Duanna Knighton v. Cedarville Rancheria of Npi

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DUANNA KNIGHTON, No. 17-15515
Plaintiff-Appellant,
D.C. No.
v. 2:16-cv-02438-
WHO
CEDARVILLE RANCHERIA OF
NORTHERN PAIUTE INDIANS;
CEDARVILLE RANCHERIA TRIBAL ORDER AND
COURT; PATRICIA R. LENZI, in her OPINION
capacity as Chief Judge of the
Cedarville Rancheria Tribal Court,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
William Horsley Orrick, District Judge, Presiding
Argued and Submitted November 16, 2018
San Francisco, California
Filed April 24, 2019
Before: A. Wallace Tashima and Milan D. Smith, Jr.,
Circuit Judges, and Lawrence L. Piersol, * District Judge.
Opinion by Judge Piersol
*
The Honorable Lawrence L. Piersol, United States District Judge
for the District of South Dakota, sitting by designation.
2 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
SUMMARY **
Tribal Jurisdiction
The panel filed (1) an order granting a petition for panel
rehearing and withdrawing its opinion filed March 13, 2019;
and (2) a superseding opinion affirming the district court’s
dismissal of an action challenging a tribe’s subject matter
jurisdiction over tort claims brought by the tribe against a
nonmember employee.
The tort claims arose from conduct committed by the
nonmember on tribal lands during the scope of her
employment. At issue was whether the tribal court had
jurisdiction to adjudicate tribal claims against its
nonmember employee, where the tribe’s personnel policies
and procedures manual regulated the nonmember’s conduct
at issue and provided that the tribal council would address
violations by the nonmember during the course of her
employment, and the tribal court and tribal judicial code
were established and enacted after the nonmember left her
employment with the tribe.
The panel held that a tribe’s regulatory power over
nonmembers on tribal land derives both from the tribe’s
inherent sovereign power to exclude nonmembers from
tribal land and from the tribe’s inherent sovereign power to
protect self-government and control internal relations.
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 3
The panel held that the tribe had authority to regulate the
nonmember employee’s conduct at issue pursuant to its
sovereign exclusionary power. Alternatively, the tribe had
regulatory authority under both Montana exceptions, which
allow a tribe (1) to regulate the activities of nonmembers
who enter consensual relationships with the tribe or its
members and (2) to exercise civil authority over the conduct
of nonmembers on fee lands within its reservation when that
conduct threatens or directly affects the political integrity,
the economic security, or the health or welfare of the tribe.
The panel concluded that the tribe’s personnel manual
regulated the employee’s conduct, and the fact that the tribe
later sought to adjudicate its claims in tribal court did not
undermine the tribal court’s jurisdiction. Given the
existence of regulatory authority, the sovereign interests at
stake, and the congressional interest in promoting self-
government, the tribal court had jurisdiction over the tribe’s
tort claims.
COUNSEL
Patrick L. Deedon (argued), Maire & Deedon, Redding,
California, for Plaintiff-Appellant.
Jack Duran, Jr., Esq. (argued), Duran Law Office, Roseville,
California, for Defendants-Appellees.
4 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
ORDER
Plaintiff-Appellant’s petition for panel rehearing is
GRANTED. The opinion filed March 13, 2019, and
reported at 918 F.3d 660, is hereby withdrawn. A
superseding opinion will be filed concurrently with this
order.
OPINION
PIERSOL, Senior District Judge:
This case concerns the sources and scope of an Indian
tribe’s jurisdiction over tort claims brought by the tribe
against a nonmember employed by the tribe. The tort claims
arose from conduct committed by the nonmember on tribal
lands during the scope of her employment. The question
presented is whether the tribal court has jurisdiction to
adjudicate tribal claims against its nonmember employee,
where the tribe’s personnel policies and procedures manual
regulated the nonmember’s conduct at issue and provided
that the tribal council would address violations by the
nonmember during the course of her employment, and the
tribal court and tribal judicial code were established and
enacted after the nonmember left her employment with the
tribe.
We previously held that a tribe’s inherent sovereign
power to exclude nonmembers from tribal land is an
independent source of regulatory power over nonmember
conduct on tribal land. See Water Wheel Camp Recreational
Area, Inc. v. LaRance, 642 F.3d 802, 814 (9th Cir. 2011) (per
curiam) (stating that where the nonmember activity occurred
on tribal land, and when there are no competing state
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 5
interests at play, “the tribe’s status as landowner is enough
to support regulatory jurisdiction without considering
Montana [v. United States, 450 U.S. 544 (1981)]”). Today
we also observe that a tribe’s regulatory power over
nonmembers on tribal land does not solely derive from an
Indian tribe’s exclusionary power, but also derives
separately from its inherent sovereign power to protect self-
government and control internal relations. See Montana,
450 U.S. at 564 (stating that Indian tribes retain their
inherent sovereign power to protect tribal self-government
and to control internal relations); see also Merrion v.
Jicarilla Apache Tribe, 455 U.S. 130, 144–45 (1982)
(holding that the tribe’s authority to tax nonmember mining
and drilling on tribal land derived from its inherent power to
govern and pay for the costs of self-government and stating
that such regulations were also within the tribe’s inherent
power to condition the continued presence of nonmembers
on tribal land).
Accordingly, we now hold that under the circumstances
presented here, the tribe has authority to regulate the
nonmember employee’s conduct at issue pursuant to its
inherent power to exclude nonmembers from tribal lands.
We also hold, in the alternative, that the tribe has regulatory
authority over the nonmember employee’s conduct under
both Montana exceptions. Given the existence of regulatory
authority, the sovereign interests at stake, and the
congressional interest in promoting tribal self-government,
we conclude that the tribal court has jurisdiction over the
tribe’s claims in this case.
6 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
FACTUAL AND PROCEDURAL BACKGROUND
I. Factual Background
The facts as presented and analyzed here are based on
the allegations included in the original complaint filed in
tribal court, and not upon the conclusions of a fact finder.
A. The Cedarville Rancheria Tribe
The Cedarville Rancheria of Northern Paiute Indians
(“the Tribe”) is a federally recognized Indian tribe that has
approximately twelve voting members and operates a
17-acre Rancheria in Cedarville, California (“the
Rancheria”). The Rancheria is held in trust for the Tribe by
the United States government. During the latter part of
events at issue in this case, the Tribe’s administrative offices
were relocated from the Rancheria to land held in fee 1 by the
Tribe in Alturas, California.
The Tribe’s governing body is the Community Council,
which is composed of all qualified voters of the Rancheria
who are 18 years of age or older. Every three years, the
Community Council elects three of its members to serve on
the Executive Committee—the Tribal Chairperson, Vice
Chairperson, and Secretary. The Executive Committee
enforces the Community Council’s ordinances and other
enactments and represents the Tribe in negotiations with
tribal, federal, state, and local governments.
1
Pending with the Bureau of Indian Affairs is a petition by the Tribe
to place the property on which the Tribe’s administrative offices are now
located in trust with the United States government.
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 7
B. Knighton’s Employment with the Tribe
Duanna Knighton (“Knighton”) was employed by the
Tribe from July 1996 until she resigned in March 2013.
Knighton is not a member of the Tribe and had never resided
on or owned land within the Rancheria. At the time of her
resignation, Knighton’s position was that of Tribal
Administrator. As Tribal Administrator, she oversaw the
day-to-day management of the Rancheria, its personnel, and
many aspects of its finances.
During Knighton’s employment, the Tribe regulated its
employees pursuant to the Cedarville Rancheria Personnel
Policies and Procedures Manual (“the Personnel Manual”).
The Personnel Manual regulated employee conduct
including, but not limited to: misfeasance and malfeasance
in the performance of duty, incompetency in the
performance of job duties, theft, carelessness or negligence
with the monies or property of the Rancheria, inducement of
an employee to act in violation of Rancheria regulations, and
violation of personnel rules. Disciplinary actions for an
employee’s breach of rules and standards of conduct in the
course of employment specified in the Personnel Manual
included a verbal warning, written reprimand, suspension
without pay, demotion, and involuntary termination.
The Personnel Manual provided that where the Tribal
Administrator was the subject of disciplinary action, the
Community Council directly oversaw the disciplinary
process.
C. Knighton’s Employment with RISE
From 2009 until at least 2016, in addition to her position
as Tribal Administrator, Knighton was also serving as an
employee or officer of Resources for Student Education
8 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
(“RISE”), a California nonprofit, that provides education
services and programs to Indian children. RISE is not a
tribally created or licensed business entity, and it receives
the majority of its funding from state and federal grants and
private donations.
D. The Tribe’s Purchase of RISE Property
In mid-2009, Knighton, acting in her capacity as Tribal
Administrator, negotiated the Tribe’s purchase from RISE of
a building in Alturas, California, where the Tribe’s
administrative offices are now located. During this time,
Knighton was also an employee or agent of RISE.
Knighton initially recommended that the Tribe purchase
the building for $350,000, allegedly representing that such a
price was below market value even though she had not
received a professional appraisal of the property. The Tribe
later discovered that the $350,000 purchase price
recommended by Knighton was $200,000 above market
value. Knighton also represented to the Tribe that it could
pay off its building loan within five years after the purchase
and that RISE would pay rent to the Tribe for its occupancy
until the note on the building was paid off.
The Tribe asserts that at no time during the purchase
negotiations did Knighton disclose she had a conflict of
interest representing both RISE and the Tribe in the sale, that
RISE was close to insolvency, or that she had an agreement
with RISE to split the proceeds of the building sale. The
parties settled on a purchase price of $300,000. Within
twelve months of the sale, RISE moved its business
operations out of the building.
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 9
E. Knighton’s Resignation
Before Knighton resigned in March 2013 as Tribal
Administrator, she allegedly cashed out $29,925 in vacation
and sick pay in violation of the Tribe’s policies and
procedures. The Tribe issued a check in the amount of
$29,925, payable to RISE on Knighton’s behalf. The Tribal
Vice Chairman approved Knighton’s request to cash out
based on her representation that her request had been
approved by the Tribal Chairperson, when in fact, the Tribal
Chairperson had denied Knighton’s request.
When Knighton resigned in March 2013, she took with
her all files, including files belonging to the Tribe, room
furnishings, and a computer, representing to the Tribe that
the property removed belonged to RISE.
In late 2013, the Tribe wrote a letter to RISE demanding
the return of the $29,925 and any and all tribal property,
including the computer. Both RISE and Knighton refused
through their counsel to return the funds or any of the
property.
F. Creation of Constitution, Tribal Judicial Code,
and Tribal Court
In February 2011, while Knighton was still employed by
the Tribe, the Tribe’s voting membership adopted the
Constitution and Bylaws of the Cedarville Rancheria, which
was approved by the Regional Director of the Bureau of
Indian Affairs. Article II of the Tribe’s Constitution
provides that the “jurisdiction of [the Tribe] shall extend to
the land now within the confines of the [] Rancheria and to
such other lands as may thereafter be added thereto.”
10 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
In December 2013, nine months after Knighton’s
resignation, the Tribe enacted the Cedarville Rancheria
Judicial Code (“the Tribal Judicial Code”) and established
the Cedarville Rancheria Tribal Court, which consists of a
tribal court (“the Tribal Court”) and a tribal court of appeals
(“the Tribal Court of Appeals”). All judges must be lawyers
experienced in the practice of tribal and federal Indian law
and licensed to practice in the highest court of any state.
Judges cannot be the Tribal Administrator, Assistant Clerks,
or members of the Executive Committee. The Tribal
Judicial Code provides that the Tribal Court and Tribal Court
of Appeals have jurisdiction over all civil causes of action
that arise within the boundaries of the Rancheria. Pursuant
to the Tribal Judicial Code, the Tribal Court has the power
to issue orders and judgments and to award limited money
damages.
G. The Tribe’s Audit Findings
In early 2014, after Knighton resigned, the Tribe
conducted a forensic accounting of the Tribe’s financial
position. The Tribe alleges that the forensic accounting
came about after the former Tribal Chairperson shot and
killed four tribal members at an Executive Committee
meeting on February 20, 2014. The slain Tribal Chairman
was a vocal critic of Knighton’s performance. He was
among those killed by his sister. During this accounting, the
Tribe reviewed its annual audit reports dating back to 2005
and found that the reports detailed several material weakness
findings by the auditor. The auditor’s findings noted major
deficiencies in the accounting of the Tribe’s finances, which
Knighton oversaw, and noted that the Tribe had not adopted
a policy regarding the investment of tribal funds. The Tribe
also discovered that in 2008, an annual audit of the Tribe’s
finances showed that $3.07 million of the Tribe’s money had
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 11
been invested by Knighton in high-risk investments, which
had declined in value by more than $1.2 million by the end
of 2008. The Tribe also discovered that tribal funds
belonging to the Tribe’s children had been co-mingled with
funds invested on behalf of adults, resulting in improper
taxation.
The Tribe asserts that the annual audit reports, and the
material weakness findings and investment losses detailed
therein, had not been provided by Knighton to the Tribe and
were only discovered by the Tribe after Knighton’s
resignation.
II. Procedural Background
The Tribe filed a complaint in the Tribal Court against
Knighton, RISE, and Oppenheimer Funds, Inc. 2 The
complaint included claims for fraud and deceit, recovery of
unauthorized and excessive pension payments, breach of
fiduciary duty, aiding and abetting breach of fiduciary duty,
and unjust enrichment, common count-account stated, and
common count-money had and received. In support of its
claims, the Tribe alleged that Knighton improperly
manipulated the Tribe’s policies and procedures to provide
her salary and fringe benefits, including a pension in excess
of what would normally be paid to a Tribal Administrator for
a like-sized tribe. The Tribe also alleged that Knighton
invested its money in high-risk investments without the
appropriate authority, and attempted to enter financial
agreements without appropriate authorization or waivers of
tribal sovereign immunity.
2
RISE and Oppenheimer Funds, Inc. are no longer parties in this
lawsuit.
12 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
Knighton responded by filing a motion to dismiss,
claiming, in relevant part, that the Tribal Court lacked
subject matter jurisdiction under Montana v. United States.
The Tribal Court denied Knighton’s motion to dismiss,
finding that it had jurisdiction over the Tribe’s claims against
Knighton under both Montana exceptions because Knighton
entered into a consensual relationship with the Tribe, by
virtue of her employment with the Tribe, and because
Knighton’s conduct threatened or had a direct effect on the
political integrity, economic security, and health and welfare
of the Tribe. The Tribal Court’s decision was affirmed by
the Tribal Court of Appeals, but the case was remanded to
the Tribal Court to determine whether RISE was an
indispensable party to the suit, following a finding that the
issue had not been raised in the Tribal Court.
On remand, pursuant to a stipulation between the parties,
the Tribal Court stayed the case to allow Knighton to contest
in federal district court the Tribal Court’s jurisdiction over
the Tribe’s asserted claims. As a result of the stay, there is
no Tribal Court exhaustion issue in this case.
Knighton filed a lawsuit in federal district court seeking,
among other things, a declaratory judgment that the Tribal
Court lacks subject matter jurisdiction over the Tribe’s
claims against Knighton under both Montana exceptions,
and a permanent injunction against further proceedings in
the Tribal Court. The defendants moved to dismiss
Knighton’s complaint on the basis that the Tribal Court’s
jurisdiction over the Tribe’s claims was proper under both
Montana exceptions.
The district court ruled that the Tribal Court has subject
matter jurisdiction over the Tribe’s claims, and granted
defendants’ motion to dismiss. The district court declined to
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 13
apply Montana in its jurisdictional analysis based on its
finding that Knighton’s alleged conduct occurred either on
tribal land within the Rancheria’s borders or was closely
related to tribal land. The district court stated that under
Water Wheel, the Montana framework did not apply to
jurisdictional issues involving nonmember conduct on tribal
land. The district court concluded that the Tribe had
authority to regulate Knighton’s conduct because
“Knighton’s employment activities directly affected the
Tribe’s inherent powers to protect the welfare of its members
and preserve the integrity of its government” and because
“her conduct threatened the Tribe’s very economic
survival,” and held that the Tribal Court had jurisdiction to
adjudicate the Tribe’s claims.
Knighton appealed.
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction under 28 U.S.C. § 1291. The
question of tribal court jurisdiction is a question of federal
law, which we review de novo, with factual findings
reviewed for clear error. Smith v. Salish Kootenai Coll.,
434 F.3d 1127, 1130 (9th Cir. 2006) (en banc).
ANALYSIS
“To exercise its inherent civil authority over a defendant,
a tribal court must have both subject matter jurisdiction—
consisting of regulatory and adjudicative jurisdiction—and
personal jurisdiction.” Water Wheel, 642 F.3d at 809. At
issue in this case is whether the Tribal Court has subject
matter jurisdiction over the Tribe’s claims against Knighton.
14 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
I. Regulatory Jurisdiction
A. Legal Precedent and This Case
“The sovereignty that the Indian tribes retain is of a
unique and limited character. It exists only at the sufferance
of Congress and is subject to complete defeasance. But until
Congress acts, the tribes retain their existing sovereign
powers.” United States v. Wheeler, 435 U.S. 313, 323
(1978). “Indian tribes still possess those aspects of
sovereignty not withdrawn by treaty or statute, or by
implication as a necessary result of their dependent status.”
Id. In National Farmers Union Insurance Cos. v. Crow
Tribe of Indians, the Court recognized that “[t]he tribes also
retain some of the inherent powers of the self-governing
political communities that were formed long before
Europeans first settled in North America.” 471 U.S. 845,
851 (1985) (citing White Mountain Apache Tribe v. Bracker,
448 U.S. 136, 142 (1980); Santa Clara Pueblo v. Martinez,
436 U.S. 49 55–56 (1978)). The Court went on to say that
under 28 U.S.C. § 1331, a federal court may determine
“whether a tribal court has exceeded the lawful limits of its
jurisdiction.” Id. at 853. Thus, the outer boundaries of tribal
court jurisdiction are a matter of federal common law.
We have noted that the Court has long recognized that as
part of their residual sovereignty, tribes retain the inherent
power to exclude nonmembers from tribal lands. See Water
Wheel, 642 F.3d at 808; see also New Mexico v. Mescalero
Apache Tribe, 462 U.S. 324, 333 (1983) (“A tribe’s power
to exclude nonmembers entirely or to condition their
presence on [tribal land] is [] well established.”). “From a
tribe’s inherent sovereign powers flow lesser powers,
including the power to regulate [nonmembers] on tribal
land.” Water Wheel, 642 F.3d at 808–09 (citing South
Dakota v. Bourland, 508 U.S. 679, 689 (1993)).
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 15
The Court has made clear, however, “that once tribal
land is converted into fee simple [land], the tribe loses
plenary jurisdiction over it . . . . As a general rule, then ‘the
tribe has no authority itself, by way of tribal ordinance or
actions in the tribal courts, to regulate the use of fee land.’”
Plains Commerce Bank v. Long Family Land & Cattle Co.,
554 U.S. 316, 328–29 (2008) (quoting Brendale v.
Confederated Tribes & Bands of Yakima Indian Nation,
492 U.S. 408, 430 (1989) (plurality opinion)). In Montana
v. United States, the Court recognized two exceptions to this
general rule. First, “[a] tribe may regulate, through taxation,
licensing, or other means, the activities of nonmembers who
enter consensual relationships with the tribe or its members,
through commercial dealing, contracts, leases, or other
arrangements.” Montana, 450 U.S. at 565. Second, a tribe
may exercise civil authority over the conduct of
nonmembers on fee lands within its reservation when “that
conduct threatens or has some direct effect on the political
integrity, the economic security, or the health or welfare of
the tribe.” Id. at 566.
“Since deciding Montana, the Supreme Court has
applied those exceptions almost exclusively to questions of
jurisdiction arising on [non-tribal] land.” Water Wheel,
642 F.3d at 809. The exception is Nevada v. Hicks, 533 U.S.
353 (2001). Water Wheel, 642 F.3d at 809. In Hicks, the
Court addressed a tribal court’s jurisdiction over claims
against state officers arising from the execution of a search
warrant on tribal land for alleged violations of state poaching
laws—specifically, the killing of bighorn sheep off the
reservation. 533 U.S. at 356–57. Both the state court and
then the tribal court issued search warrants. Id. at 356. The
Court stated that although ownership status of the land “may
sometimes be a dispositive factor” in determining a tribe’s
authority to regulate nonmember activity on tribal land, the
16 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
tribe’s power to exclude nonmembers from tribal land was
“not alone enough to support” the tribe’s regulatory
jurisdiction over the state officers’ activities when the state
had a competing interest in executing a warrant for an off-
reservation crime. Id. at 360. The Court applied Montana
and concluded that “tribal authority to regulate state officers
in executing process related to the violation, off reservation,
of state laws is not essential to tribal self-government or
internal relations” while “[t]he State’s interest in execution
of process is considerable.” Id. at 364.
Although some jurisdictions have interpreted Hicks as
eliminating the right-to-exclude framework as an
independent source of regulatory power over nonmember
conduct on tribal land, we have declined to do so. In Water
Wheel, we observed that Hicks “expressly limited its holding
to ‘the question of tribal-court jurisdiction over state officers
enforcing state law.’” Water Wheel, 642 F.3d at 813
(quoting Hicks, 533 U.S. at 358 n.2). Indeed, the Hicks
Court specifically “le[ft] open the question of tribal-court
jurisdiction over nonmember defendants in general.” Hicks,
533 U.S. at 358 n.2. In Water Wheel, we held that a “tribe’s
status as landowner is enough to support regulatory
jurisdiction” except “when the specific concerns at issue [in
Hicks] exist.” 642 F.3d at 813. “Doing otherwise would
impermissibly broaden Montana’s scope beyond what any
precedent requires and restrain tribal sovereign authority
despite Congress’s clearly stated federal interest in
promoting tribal self-government.” Id. at 813.
In Hicks, the defendants were state officers enforcing a
state-court-issued search warrant, so there was a significant
state interest at stake. By contrast, the present case involves
a private, consensual employment relationship between
Knighton and the Tribe, which occurred primarily on tribal
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 17
land. There are no significant competing state interests, as
in Hicks. Accordingly, our Water Wheel precedent compels
the conclusion that the Tribe possesses regulatory
jurisdiction over its claims against Knighton.
Since Hicks’s limited holding, the Court in Plains
Commerce Bank held that a tribal court did not have
jurisdiction to adjudicate a discrimination claim concerning
a non-Indian defendant’s sale of fee land. Plains Commerce
Bank, 554 U.S. at 323, 340–41. The land in question was
sold as part of the 1908 Allotment Act and was owned by a
non-Indian party for at least 50 years. Id. at 331, 341. The
Court found that the discrimination law that the plaintiffs
were attempting to enforce operated as a restraint on
alienation and had the effect of regulating the substantive
terms on which the non-Indian bank was able to offer its fee
land for sale. Id. at 331. The Court stated that while
“Montana and its progeny permit tribal regulation of
nonmember conduct inside the reservation that implicates
the tribe’s sovereign interests,” that case “does not permit
Indian tribes to regulate the sale of non-Indian fee land,” as
neither of the Montana exceptions applies. Id. at 332. By
contrast, in the present case the nonmember defendant while
on tribal land allegedly used her position as Tribal
Administrator to violate the terms of her employment in a
wide variety of ways that were significantly detrimental to
the management and financial security of the Tribe.
B. Appellant’s Arguments
Knighton argues that treating ownership status of the
land as a dispositive factor in upholding a tribe’s power to
regulate nonmember conduct on tribal land (unless, as in
Hicks, there are significant state interests present) is contrary
to our prior rulings in McDonald v. Means, 309 F.3d 530
(9th Cir. 2002), and Smith v. Salish Kootenai College. We
18 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
disagree. In McDonald, we specifically recognized that a
tribe’s jurisdiction over civil claims against nonmembers
arising on tribal land is limited under Hicks only in cases
where significant state interests are present. See 309 F.3d
at 540. And in Window Rock Unified School District v.
Reeves, 861 F.3d 894, 902 n.9 (9th Cir. 2017), we concluded
that Smith did not limit a tribe’s jurisdiction over civil claims
against nonmembers bearing a direct connection to tribal
land. We concluded that Smith was distinguishable because
it involved a nonmember plaintiff, as opposed to a
nonmember defendant, who had entered into a consensual
relationship with the tribe by filing his action in tribal court.
Id.
Knighton’s argument that a tribe’s regulatory power over
nonmember conduct on tribal land is limited to conduct that
directly interferes with a tribe’s inherent powers to exclude
and manage its own lands is also unavailing. In Window
Rock, we concluded that the tribal court’s jurisdiction over
employment-related claims that did not involve access to
tribal land was plausible; accordingly, we held that the
nonmember defendants were required to exhaust their tribal
court remedies before proceeding in federal court. Id. at 896,
906. Moreover, limiting a tribe’s regulatory power over
nonmember conduct to that which directly interferes with a
tribe’s inherent powers to exclude and manage its own lands,
as Knighton suggests, would restrict tribal sovereignty
absent explicit authorization from Congress—an approach
we specifically rejected in Water Wheel. See 642 F.3d at 812
(stating that the tribe’s right to exclude nonmembers from
tribal land includes the power to regulate them “unless
Congress has said otherwise, or unless the Supreme Court
has recognized that such power conflicts with federal
interests promoting tribal self government”).
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 19
Knighton also argues that under the facts of this case,
Water Wheel’s right-to-exclude framework is inapplicable
because some of her alleged misconduct occurred off tribal
land, after the tribal administrative offices were relocated to
fee land owned by the Tribe. Although the Tribe’s
complaint does not allege precisely where the conduct at
issue occurred, most of the claims alleged against Knighton
involve conduct that took place on tribal land, before the
Tribe’s administrative offices were moved in mid-2009 to
the RISE building in Alturas, California. Moreover, the facts
of this case are unique in that any claims that may have
arisen outside tribal land are based on alleged misconduct
and misrepresentations made by Knighton on tribal land.
See Smith, 434 F.3d at 1135 (stating that jurisdictional
inquiry is not limited to deciding precisely when and where
the claim arose, but whether it bears some direct connection
to tribal lands). For example, the $29,925 overpayment for
unused vacation and sick leave that the Tribe seeks to
recover stems from misrepresentations that Knighton
allegedly made throughout the course of her employment,
before the Tribe’s administrative offices relocated. In
addition, the relocation of the Tribe’s administrative offices
from tribal land to the RISE building on tribal fee land was
allegedly due to misrepresentations by Knighton.
Knighton further argues that even if the Tribe had the
power to regulate her conduct on tribal land during the
course of her employment under Water Wheel’s right-to-
exclude framework, the Tribe’s authority is limited to the
regulations that were in place during her employment—
which is to say, those provided for in the Personnel Manual.
Knighton contends that the Tribe is attempting to impose
new regulations on her through tort law after she left her
employment with the Tribe.
20 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
A tribe’s power to exclude nonmembers from tribal lands
permits a tribe to condition a nonmember’s entry or
continued presence on tribal land, see Merrion, 455 U.S. at
144–45, but this inherent power does not permit the Tribe to
impose new regulations upon Knighton’s conduct
retroactively when she is no longer present on tribal land.
However, we agree with the district court that Knighton’s
alleged conduct violated the Tribe’s regulations that were in
place at the time of her employment. The Personnel Manual
regulated employee conduct including, but not limited to,
misfeasance or malfeasance in the performance of duty,
incompetency in the performance of job duties, theft,
carelessness or negligence with the monies or property of the
Rancheria, inducement of an employee to act in violation of
Rancheria regulations, and violation of personnel rules—all
conduct that forms the basis of the Tribe’s claims against
Knighton.
C. Sources of Authority
In Water Wheel, we concluded that a tribe’s inherent
sovereign power to exclude nonmembers from tribal land
provides an independent basis upon which a tribe may
regulate the conduct of nonmembers on tribal land. But, a
tribe’s power to exclude is not the only source of its
regulatory authority over nonmembers on tribal land. See
Brendale, 492 U.S. at 425 (“An Indian tribe’s [] power to
exclude nonmembers of the tribe from its lands is not the
only source of Indian regulatory authority.”). “[T]ribes have
inherent sovereignty independent of that authority arising
from their power to exclude.” Id. (citing Merrion, 455 U.S.
at 141); see also Babbitt Ford, Inc. v. Navajo Indian Tribe,
710 F.2d 587, 592 (9th Cir. 1983) (“The power to exercise
tribal civil authority over [nonmembers] derives not only
from the tribe’s inherent powers necessary to self-
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 21
government and territorial management, but also from the
power to exclude nonmembers from tribal land.” (citing
Merrion, 455 U.S. at 141–44)).
In addition to the power to exclude, we have the
Montana Court’s acknowledgment that Indian tribes retain
their inherent sovereign power to protect tribal self-
government and to control internal relations. 450 U.S.
at 564. “[I]n accordance with that right tribes ‘may regulate
nonmember behavior that implicates [these sovereign
interests].’” Attorney’s Process & Investigation Servs., Inc.
v. Sac & Fox Tribe of Miss. in Iowa, 609 F.3d 927, 936
(8th Cir. 2010) (quoting Plains Commerce Bank, 554 U.S. at
335).
Subsequent to Montana, in Merrion, the Court affirmed
that Indian tribes have inherent sovereign power to regulate
nonmember conduct on tribal land independent of that
authority arising from their power to exclude. Merrion,
455 U.S. at 144. The Court in Merrion concluded that a
tribe’s power to tax nonmember mining and drilling on tribal
land derived from its inherent “power to govern and to pay
for the costs of self-government,” and concluded that such
regulatory authority was also within the tribe’s inherent
power to condition the continued presence of nonmembers
on tribal land. Id. at 144–45. These varied sources of tribal
regulatory power over nonmember conduct on the
reservation were affirmed by the Court in Plains Commerce
Bank. 554 U.S. at 337 (“[T]he regulation must stem from
the tribe’s inherent sovereign authority to set conditions on
entry, preserve tribal self-government, or control internal
relations.”).
While the district court believed that our caselaw
prohibited the application of the Montana framework to
tribal jurisdictional issues involving nonmember conduct on
22 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
tribal land, it also recognized that a tribe’s regulatory power
over nonmembers on tribal land does not solely derive from
its power to set conditions on entry or continued presence.
Accordingly, it concluded that the Tribe had regulatory
jurisdiction over Knighton’s conduct because “Knighton’s
employment activities directly affected the Tribe’s inherent
powers to protect the welfare of its members and preserve
the integrity of its government,” and because “her conduct
threatened the Tribe’s very economic survival.”
We now clarify Water Wheel and our subsequent cases
involving tribal jurisdictional issues on tribal land do not
exclude Montana as a source of tribal regulatory authority
over nonmember conduct on tribal land. Rather, our caselaw
states that an Indian tribe has power to regulate nonmember
conduct on tribal land incident to its sovereign power to
exclude nonmembers from tribal land, regardless of whether
either of the Montana exceptions is satisfied. See Water
Wheel, 642 F.3d at 814 (“[T]he tribe’s status as landowner is
enough to support regulatory jurisdiction without
considering Montana.” (emphasis added)); Grand Canyon
Skywalk Dev., LLC v. ‘Sa’ Nyu Wa Inc., 715 F.3d 1196, 1204
(9th Cir. 2013) (“[A] tribe’s inherent authority over tribal
land may provide for regulatory authority over
[nonmembers] on that land without the need to consider
Montana.” (emphasis added)); Window Rock, 861 F.3d at
902 (“[I]n civil cases involving nonmember conduct on
tribal land, we have held that tribal courts have jurisdiction
unless a treaty or federal statute provides otherwise—
regardless of whether the Montana exceptions would be
satisfied.” (emphasis added)). Certainly, as our caselaw has
discussed at length, without evidence of a contrary intent by
Congress, a tribe’s power to regulate nonmember conduct on
tribal land flows from its inherent power to exclude and is
circumscribed only to the limited extent that the
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 23
circumstances in Hicks—significant state interests—are
present. See Water Wheel, 642 F.3d at 813; Grand Canyon,
715 F.3d at 1205; Window Rock, 861 F.3d at 902. However,
the Court has made clear that a tribe also has sovereign
authority to regulate nonmember conduct on tribal lands
independent of its authority to exclude if that conduct
intrudes on a tribe’s inherent sovereign power to preserve
self-government or control internal relations. The Montana
exceptions are “rooted” in the tribes’ inherent power to
regulate nonmember behavior that implicates these
sovereign interests. Attorney’s Process, 609 F.3d at 936
(citing Plains Commerce Bank, 554 U.S. at 335).
Accordingly, although we conclude that the Tribe had
authority to regulate Knighton’s conduct on tribal land
pursuant to its sovereign exclusionary powers, a separate
question remains as to whether the Tribe also had regulatory
authority over Knighton’s conduct pursuant to Montana.
i. First Montana Exception
Montana’s consensual relationship exception recognizes
that tribes have jurisdiction to regulate consensual relations
“through taxation, licensing, or other means.” 450 U.S.
at 565. Courts have recognized that tort law, under which
the Tribe’s claims against Knighton arise, constitutes a form
of regulation. See Attorney’s Process, 609 F.3d at 938
(stating that if a tribe retains the power under Montana to
regulate nonmember conduct, it does not make any
difference whether it does so through precisely tailored
regulations or through tort claims). However, Montana’s
consensual relationship exception requires that “the
regulation imposed by the Indian tribe have a nexus to the
consensual relationship itself.” Atkinson Trading Co. v.
Shirley, 532 U.S. 645, 656 (2001). “A nonmember’s
24 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
consensual relationship in one area thus does not trigger
tribal civil authority in another.” Id.
Examining the facts of this case, we conclude that the
Tribe has regulatory authority over Knighton’s conduct in
this case under Montana’s consensual relationship
exception. The conduct that the Tribe seeks to regulate
through tort law arises directly out of the consensual
employment relationship between the Tribe and Knighton.
Moreover, given the circumstances, Knighton should have
reasonably anticipated that her conduct might “trigger” tribal
authority. Water Wheel, 642 F.3d at 818 (quoting Plains
Commerce Bank, 554 U.S. at 338). Knighton is no stranger
to the Tribe’s governance and laws. She had been an
employee of the Tribe for approximately sixteen years and,
as Tribal Administrator, was responsible for the overall
supervision and management of tribal operations and
carrying out tribal projects consistent with the Tribal
Constitution. The Tribal Constitution, adopted
approximately two years before Knighton resigned as Tribal
Administrator, specifically provided that the “jurisdiction of
[the Tribe] shall extend to land now within the confines of
the [Rancheria] and to such other lands as may thereafter be
added thereto.” We conclude that given these
circumstances, Knighton should reasonably have anticipated
that her conduct on tribal land would fall within the Tribe’s
regulatory jurisdiction.
ii. Second Montana Exception
In determining whether Knighton’s conduct threatens or
has some direct effect on the political integrity, the economic
security, or the health or welfare of the tribe—the second
Montana exception, 450 U.S. at 566—we find instructive the
Eighth Circuit’s decision in Attorney’s Process. In that case,
API, a nonmember corporation, was hired by a tribal
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 25
government leader who refused to step down from
leadership after he lost in a special tribal election. 609 F.3d
at 932. Under their contract, API agreed to perform services
relating to “the investigation of a takeover by dissidents at
the Tribe’s facility located on the Tribe’s reservation lands.”
Id. As the newly elected tribal council occupied the casino
and tribal government offices, approximately thirty API
agents forced their way into both buildings, which were
located on tribal land. Id. The agents were armed with
batons, at least one carried a firearm, and they seized
confidential information from both facilities related to the
tribe’s gaming operations and finances. Id. In addition to
the wrongfully seized confidential information, the agents
caused approximately $7,000 in property damage and
committed various intentional torts against tribal members.
Id. The tribe filed suit in tribal court for trespass to tribal
land and chattels, misappropriation of trade secrets, and
other claims. Id.
API argued that tort claims do not in the ordinary course
threaten the political integrity, economic security, or the
health or welfare of the tribe and thus the tribal court had no
jurisdiction over the tribe’s claims under Montana’s second
exception. Id. at 937. Relying on Plains Commerce Bank,
the court in Attorney’s Process stated that courts “should not
simply consider the abstract elements of the tribal claim at
issue, but must focus on the specific nonmember conduct
alleged, taking a functional view of the regulatory effect of
the claim on the nonmember.” Id. at 938. The court
concluded that API’s raid on the casino and government
offices, leading to the claims for trespass to land, trespass to
chattels, and misappropriation of tribal trade secrets,
“menace[d] the ‘political integrity, the economic security,
[and] the health [and] welfare’ of the Tribe to such a degree
that it ‘imperil[ed] the subsistence’ of the tribal community”
26 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
and that the tribe therefore retained the inherent power under
the second Montana exception to regulate that conduct. Id.
at 939 (alterations in original) (quoting Plains Commerce
Bank, 554 U.S. at 341).
While Knighton’s conduct constitutes a different type of
violation, it was of long duration and had a great impact upon
the Tribe, and so we conclude that the alleged harm to the
Tribe caused by her conduct “‘imperil[ed] the subsistence’
of the tribal community.” Evans v. Shoshone-Bannock Land
Use Policy Comm’n, 736 F.3d 1298, 1306 (9th Cir. 2013)
(quoting Plains Commerce Bank, 554 U.S. at 341). Among
the tribe’s many claims are allegations that Knighton
invested the Tribe’s money without appropriate authority,
concealed investment documents and audit reports from the
Tribe, and attempted to enter financial agreements without
the appropriate authorization or waiver of tribal sovereign
immunity. The Tribe also alleges that Knighton made
unreasonably risky investments that led to investment losses
in excess of $1.2 million, excess transaction fees, and state
and federal tax exposure, and that she breached her fiduciary
duty and deceived the Tribe, causing it to pay $300,000,
$150,000 above market value, for the RISE building
purchase. Finally, the Tribe alleges that when she resigned
her employment with the Tribe, Knighton took all files,
including files belonging to the Tribe, room furnishings, and
a computer, representing to the Tribe that the property
removed belonged to RISE. We conclude that this conduct
threatened the Tribe’s very subsistence and that the Tribe
therefore retains the inherent power under the second
Montana exception to regulate this conduct.
II. Adjudicatory Jurisdiction
Knighton also contends that the Tribe is seeking to
exercise greater adjudicative authority over her than it was
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 27
capable of at the time of her employment. She argues that
the adjudicatory authority of the Tribe is limited to the
disciplinary procedures provided for in the Personnel
Manual. At the time of her employment, the disciplinary
actions detailed in the Personnel Manual for an employee’s
breach of rules and standards of conduct in the course of
employment included a verbal warning, written reprimand,
suspension without pay, demotion, and involuntary
termination. The Personnel Manual provided that when the
Tribal Administrator was the subject of disciplinary action,
the Community Council directly oversaw the disciplinary
and grievance procedures.
We hold that the Tribe has the power to regulate
Knighton’s conduct incident to its sovereign powers to
exclude nonmembers from tribal land, and also, in the
alternative, under both Montana exceptions. “[W]here tribes
possess authority to regulate the activities of nonmembers,
‘[c]ivil jurisdiction over [disputes arising out of] such
activities presumptively lies in the tribal courts.’” Strate v.
A-1 Contractors, 520 U.S. 438, 453 (1997) (second and third
alterations in original) (quoting Iowa Mut. Ins. Co. v.
LaPlante, 480 U.S. 9, 18 (1987)). However, a tribe’s
adjudicative authority over nonmembers may not exceed its
regulatory authority. Id.
We conclude that under the facts of this case, the Tribe’s
adjudicatory authority does not exceed the regulatory
authority it had over Knighton’s conduct during her
employment under Water Wheel’s right-to-exclude
framework. As discussed above, the Personnel Manual
regulated the conduct that forms the basis of the Tribe’s
claims against Knighton and conferred jurisdiction over her
conduct as Tribal Administrator on the Community Council.
The fact that the Tribe now seeks to adjudicate these claims
28 KNIGHTON V. CEDARVILLE RANCHERIA OF NPI
in the Tribal Court does not undermine its jurisdiction over
the Tribe’s claims.
Likewise, examining the Tribe’s adjudicative authority
over Knighton’s conduct under Montana, we return to the
illuminating Eighth Circuit opinion in Attorney’s Process.
Similar to this case, in Attorney’s Process, the tribal court
system was established after the tort claims against API
arose. 609 F.3d at 933. API argued that the tribe lacked
jurisdiction over its claims because there were no written
regulations in place at the time which prohibited the tortious
conduct that API was alleged to have committed. Id. at 938.
The court stated that “[i]f the Tribe retains the power under
Montana to regulate such conduct, we fail to see how it
makes any difference whether it does so through precisely
tailored regulations or through tort claims such as those at
issue [in the case].” Id. The court concluded that because
API’s intervention onto tribal land threatened the “‘political
integrity, the economic security, [and] the health [and]
welfare’ of the Tribe,” the tribe had the authority to regulate
and adjudicate such conduct under Montana, as well as
incident to its sovereign right to exclude nonmembers from
tribal land. Id. at 940 (alterations in original) (quoting
Montana, 450 U.S. at 566).
As the court in Attorney’s Process recognized, our task
is to outline the boundaries of the inherent sovereign power
retained by the Indian tribes. “Those boundaries are
established by federal law, a source of law external to the
tribes.” Id. at 938 (citing Nat’l Farmers Union, 471 U.S.
at 852). In contrast, “positive tribal law,” the court stated,
“is internal to the tribes.” Id. “It is a manifestation of tribal
power, and as such it does not contribute to the external
limitations which concern us here. Once it is determined that
KNIGHTON V. CEDARVILLE RANCHERIA OF NPI 29
certain conduct is within the scope of a tribe’s power as a
matter of federal law, our inquiry is at an end.” Id.
In the present case, the Tribe’s authority to regulate
Knighton’s conduct derived not only from its sovereign
power to exclude nonmembers from tribal lands, but also
from its inherent sovereign power to regulate consensual
relations with nonmembers “through taxation, licensing, or
other means,” and to protect the “political integrity, the
economic security, [and] the health [and] welfare” of the
Tribe. Montana, 450 U.S. at 565–66.
Once the authority to regulate nonmember conduct
exists, whether from Water Wheel or from Montana, then the
observation from the court in Attorney’s Process persuades
us that it makes no difference whether the Tribe adjudicates
Knighton’s conduct through the Personnel Manual or
through tort law.
CONCLUSION
There is no general rule as to the extent of a tribe’s
adjudicative jurisdiction over non-Indians on tribal land, but
“it is clear that the general rule announced in Strate, and
confirmed in Hicks and Plains Commerce Bank, that
adjudicative jurisdiction is confined by the bounds of a
tribe’s regulatory jurisdiction” applies. Water Wheel,
642 F.3d at 814. Given the existence of regulatory authority,
the sovereign interests at stake, and the congressional
interest in promoting tribal self-government, we conclude
that the Tribal Court has jurisdiction over the Tribe’s claims
in this case.
AFFIRMED.