United States v. Santee Sioux Tribe of Nebraska

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 00-1399
___________
United States of America, *
*
Appellant, *
*
v. *
*
Santee Sioux Tribe of Nebraska, *
a Federally Recognized Indian *
Tribe; Arthur "Butch" Denny; Roger *
Trudell; Diane Lapointe; Kenneth * Appeals from the United States
Chapman; Earl Decory; Karen * District Court for the District
Red Owl; Stuart Redwing; Richard * of Nebraska.
D. Thomas; James White; James *
Hallum, *
*
Appellees. *
___________
Nos. 00-1542/00-1764
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United States of America, *
*
Appellee/Cross-Appellant, *
*
v. *
*
Santee Sioux Tribe of Nebraska, *
a Federally Recognized Indian Tribe, *
*
Appellant/Cross-Appellee. *
___________
Submitted: January 11, 2001
Filed: June 21, 2001
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Before BOWMAN, BEAM and MURPHY, Circuit Judges.
___________
BEAM, Circuit Judge.
These consolidated cases involve our latest journey through this long-existing
quagmire created by the parties. We affirm in part and reverse in part.
I. BACKGROUND
Pursuant to this court's decision in United States v. Santee Sioux Tribe of
Nebraska, 135 F.3d 558 (8th Cir. 1998) (Santee I),1 the district court issued an
injunction against the Santee Sioux Tribe ("the Tribe"), ordering it to close a tribal
casino operating class III gaming devices. After the Tribe failed to comply with the
injunction, the court held it in contempt and began assessing a fine for every day it
continued to operate the casino. On June 25, 1999, and November 12, 1999, the court
reduced the fines to judgments totaling $1,182,000. The federal government
(hereinafter "government") then initiated garnishment proceedings against tribal bank
accounts pursuant to the Federal Debt Collection Procedures Act ("the Act"), 28 U.S.C.
§§ 3001-3308. The district court found that twenty-two of the tribal accounts were
subject to garnishment. The government also unsuccessfully sought to have the court
hold members of the Tribal Council in contempt. The Tribe appeals the district court's
1
A full account of the underlying facts of this protracted dispute can be found
in this prior case.
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findings that fifteen of the accounts are subject to garnishment, and the government
cross-appeals the court's finding that one of the accounts, the Cedar Hill account, is
exempt. The government also appeals the court's refusal to hold individual members
of the Tribal Council in contempt.
II. DISCUSSION
The denial of a contempt order is reviewed for abuse of discretion. Chicago
Truck Drivers v. Brotherhood Labor Leasing, 207 F.3d 500, 504 (8th Cir. 2000).
Interpretation of a statute is reviewed de novo. United States v. McAllister, 225 F.3d
982, 986 (8th Cir. 2000). A district court's findings of fact are reviewed for clear error
and its conclusions of law are reviewed de novo. Milligan v. City of Red Oak, 230
F.3d 355, 359 (8th Cir. 2000).
A. Garnishment of Tribal Accounts
1. The Tribe's Appeal - Case No. 00-1542
The district court issued writs of garnishment against twenty-three tribal accounts
utilizing the Act.2 This legislation was enacted in 1990 to address the need for a
uniform procedure to collect over five billion dollars worth of non-tax related civil
debts. See Seth S. Katz, Federal Debt Collection Under the Federal Debt Collection
Procedures Act: The Preemption of State Real Estate Laws, 46 Emory L. J. 1697,
2
The Act is divided into four principal provisions: subchapter A (§§ 3001-3015)
contains definitions and general provisions; subchapter B (§§ 3101-3105) contains the
provisions for prejudgment remedies; subchapter C (§§ 3201-3206) contains the
provisions for postjudgment remedies; and subchapter D (§§ 3301-3308) contains
provisions for fraudulent transfers.
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1698-99 (1997). The federal government now enforces all non-tax related civil debts
under the Act. Id. at 1699, 1705.
When faced with these court orders, the Tribe claimed some specific exemptions
as permitted by the Act and also filed a motion to quash all of the writs. This was done
pursuant to 28 U.S.C. § 3202(d), a provision of the Act which contains procedures for
evaluating exemptions, quashing postjudgment garnishments and requesting a hearing.
After an evidentiary hearing, the court found that twenty-two out of twenty-three of the
accounts were lawfully seized, and the Tribe appeals the findings as to fifteen of these
twenty-two rulings. The government argues that the district court properly applied a
rebuttable presumption that accounts bearing the Tribe's federal tax identification
number belonged to the Tribe. We agree with this contention. Not only did the
accounts bear the Tribe's federal tax identification number but the individuals who
established each account acknowledged the accuracy of such designation and certified
under penalty of perjury that this was the proper identification number for the particular
account. Accordingly, we find that the district court did not err in applying a
presumption of tribal ownership.
Given this rebuttable presumption, the district court applied the burden-shifting
analysis set forth in 28 U.S.C. § 3014(b)(2) of the Act. That section states in pertinent
part that "[u]nless it is reasonably evident that the exemption applies, the debtor shall
bear the burden of persuasion." Id.
The Tribe argues that the district court should have instead applied the general
rule of presumptions found in Federal Rule of Evidence 301 because, while it did
request a hearing, it did not actually claim an exemption under section 3014.3 Instead,
3
Rule 301 provides: "In all civil actions and proceedings not otherwise provided
for by Act of Congress or by these rules, a presumption imposes on the party against
whom it is directed the burden of going forward with evidence to rebut or meet the
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it alleges that the accounts either were not owned or controlled by the Tribe or that it
lacked any substantial interest in the accounts. Since section 3014(b)(2) applies only
to debtors claiming exemptions, which the Tribe alleges it was not doing, the Tribe
contends that the burden of proof in section 3014 does not apply.
We first note that the Tribe did actually claim an exemption with regard to two
of the accounts. It claimed the money in one account was held in trust by the United
States for the benefit of an Indian tribe or individual Indian. The Tribe claimed the
money in a second account was received pursuant to the Mississippi Sioux Judgment
Funds Act. Thus, for these two accounts, the burden-shifting analysis in section 3014
clearly applies.
Next we turn to whether the Tribe also bore the burden of proof with regard to
the remaining accounts. We find that it did have the burden of proving that it did not
have a substantial interest in these deposits.4
presumption, but does not shift to such party the burden of proof in the sense of the risk
of nonpersuasion, which remains throughout the trial upon the party on whom it was
originally cast." Obviously the difference is important because under section
3014(b)(2), the burden of persuasion is on the Tribe, while under Rule 301, the Tribe
has the burden only of producing evidence in support of its position.
4
The government may only garnish property in which the debtor has a substantial
interest. 28 U.S.C. § 3205(a). Thus, the allegations of no substantial interest by the
Tribe are important under the statutory scheme. Section 3202(d) limits the issues that
may be raised in a motion to quash. It states, "[t]he issues at such hearing shall be
limited – (1) to the probable validity of any claim of exemption by the judgment debtor;
(2) to compliance with any statutory requirement for the issuance of the postjudgment
remedy granted." 28 U.S.C. § 3202(d) (emphasis added). The Tribe apparently
bottoms its motion to quash on an interplay between sections 3205(a) and 3202(d)(2).
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In general, the law places the burden of proof on the party asserting a contention
and seeking to benefit from this contention. Martinelli v. Bridgeport Roman Catholic
Diocesan Corp., 196 F.3d 409, 428 (2d Cir. 1999). Furthermore, when true facts
relating to a disputed issue lie peculiarly within the knowledge of one party, it is fair
to assign the burden of proof to that party. ITSI TV Prod., Inc. v. Agricultural Ass'ns,
3 F.3d 1289, 1292 (9th Cir. 1993). Here the Tribe seeks to benefit from the assertion
that it does not have a substantial interest in the subject accounts. The Tribe likewise
has within its possession the peculiar facts related to its claim. Thus, the burden of
proof is properly with the Tribe, especially given the policy established by Congress
in section 3014(b)(2).
With this determination made, we turn to the question of whether the Tribe met
its burden of proof on the disputed accounts. We agree with the district court that the
Tribe clearly failed to do so with regard to the fifteen accounts awarded to the
government. To rebut the presumption, the Tribe showed that none of the Tribal
Council members were listed as signatories on the accounts. As previously stated,
however, the signature cards certified that the accounts bore the correct identification
number and that number was the Tribe's tax identification number. Cf. In re Clary, 259
B.R. 453, 455-57 (Bankr. S.D. Ga. 2001) (evidence as a whole established that
corporation, and not corporate owner personally, was obligor on debt where contracts
and credit applications were signed utilizing corporate federal tax identification
number). The fact that the signature cards were signed by non-Council members does
not preclude the district court's finding. The Tribe did not submit evidence that Tribal
Council members were the only members of the Tribe with authority to open tribal
bank accounts and there was no evidence that a Tribal Council member must have
signature authority on all tribal accounts.5 Again, the Tribe bore the burden of
5
The Bylaws of the Santee Sioux Tribe state that the treasurer of the Tribal
Council "shall be the custodian of all funds in possession of the tribe from any source .
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presenting such evidence. Thus, each of these accounts bearing the Tribe's federal tax
identification number is included in the broad definition of property subject to
garnishment under the Act. 28 U.S.C. § 3002(12).
Finally, it is arguable that if the Tribe does not own or have a substantial interest
in these accounts, as it contends, it does not have standing to complain about the
garnishment of the accounts. See Warth v. Seldin, 422 U.S. 490, 499 (1975) ("plaintiff
generally must assert his own legal rights and interests, and cannot rest his claim to
relief on the legal rights or interests of third parties"); cf. United States v. 1998 BMW
"I" Convertible, 235 F.3d 397, 399 (8th Cir. 2000) (in forfeiture context claimant must
first show an ownership interest in the property); United States v. $515,060.42 in
United States Currency, 152 F.3d 491, 497 (6th Cir. 1998) (in governmental forfeiture
contest claimant must have colorable ownership, possessory, or security interest in
property to have Article III standing).
At oral argument the Tribe asserted that the Tribe, even without a substantial
interest, has standing to protect the Constitutional rights of tribal members who were
signatories to the accounts. Assuming the Tribe is attempting (for the first time at oral
argument) to assert parens patriae standing, this argument fails. The doctrine of parens
patriae allows a sovereign to bring an action on behalf of the interest of all of its
citizens. Louisiana v. Texas, 176 U.S. 1, 19 (1900). However, this doctrine is
reserved for actions which are asserted on behalf of all of the sovereign's citizens. See
United States v. Hooker Chemicals & Plastics Corp., 749 F.2d 968, 984-85 (2d Cir.
1984). The parens patriae doctrine cannot be used to confer standing on the Tribe to
assert the rights of a dozen or so members of the Tribe. See, e.g., Navajo Nation v.
Superior Court of State of Wash. for Yakima County, 47 F. Supp. 2d 1233, 1240 (E.D.
. . . He shall keep an accurate record of all such funds and shall disburse the same in
accordance with the vote of the tribal council . . . ." This provision does not alter our
conclusion. That the treasurer is the official "custodian" of tribal funds does not
preclude other members of the Tribe from being signatories on tribal bank accounts.
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Wash. 1999) (Tribe lacked standing under the doctrine of parens patriae to assert rights
of biological grandparents in action challenging adoption of grandchild because claims
were personal to grandparents and not those of Tribe as a whole); Kickapoo Traditional
Tribe of Texas v. Chacon, 46 F. Supp. 2d 644, 652 (W.D. Tex. 1999) (Tribe did not
have standing to assert a first amendment violation because the rights sought to be
asserted were primarily those of a small group of Tribe members and not those of the
Tribe as a whole).
In any event, the Tribe either did not meet its burden of proof on the accounts,
as the district court found, or did not have standing to object to the garnishment of
accounts in which it did not have substantial interest. We thus affirm the district court
in the Tribe's appeal.
2. The Government's Cross-Appeal - Case No. 00-1764
The government cross-appeals the district court's finding that the Tribe met its
burden of proving that it did not have a substantial interest in the funds in the Cedar Hill
account because they are held in escrow. In coming to this conclusion, the district
court relied on a purchase agreement submitted by the Tribe, which showed that the
Cedar Hill account contained earnest money for land the Tribe was attempting to
purchase. The purchase agreement provided that the funds would be held in the
account until the time of closing or transfer to an escrow account, and also provided
that either the seller or buyer could cancel the agreement any time after June 1, 2000.
Upon termination of the agreement, all earnest money deposits and interest would be
returned to the buyer.
We find the district court's quashal of the writ of garnishment for this account
should be reversed. First, even if the purchase agreement had the effect of divesting
the Tribe of an interest in the funds, the Tribe had the option of terminating the contract
and reclaiming the funds as of June 1, 2000. If the Tribe did not have a substantial
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interest in the funds at the time of the hearing, it does now. Also, under the Act, even
if the account was an escrow account, the account was garnishable. The Act defines
"property" as:
[A]ny present or future interest, whether legal or equitable, in real,
personal . . . or mixed property, tangible or intangible, vested or
contingent, wherever located and however held (including community
property and property held in trust (including spendthrift and pension
trusts)) .
28 U.S.C. § 3002(12).
Under Nebraska law, legal title remains in the grantor when funds are placed in
escrow. Cf. Mackiewicz v. J.J. & Assocs., 514 N.W.2d 613, 619-20 (Neb. 1994). See
also Knoll v. Butler, 675 A.2d 1308, 1312 (Pa. Commw. Ct. 1996) ("An ordinary
escrow agreement creates a fiduciary relationship between the agent and the transferor.
The depositor is usually the buyer who, nevertheless, retains title to the escrowed
money until the performance of certain conditions or happenings of specific events (the
escrow conditions).") Thus, if the funds were in escrow, the Tribe had legal title to the
funds and they were subject to garnishment. The Tribe also had a future interest in the
funds at the time of the hearing because after June 1, 2000, the Tribe could cancel the
agreement and reclaim the funds. Therefore, we find the Cedar Hill account was
subject to garnishment.
B. Contempt of Individual Tribal Council Members - Case No. 00-1399
The Council members argue that this court has no jurisdiction over this appeal
because even though labeled a "civil contempt" proceeding, the punitive nature of the
proposed fines rendered the underlying action criminal in nature, and the district court's
refusal to impose sanctions constitutes an unappealable acquittal of criminal contempt.
We disagree.
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The council members cite International Union, United Mine Workers v. Bagwell,
512 U.S. 821 (1994), as support for the proposition that the contempt proceedings
labeled "civil" in district court were really criminal in nature. Bagwell involved a labor
union's failure to comply with a complex state court order that prohibited the union
from engaging in several different kinds of specific conduct, including obstructing
ingress and egress to company facilities, threatening company employees, sabotaging
roads leading to company facilities, and picketing with excessive numbers of people
at designated sites. The state court had set up a prospective schedule of fines, and
required payments to the Commonwealth of Virginia only if it were shown the union
disobeyed the court's orders. The union was eventually fined in excess of $50 million
for the violations. The issue on appeal before the Supreme Court was whether the
contempt proceedings, labeled civil, were actually criminal due to the nature of the
penalties, thus entitling the union the procedural protections of a criminal trial,
including a right to trial by jury.
The Supreme Court held that because the fines were punitive, rather than
coercive or compensatory, the proceeding was actually criminal in nature. Id. at 834,
837. In reaching its decision, the Court reasoned that the fines were not compensatory
because there was no evidence concerning the losses sustained by the non-party
governments (the injured party was actually the private company, not the government),
nor did the trial court attempt to calibrate the fines in accordance with damage caused
by the union's contumacious activity. Id. at 834.
The Court further found that the need for extensive fact-finding to determine
whether an extremely specific and complex injunction had been violated made it
necessary to have impartial fact-finding subject to criminal procedures to protect the
due process rights of the alleged contemnor. Id. at 833-34. Without a neutral fact-
finder, the trial court was in the position of policing the union's "compliance with an
entire code of conduct that the court itself had imposed." Id. at 837.
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Here, unlike Bagwell, the injunction is not complex, negating the need for
extensive and impartial fact-finding. The injunction simply requires that the Tribe
cease class III gaming. Further, the fines are compensatory because here the
government is actually the aggrieved party. Thus, the action in district court was a civil
contempt action, and we have jurisdiction to hear the government's appeal.
Once it has been shown that the alleged contemnors violated a court order, the
contemnor bears the burden of showing that compliance is presently impossible.
Chicago Truck Drivers, 207 F.3d at 505. To show that compliance is presently
impossible, the defendant must demonstrate: "(1) that they were unable to comply,
explaining why categorically and in detail, (2) that their inability to comply was not
self-induced, and (3) that they made in good faith all reasonable efforts to comply." Id.
at 506 (internal quotes and citations omitted).
In this case, the district court held that it could not hold the Council members in
civil contempt because to do so would not result in the cessation of class III gaming
due to a tribal referendum. The district court held that the Council members would be
unable to comply with the court order because the referendum vote precluded the
Council from shutting down the class III gaming activities.
Because the tribal referendum lacks legal effect, we conclude that the Tribal
Council members cannot establish they were unable to comply. Cf. Missouri v.
Jenkins, 495 U.S. 33, 57-58 (1990) (holding that state legislature cannot hinder a
federal law from being implemented by passing a law that prohibits its implementation).
The Council members cannot hide behind a spurious tribal referendum because the
Tribe cannot pass such a referendum in contravention of federal law, including the
lawful orders of a federal court. This court decided in Santee I that the operation of the
casino violated the Indian Gaming Regulatory Act, 25 U.S.C. §§ 2701-2721. 135 F.3d
at 565. We thus ordered the district court to enjoin the Tribe's operation of class III
gaming devices. Id. at 566. The Tribe, through the purported referendum process, has
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disregarded federal law and orders of the district court and this court. The Tribe is
required to comply with the same rules that bind other political subdivisions in the
United States, and thus cannot flagrantly disregard federal law. Cf. Florida Paraplegic
Ass'n v. Miccosukee Tribe of Indians of Florida, 166 F.3d 1126, 1135 (11th Cir. 1999)
("The federal government is responsible for harmonizing the competing interests of
allowing Indian tribes, sovereign yet subordinate dependent nations, to maintain their
independence but, at the same time, requiring tribes to comply with the same rules that
bind all other political subdivisions of the United States."). The Tribe's noncompliance
with federal law cannot serve as justification for the Council's inability to comply with
the court order. Thus, as a matter of law, the Council members cannot make the
requisite showing that compliance is presently impossible. Chicago Truck Drivers, 207
F.3d at 505, 506.
Furthermore, the record shows that one day after the district court ordered the
Tribe to cease class III gaming, and prior to the referendum vote of the entire Tribe, the
Tribal Council convened a special meeting. The minutes of this meeting disclose that
the Council was made aware of the federal court order to cease class III gaming and
shut down the Ohiya Casino, yet the Council voted to deny closure. Thus, while the
Council members attempt to cloak their actions with the cape of the tribal referendum,
the record shows the Council had no intention of complying with the court order
regardless of the referendum. Accordingly, we find the members of the Tribal Council
in contempt of the district court orders directly affecting them.
Finally, Chairman Denny separately argues that he cannot be held in contempt
because he has no vote in the Council except in the case of a tie. While this case was
pending, Mr. Denny filed a motion to substitute parties because he is no longer
Chairman or even a member of the Tribal Council. Since we have determined that this
is a civil and not criminal contempt proceeding, and Council members can purge
themselves of contempt by complying with the order, we grant Mr. Denny's motion to
substitute Roger Trudell as Tribal Chairman and to dismiss Mr. Denny as a party to this
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action. Mr. Denny is no longer a member of the Tribal Council and therefore is no
longer able to purge himself of the contempt. Any actions Mr. Denny has taken in the
past which would have subjected him to a finding of contempt of court are no longer
relevant. See In re Kave, 760 F.2d 343, 351 (1st Cir. 1985) (in contrast to criminal
contempt, civil contempt is imposed to coerce present or future compliance with order
of the court).
III. CONCLUSION
For the foregoing reasons, the judgment of the district court is affirmed in case
no. 00-1542 – the Tribe's appeal regarding the garnishment of accounts; reversed in
case no. 00-1764 – the government's cross-appeal regarding the Cedar Hill account;
and reversed in case no. 00-1399 – the government's appeal concerning the individual
liability of Tribal Council members. These cases are remanded to the district court for
further proceedings consistent with this opinion.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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