity. See Miami Nation Enters.,
386 P.3d at 373 (agreeing “indirect ownership and control of the tribal
corporation weighs against a finding of immunity” (citation omitted)
(internal quotation marks omitted)). Conversely, a tribe’s ownership of
property used by the entity for its business pursuits weighs in favor of
finding that the entity is a subordinate economic organization. See Shelley,
107 Ariz. at 6; S. Unique, 138 Ariz. at 381.
¶21 The court should also determine whether the entity
represents the tribe in any capacity. See Shelley, 107 Ariz. at 6 (noting
FATCO’s board had “full authority to act for and on behalf of” the tribe in
all phases of FATCO’s operations); S. Unique, 138 Ariz. at 381 (stating GRF’s
board “represent[ed] the Community in all matters” (alterations accepted)).
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The more the entity represents the tribe’s interests, the more likely the entity
serves as an arm of the tribe.
¶22 (4) The tribe’s intent to share immunity with the entity. The
court should be less inclined to conclude that an entity shares a tribe’s
immunity if the tribe itself did not intend this result. The tribe’s intent is
reflected not only by declarations but by actions. Thus, for example, an
entity’s obligation to indemnify and hold the tribe harmless for the entity’s
tort liability, or the procurement of liability insurance protecting the tribe
and the entity from the entity’s negligence, evidences the tribe’s expectation
that the entity would be responsible for its torts. See Dixon, 160 Ariz. at 256–
57.
¶23 (5) The financial relationship between the entity and the tribe.
The court should determine whether the tribe’s assets are protected from
judgments entered against the entity. See id.; Miami Nation Enters., 386 P.3d
at 373. But even if tribal assets are not directly at risk, the court must
consider whether enforcement of any judgment against the entity would
“effectively strike a blow against the tribal treasury” due to the tribe’s
heavy dependence on entity revenues to fund governmental functions. See
Miami Nation Enters., 386 P.3d at 373. “If a significant percentage of the
entity’s revenue flows to the tribe, or if a judgment against the entity would
significantly affect the tribal treasury, this factor will weigh in favor of
immunity even if the entity’s liability is formally limited.” Id.
¶24 (6) Whether immunizing the entity furthers federal policies
underlying sovereign immunity. Although policies underlying sovereign
immunity are embedded within factors 1 through 5, the court should
nevertheless separately consider whether recognizing sovereign immunity
for the tribal entity would further these policies. See Dixon, 160 Ariz. at 258(“Tribal immunity should only apply when doing so furthers the federal
policies behind the immunity doctrine.”).
¶25 The factors we identify today largely align with those
identified by other courts. See, e.g., Breakthrough Mgmt. Grp., Inc. v.
Chukchansi Gold Casino & Resort, 629 F.3d 1173, 1181 (10th Cir. 2010); Miami
Nation Enters., 386 P.3d at 365. In considering them, the objective is to
determine whether the entity is “part of the tribe” and serves as the tribe’s
vehicle for conducting its affairs, thereby entitling it to share the tribe’s
immunity. See Shelley, 107 Ariz. at 7–8. In doing so, a court should consider
“both formal and functional considerations—in other words, not only the
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legal or organizational relationship between the tribe and the entity, but
also the practical operation of the entity in relation to the tribe.” Miami
Nation Enters., 386 P.3d at 365. “Arm-of-the-tribe immunity must not
become a doctrine of form over substance. The ultimate purpose of the
inquiry is to determine ‘whether the entity acts as an arm of the tribe so that
its activities are properly deemed to be those of the tribe.’” Id. at 375
(quoting Allen v. Gold Country Casino, 464 F.3d 1044, 1046 (9th Cir. 2006)).
Ordinarily, therefore, an entity must produce more than its plan of
organization, bylaws, and the like to prove its entitlement to sovereign
immunity. Evidence demonstrating the functional relationship between
the tribe and the entity should also be provided to demonstrate that the
entity is—in practice and on paper—an arm of the tribe.
¶26 After considering factors 1 through 6, the court should decide
whether they collectively weigh in favor of a finding that the entity is a
subordinate economic organization of the tribe. If the entity has met its
burden of showing they do, the entity is cloaked with sovereign immunity,
unless that protection has been waived or abrogated by Congress. If not,
the entity is not immune from suit.
II. Application to this case
¶27 On this record, we are unable to conclude that GCRC satisfied
its burden to prove it is a subordinate economic organization of the Tribe,
entitled to share in sovereign immunity. To prove it is an arm of the Tribe,
GCRC provided the superior court with its plan of organization, its bylaws,
the tribal constitution, the Tribe’s corporate charter issued under section 17
of the Wheeler-Howard Act, and amendments to these documents. On
paper, many attributes of the relationship between the Tribe and GCRC
support a conclusion the latter is a subordinate economic organization of
the former. For example, the Tribe’s constitution authorizes the tribal
council to “manage all tribal economic affairs and enterprises” and
“establish and regulate subordinate organizations for economic and other
purposes”; the council passed a resolution to adopt a plan of organization
and bylaws for GCRC; the plan of organization claims sovereign immunity
for GCRC, which it cannot waive without council permission; the Tribe
capitalized GCRC and is authorized to make additional capital investments
or loans; the Tribe is GCRC’s sole shareholder and cannot transfer or pledge
its stock; the council appoints GCRC’s board of directors and can suspend
or remove them for any reason; GCRC must make monthly reports to the
council; and the board must get the council’s consent before making several
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business decisions, including making expenditures greater than $50,000,
borrowing that amount, and selling “all or substantially all” of its assets.
¶28 Other evidence, however, suggests GCRC is not a
subordinate economic organization of the Tribe. For example, GCRC is a
tribal corporation; GCRC’s assets do not belong to the Tribe; although
GCRC “initially” intended to “creat[e] economic development
opportunities” for the Tribe, it was “organized for the purpose of
conducting all lawful affairs for which corporations may be organized”;
control and operation of GCRC is vested in a board of directors, which can
hire officers, make investment decisions, borrow funds, and enter in
contracts; GCRC may “merge, consolidate, reorganize, [and] recapitalize”
without tribal council participation if necessary to maintain its exemption
from federal tax; and the Tribe is prohibited from “interfer[ing] with or
giv[ing] orders or instructions to the officers or employees of GCRC”
regarding day-to-day operations.
¶29 The record does not contain evidence addressing several
significant functional attributes of the relationship between the Tribe and
GCRC. For example, we do not know whether GCRC’s revenues fund any
governmental functions of the Tribe or, if they do, the extent to which the
Tribe depends on GCRC revenues for these functions. The record does not
reflect whether GCRC’s business is confined to operating rafting trips or is
broader in scope. We also cannot discern how GCRC contributes to the
general tribal and economic development. Does it train Tribal members?
Employ them? We do not know. And nothing reflects the level of control
and oversight the Tribe actually exercises over GCRC as the plan of
operation authorizes the Tribe to do.
¶30 In sum, on this record, we are unable to conclude that GCRC
has carried its burden to show it is a subordinate economic organization of
the Tribe so that a denial of immunity would “appreciably impair” the
Tribe’s “economic development, cultural autonomy, or self-governance.”
See Miami Nation Enters., 386 P.3d at 376. Thus, based on this record, the
superior court did not abuse its discretion by refusing to dismiss GCRC.
GCRC may renew its request, with additional evidence to permit the court
to apply the factors identified here and make an informed decision
regarding whether GCRC is a subordinate economic organization of the
Tribe. In light of our decision, we need not address the Foxes’ additional
arguments supporting the superior court’s ruling.
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CONCLUSION
¶31 Based on the record here, GCRC did not prove it is entitled to
sovereign immunity. The superior court therefore did not err by denying
its motion to dismiss the Foxes’ complaint against it. We affirm the superior
court’s order.
BOLICK, J., concurring:
¶32 I concur fully in the Court’s decision but write separately to
emphasize an essential element in the analysis that is largely missing from
the United States Supreme Court precedents we must follow.
¶33 Plaintiff Sara Fox was grievously injured in a river-rafting
accident that occurred on state land. Under our state Constitution, she is
assured that the “right of action to recover damages shall never be
abrogated.” Ariz. Const. art. 18, § 6. But by the coincidental misfortune
that the river-rafting company whose services she procured through an
Arizona corporate intermediary is owned by an Indian tribe, that guarantee
may be eviscerated.
¶34 The analysis of whether a tribal enterprise is a “subordinate
economic organization” and therefore entitled to clothe itself in tribal
immunity is determined by reference to statutes enacted pursuant to article
1, section 8 of the Federal Constitution, which authorizes Congress to
“regulate commerce . . . with the Indian tribes.” But an analysis focusing
solely on what the federal government has authorized and what tribes are
doing pursuant to such authorization omits an important consideration: the
constitutional authority of the states, which (along with the people) retain
all powers not expressly delegated by the Constitution to the national
government nor forbidden by it to the states. See U.S. Const. amend. X.
¶35 This case implicates state interests of the highest order. In our
federal system, the states retain the police power to protect the health and
safety of their citizens. See, e.g., Simpson v. Miller, 241 Ariz. 341, 345 ¶ 8
(2017) (“In our federalist system of dual sovereignty, states retain certain
antecedent powers . . . .”); Indus. Comm’n v. Navajo Cty., 64 Ariz. 172, 180
(1946) (stating that “the police power is inalienable” (emphasis removed)).
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JUSTICE BOLICK, Concurring
The framers of the Arizona Constitution deemed the right to recover
damages for injuries so fundamental that they protected it not only in article
18, section 6, but in our Declaration of Rights as well. See Ariz. Const. art.
2, § 31 (“No law shall be enacted in this state limiting the amount of
damages to be recovered for causing the death or injury of any person . . . .
”). As the Arizona Constitution is “our basic charter[] of state
governance . . . ., we strive wherever possible to uphold [its] provisions.”
Miller, 241 Ariz. at 341 ¶ 8 (citation omitted).
¶36 As Justice Thomas has observed, “the Constitution does not
grant Congress power to override state law whenever that law happens to
be applied to Indians.” Adoptive Couple v. Baby Girl, 570 U.S. 637, 666 (2013)
(Thomas, J., concurring). Specifically, the text of the Indian Commerce
Clause “confirms that Congress may only regulate commercial
interactions—'commerce’—taking place with established Indian
communities—'tribes.’ That power is far from ‘plenary.’” Id. at 660.
¶37 It is one thing to recognize immunity for a tribe exercising its
sovereignty within its own borders or acting in its sovereign capacity in
dealings with other sovereign governments. It is quite another to accord
sovereign immunity when a tribe is engaged in wholly economic pursuits
outside its jurisdiction under the cloak of independent corporate identity.
To deny a citizen of a state recourse for injury under the laws of the state
under such circumstances is an affront to our federalist system of dual
sovereignty. “In this economic context, immunity can harm those who are
unaware that they are dealing with a tribe, who do not know of tribal
immunity, or who have no choice in the matter, as in the case of tort
victims.” Kiowa Tribe v. Mfg. Techs., Inc., 523 U.S. 751, 758 (1998); see also
Thomas P. McLish, Tribal Sovereign Immunity: Searching for Sensible Limits,
88 Colum. L. Rev. 173, 193 (1988) (“The current breadth with which the
doctrine of tribal immunity is applied is inconsistent with the policies that
underlie it, and inappropriately denies plaintiffs the ability to seek redress
in courts of law.”).
¶38 As four members of the Supreme Court have observed, “[t]he
problem repeats itself every time a tribe . . . harms a tort victim, breaches a
contract, or otherwise violates state laws, and tribal immunity bars the only
feasible legal remedy.” Michigan v. Bay Mills Indian Cmty., 572 U.S. 782, 824
(2014) (Thomas J., joined by Scalia, Ginsburg, & Alito, J.J., dissenting).
Given its displacement of legal protections that are central to the states’ role
in our constitutional system and its denial of relief to innocent victims of
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HWAL’BAY BA: J ENTERPRISES, INC. V. HON. JANTZEN/FOX
JUSTICE BOLICK, Concurring
wrongdoing, I hope the Supreme Court will reconsider the contours of
tribal immunity currently binding us. See id. at 814 (stating the expansion
of tribal immunity in Kiowa was “error” and “an affront to state
sovereignty”); Kiowa, 523 U.S. at 758 (“There are reasons to doubt the
wisdom of perpetuating the doctrine. . . . In our interdependent and mobile
society, . . . tribal immunity extends beyond what is needed to safeguard
tribal self-governance.”); Kiowa, 523 U.S. at 766 (Stevens, J., dissenting)
(“[T]he rule is unjust. It is especially so with respect to tort victims who
have no opportunity to negotiate for a waiver of sovereign immunity.”);
Puyallup Tribe, Inc. v. Dep’t. of Game, 433 U.S. 165, 178–79 (1977) (Blackmun,
J., concurring) (the doctrine of tribal sovereign immunity “may well merit
re-examination in an appropriate case”).
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