Chao v. Matheson

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HILDA L. SOLIS, Secretary of 
Labor, United States Department
of Labor,
Plaintiff-Appellee, No. 07-35633
v.
 D.C. No.
3:06-cv-05361
PAUL MATHESON, an individual
doing business as Baby Zack’s OPINION
Smoke Shop; NICK MATHESON, an
individual,
Defendants-Appellants.

Appeal from the United States District Court
for the Western District of Washington
Ronald B. Leighton, District Judge, Presiding
Argued and Submitted
November 21, 2008—Seattle, Washington
Filed April 20, 2009
Before: Betty B. Fletcher and Johnnie B. Rawlinson,
Circuit Judges, and David Alan Ezra,* District Judge.
Opinion by Judge Ezra
*The Honorable David Alan Ezra, United States District Judge for the
District of Hawaii, sitting by designation.
4511
4514 SOLIS v. MATHESON
COUNSEL
Robert E. Kovacevich, Spokane, Washington, for the appel-
lants.
Jonathan L. Snare, Acting Solicitor of Labor, Steven J. Man-
del, Associate Solicitor, Paul L. Frieden, Counsel for Appel-
late Litigation, Mary J. Rieser, Attorney, Gregory F. Jacob,
Attorney (argued), Washington, D.C., for the appellee.
OPINION
EZRA, District Judge:
In this opinion we resolve whether the overtime provisions
of the Fair Labor Standards Act (“FLSA”) apply to a retail
SOLIS v. MATHESON 4515
business located on an Indian reservation and owned by
Indian tribal members. We also resolve whether Appellee the
Secretary of Labor for the United States Department of Labor
(the “Secretary”) has the authority to enter the Indian reserva-
tion to inspect the books of that business. Finally, we resolve
whether it was an abuse of discretion for the district court to
appoint a receiver for the retail business in the event the over-
time payments were not made.
We conclude that the overtime requirements of the FLSA
apply to the retail business at issue in this case. Because the
FLSA applies to the retail business, we conclude that the Sec-
retary had the authority to enter the Indian reservation to audit
the books of the business, as she would regularly do with
respect to any private business. We therefore affirm the deci-
sion of the district court on these two issues.
We conclude that the district court’s decision with respect
to the automatic appointment of a receiver over the retail busi-
ness in the event the overtime payments were not made was
premature. We therefore vacate that portion of the judgment.
I.
BACKGROUND
The parties stipulated to the underlying facts of this case.
A. Baby Zack’s Smoke Shop
Appellant Paul Matheson is a member of the Puyallup
Tribe. The Puyallup Tribe is a Pacific Northwest Indian tribe
that has a reservation in the State of Washington. Paul Mathe-
son owns and operates a retail store known as Baby Zack’s
Smoke Shop (“Baby Zack’s”)1, located on trust land within
1
Paul Matheson, Nick Matheson and Baby Zack’s are referred to herein
collectively as “the Mathesons.”
4516 SOLIS v. MATHESON
the Puyallup Indian Reservation. Appellant Baby Zack’s sells
tobacco products and sundries to Indians and non-Indians.
Some of the goods sold by Baby Zack’s have been shipped in
from locations outside the State of Washington. Baby Zack’s
accepts credit card and debit card payments and uses elec-
tronic or telephonic means of communication to banks and
credit card companies located outside of the State of Wash-
ington. Baby Zack’s regularly employs both Indian and non-
Indian workers.
In 2004 and 2005, Baby Zack’s had an annual gross vol-
ume of sales of not less than $500,000. Paul and Nick Mathe-
son are employers within the meaning of the FLSA. If the
FLSA applies, the amount of wages due to employees and
former employees is $31,354.87.
B. The Medicine Creek Treaty
The Puyallup Tribe entered into a treaty in the 1850s
known as the Treaty of Medicine Creek. The Treaty of Medi-
cine Creek provides that the “tribes and bands agree to free
all slaves now held by them, and not to purchase or acquire
others hereafter.” The Treaty of Medicine Creek also provides
that certain lands are for “exclusive use” of the Indians, “nor
shall any white man be permitted to reside upon the same
without permission of the tribe and the superintendent or
agent.”
C. Procedural History
The Secretary subpoenaed the books of Baby Zack’s and
determined that the Mathesons had failed to pay overtime
wages to its employees, as required by the FLSA. The Secre-
tary filed suit and a motion for summary judgment. The dis-
trict court granted the Secretary’s motion for summary
judgment, finding that the FLSA applied to the Mathesons.
SOLIS v. MATHESON 4517
The district court later entered judgment (the “Judgment”)
concluding that the FLSA applied to the Mathesons, and their
failure to pay overtime wages violated the FLSA. The Judg-
ment provided that the Mathesons were enjoined from violat-
ing the FLSA, they must pay $31,339.272 in overtime wages,
and if they failed to do so, the court would appoint a receiver
from a list of potential receivers provided by the Secretary or
one of its own choosing, and the Mathesons would be
required to pay the costs of the receiver. In addition, the Judg-
ment stated that the receiver would have full authority to col-
lect assets and report findings, redeem or liquidate assets, turn
over proceeds, and prevent waste or fraud.
The Mathesons appealed both the decision regarding the
applicability of the FLSA and the automatic appointment of
a receiver upon the failure to pay, which was set forth for the
first time in the Secretary’s proposed judgment.
II.
STANDARDS OF REVIEW
We review a district court’s grant of summary judgment de
novo. Golden Gate Rest. Ass’n v. City & County of San Fran-
cisco, 512 F.3d 1112, 1116 (9th Cir. 2008) (citing Aguilera v.
Baca, 510 F.3d 1161, 1165-67 (9th Cir. 2007)).
We review the district court’s appointment of a receiver
upon failure to pay for abuse of discretion. See View Crest
Garden Apartments, Inc. v. United States, 281 F.2d 844, 849
(9th Cir. 1960) (holding that “the [district] Court acted well
within the discretionary powers a court of equity exercises in
appointing a receiver”); see also SEC v. Hardy, 803 F.2d
1034, 1037 (9th Cir. 1986) (reviewing for abuse of discretion
2
There is no explanation for the discrepancy between this amount and
the stipulated amount of $31,354.87 owed.
4518 SOLIS v. MATHESON
the district court’s decision involving supervision of receiver-
ship).
III.
DISCUSSION
A. The Application of the FLSA to the Mathesons
[1] The Mathesons argue that the FLSA does not apply in
this instance because they qualify for either or both the intra-
mural affairs exception set forth in Donovan v. Coeur d’Alene
Tribal Farm, 751 F.2d 1113, 1115-16 (9th Cir. 1985), or the
treaty rights exception. We disagree.
The central aim of the FLSA is to achieve certain minimum
labor standards, such as overtime requirements, with respect
to industries engaged in commerce. 29 U.S.C. § 202. “The
FLSA is a statute of general applicability,” Snyder v. Navajo
Nation, 382 F.3d 892, 894 (9th Cir. 2004) (citation omitted),
that is to be construed liberally. Klem v. County of Santa
Clara, 208 F.3d 1085, 1089 (9th Cir. 2000). Congress did not
expressly make the FLSA applicable to Indian tribes. Reich v.
Great Lakes Indian Fish & Wildlife Comm’n, 4 F.3d 490, 493
(7th Cir. 1993). The issue in this case is whether, as a statute
of general applicability, the FLSA applies to the Mathesons’
business, which is owned and run by tribal members and
located on the tribe’s reservation.
Indian tribes have a special status as sovereigns with lim-
ited powers. Indian tribes are dependent on, and subordinate
to the federal government, yet retain powers of self-
government. See Washington v. Confederated Tribes of the
Colville Indian Reservation, 447 U.S. 134, 154 (1980); Mac-
Arthur v. San Juan County, 497 F.3d 1057, 1067 (10th Cir.
2007), cert. denied, 128 S.Ct. 1229 (2008). However, those
powers may be limited, modified, or eliminated by Congress.
Santa Clara Pueblo v. Martinez, 436 U.S. 49, 56 (1978).
SOLIS v. MATHESON 4519
The tribes’ retained sovereignty reaches only that
power needed to control internal relations, preserve
their own unique customs and social order, and pre-
scribe and enforce rules of conduct for their own
members. Toward this end, the Supreme Court has
recognized that a tribe may regulate any internal
conduct which threatens the political integrity, the
economic security, or the health or welfare of the
tribe.
Reich v. Mashantucket Sand & Gravel, 95 F.3d 174, 178-79
(2nd Cir. 1996) (citations, quotation marks, brackets, and
ellipses omitted).
[2] Indians and their tribes are equally subject to statutes of
general applicability, just as any other United States citizen.
Coeur d’Alene, 751 F.2d at 1115; Fed. Power Comm’n v. Tus-
carora Indian Nation, 362 U.S. 99, 116 (1960). However, a
statute of general applicability that is silent on the issue of
applicability to Indian tribes, like the FLSA, does not apply
to Indian tribes if:
(1) the law touches exclusive rights of self-
governance in purely intramural matters; (2) the
application of the law to the tribe would abrogate
rights guaranteed by Indian treaties; or (3) there is
proof by legislative history or some other means that
Congress intended the law not to apply to Indians on
their reservations. In any of these three situations,
Congress must expressly apply a statute to Indians
before we will hold that it reaches them.
Coeur d’Alene, 751 F.2d at 1116 (citations, quotation marks,
brackets, and ellipses omitted). The Mathesons assert that the
first exception known as the intramural affairs exception, or
the second exception known as the treaty rights exception,
applies in this case.
4520 SOLIS v. MATHESON
1. Self-Government and Intramural Affairs Exception
“[T]he tribal self-government exception is designed to
except purely intramural matters such as conditions of tribal
membership, inheritance rules, and domestic relations from
the general rule that otherwise applicable federal statutes
apply to Indian tribes.” Coeur d’Alene, 751 F.2d at 1116 (cita-
tion omitted). Although these are not the only matters which
could be covered by this exception, exemptions have been
allowed “only in those rare circumstances where the immedi-
ate ramifications of the conduct are felt primarily within the
reservation by members of the tribe and where self-
government is clearly implicated.” Snyder, 382 F.3d at 895.
[3] The only case in this Circuit regarding the applicability
of the FLSA to Indian tribes is the Snyder case. In Snyder, this
court addressed whether tribal law enforcement officers who
enforced the law on an Indian reservation were entitled to
overtime payments pursuant to the FLSA. Id. at 894. This
court held that law enforcement was “an appropriate activity
to exempt as intramural” because it was “a traditional govern-
mental function”, and the FLSA contained an express exemp-
tion for state and local law-enforcement officers in 29 U.S.C.
§§ 207(k), 207(o). Id. at 895. This court also found that
although the officers traveled outside of the reservation to
provide information or to testify in a court, they did
so because of a crime that occurred on the reserva-
tion or directly affected the interests of the tribal
community. Thus, such services performed off-
reservation nevertheless relate primarily to tribal
self-government and remain part of exempt intramu-
ral activities. Such travel does not relate to any non-
government purpose. Nor does it provide primary
benefits to persons with no interest or stake in tribal
government. Indeed, none of the officers’ official
travel is aimed at benefiting any private organization
or nonmember. Employed by an arm of the tribal
SOLIS v. MATHESON 4521
government, officers serve the tribe’s governmental
need for law enforcement to promote the welfare of
the tribe and its members.
Id. at 896 (citation omitted); see also Great Lakes, 4 F.3d at
495 (holding that law enforcement officers were exempt from
overtime requirements of FLSA because they performed gov-
ernmental functions).
While there is no case directly on point in this Circuit, there
are cases both from this Circuit and others deciding the appli-
cability of other federal employment statutes to Indian tribes.
In Coeur d’Alene, this court recognized that the Occupational
Safety and Health Act (“OSHA”) is a statute of general appli-
cability, and that it applied to a farm wholly owned and oper-
ated by the Coeur d’Alene Indian Tribe, located entirely
within the Indian reservation. Coeur d’Alene, 751 F.2d at
1114. This court recognized that the Tribe had “the inherent
sovereign right to regulate the health and safety of workers in
tribal enterprises. But neither [wa]s there any doubt that Con-
gress has the power to modify or extinguish that right. Unlike
the states, Indian tribes possess only a limited sovereignty that
is subject to complete defeasance.” Id. at 1115 (citations omit-
ted). This court, therefore, found that none of the exceptions
applied because the farm was a commercial enterprise that
produced grain and lentils exclusively for sale on the open
market in interstate commerce, and because the farm
employed non-Indian workers. Id. at 1114, 1116. Thus, the
farm’s activities were neither profoundly intramural, nor
essential to self-government. Id.The tribe in Coeur d’Alene had argued that under their
rights to self-government and to exclude non-Indians, they
could exclude OSHA inspectors as part of their “ ‘fundamen-
tal aspect’ of tribal sovereignty that cannot be infringed with-
out a clear expression of congressional intent.” Id. at 1116-17.
This court stated that it had “never employed this fundamental
aspect of sovereignty formulation of the tribal self-
4522 SOLIS v. MATHESON
government exception to the general rule that federal statutes
ordinarily apply to Indians,” and declined to do so for the
Coeur d’Alene tribe. Id. (internal quotation omitted).
In EEOC v. Karuk Tribe Housing Authority, 260 F.3d
1071, 1079-80 (9th Cir. 2001), this court found that the Age
Discrimination in Employment Act (“ADEA”) did not apply
to an employment relationship between the Karuk Tribe
Housing Authority, a tribal governmental employer, and a
tribe member, because it touched “on ‘purely internal matters’
related to the tribe’s self-governance.”3 The dispute did “not
concern non-Karuks or non-Indians as employers, employees,
customers, or anything else.” Id. at 1081. This court noted that
“[t]he Housing Authority . . . functions as an arm of the tribal
government and in a governmental role. It is not simply a
business entity that happens to be run by a tribe or its mem-
3
In EEOC v. Fond du Lac Heavy Equipment and Construction Co., Inc.,
986 F.2d 246 (8th Cir. 1993), the Eighth Circuit took a different approach
to find that the ADEA did not apply to the narrow facts of the case. First,
the Eighth Circuit found that the dispute regarding whether an employer
could consider an applicant’s age was between an Indian applicant and an
Indian tribal employer which was located on the reservation. The Eighth
Circuit held that
[s]ubjecting such an employment relationship between the tribal
member and his tribe to federal control and supervision dilutes
the sovereignty of the tribe. The consideration of a tribe mem-
ber’s age by a tribal employer should be allowed to be restricted
(or not restricted) by the tribe in accordance with its culture and
traditions. Likewise, disputes regarding this issue should be
allowed to be resolved internally within the tribe. Federal regula-
tion of the tribal employer’s consideration of age in determining
whether to hire the member of the tribe to work at the business
located on the reservation interferes with an intramural matter
that has traditionally been left to the tribe’s self-government.
Id. at 249. Due to the intramural nature of the matter, the Eighth Circuit
held that as a statute of general applicability, the ADEA did not apply “ab-
sent a clear and plain congressional intent.” Id. The Eighth Circuit found
that there was no clear and plain intention of Congress to apply the ADEA
to Indian tribes. Id. at 250.
SOLIS v. MATHESON 4523
bers, but, rather, occupies a role quintessentially related to
self-governance.” Id. at 1080.
Unlike the housing authority in the Karuk Tribe case,
NLRB v. Chapa De Indian Health Program, Inc., 316 F.3d
995, 1000 (9th Cir. 2003), involved a financially independent,
nonprofit organization of the Rumsey Tribe that contracted to
provide health services to members of the tribe as well as oth-
ers, and operated outside of the reservation. The organization
argued that the National Labor Relations Act (“NLRA”) did
not apply to its activities because providing health care ser-
vices to tribal members was purely intramural. Id. at 998-99.
This court found that the activities were not exempt from pro-
visions of the NLRA because the organization itself was not
a tribe and even if the Rumsey Tribe terminated its funding
of the organization, the organization would have other
resources available to operate. Id. at 1000. In addition, the
health care facilities were not located on Indian land, and
nearly half of the patients and the nonprofessional employees
involved in the controversy were non-Indian. Id. This court
stated that the non-Indian patients and non-Indian employees
cut against the organization’s “claim that its activities touch
rights of self-governance on a purely intramural matter.” Id.Finally, none of the organization’s board members were
members of the tribe and the organization did not argue that
its labor relations were intramural activities related to self-
governance. In light of these circumstances, this court held
that “applying the NLRA does not clearly appear to touch on
purely intramural matters that affect the right to self-
governance.” Id.Other cases have similarly affirmed the application of
OSHA, the Employee Retirement Income Security Act
(“ERISA”), and the Americans with Disabilities Act (“ADA”)
to tribal businesses. See U.S. Dep’t of Labor v. Occupational
Safety & Health Review Comm’n, 935 F.2d 182, 183-84 (9th
Cir. 1981) (finding tribal lumber mill employer subject to
OSHA because it “employ[ed] a significant number of non-
4524 SOLIS v. MATHESON
Native Americans and [sold] virtually all of its finished prod-
uct to non-Native Americans through channels of interstate
commerce”); Mashantucket Sand & Gravel, 95 F.3d at 181(finding that OSHA applied to tribe-owned construction busi-
ness); Lumber Indus. Pension Fund v. Warm Springs Forest
Prods. Indus., 939 F.2d 683, 684-85 (9th Cir. 1991) (holding
that ERISA, as a statute of general applicability, applied to a
tribally owned and operated sawmill because “[t]he self-
government exception applies only where the tribe’s decision-
making power is usurped[, and] [p]ermitting the Fund to sue
the mill under ERISA . . . will not usurp the tribe’s decision-
making power”); Smart v. State Farm Ins. Co., 868 F.2d 929,
935-36 (7th Cir. 1989) (applying ERISA to health care facility
owned and operated by tribe and located on tribal land); Fla.
Paraplegic Ass’n, Inc. v. Miccosukee Tribe of Indians of Fla.,
166 F.3d 1126, 1129 (11th Cir. 1999) (holding that ADA’s
public accommodation requirements could apply to restaurant
and gaming business run by an Indian tribe because the busi-
ness did “not relate to the governmental functions of the
Tribe, nor d[id] it operate exclusively within the domain of
the Tribe and its members”).
The Mathesons rely on United States v. Lara, 541 U.S. 193(2004), asserting that it stands for the proposition that as sov-
ereign entities with power over their members, tribes possess
inherent power to control events that occur on their land. The
Mathesons also assert that Lara stands for the proposition that
Congress could not enact laws modifying tribal inherent
power.
The Mathesons’ reliance is misplaced. The Lara case dealt
with the inherent tribal authority to prosecute tribe members.
See id. at 204-05. The Supreme Court in Lara held that Con-
gress possessed the power to lift restrictions on tribes’ crimi-
nal jurisdiction over nonmember Indians. Id. at 200. The Lara
case did not hold that tribes possess inherent power to control
events that occur on their land or that Congress could not
enact laws modifying that power. Indeed, as noted above, the
SOLIS v. MATHESON 4525
Supreme Court has held that “Congress has plenary authority
to limit, modify or eliminate the powers of local self-
government which the tribes otherwise possess.” Santa Clara
Pueblo, 436 U.S. at 56 (citation omitted). The Mathesons fail
to provide an appropriate analogy between the Lara case and
the instant case, and we find none.
The Mathesons also assert that the Lara case aligns with
the earlier case from the Tenth Circuit, NLRB v. Pueblo of
San Juan, 276 F.3d 1186 (10th Cir. 2002). The Tenth Circuit
in Pueblo of San Juan determined whether “in light of the
Constitution’s Supremacy Clause and Congress’s plenary
power over Indian affairs, the NLRA prevents [through pre-
emption] the Pueblo from enacting a ‘right-to-work’ law or
entering into a lease with provisions making prohibitions sim-
ilar to those in right-to-work laws.” Id. at 1190.
The Mathesons’ reliance on this case is also misplaced
because the general applicability of the NLRA was not at
issue. Id. at 1191. Additionally, the Pueblo had exercised its
sovereign authority by enacting a labor regulation. Id. at 1199.
The Pueblo was not acting in a proprietary capacity, such as
an employer or landlord. Id. at 1191. The Tenth Circuit found
that “as an Indian tribe, [the Pueblo] retain[ed] the sovereign
power to enact its right-to-work ordinance, and to enter into
the lease agreement with right-to-work provisions, because
Congress has not made a clear retrenchment of such tribal
power as is required to do so validly.” Id.[4] Here, although the Supreme Court has found that Indian
tribes have “a strong interest as a sovereign in regulating eco-
nomic activity involving its own members within its own ter-
ritory and . . . may enact laws governing such activity[,]” see
Pueblo of San Juan, 276 F.3d at 1200 (citing Merrion v.
Jicarilla Apache Tribe, 455 U.S. 130, 137 (1982)), the Mathe-
sons do not argue that the Puyallup Tribe enacted a different
wage and hour law that applied in place of the FLSA, nor do
they assert that the FLSA does not preempt any such law. See
4526 SOLIS v. MATHESON
Great Lakes, 4 F.3d at 493 (stating that if “the Chippewa had
a treaty right to employ law enforcement officers on any
terms, the Fair Labor Standards Act would be presumed not
to abrogate the right by forcing the Great Lakes Indian Fish
and Wildlife Commission to pay time and a half for over-
time”). Thus, there is no evidence in the record that the Puyal-
lup Tribe has acted on its right of self-governance in the field
of wage and hours laws and specifically with respect to over-
time.
[5] Because the Puyallup Tribe has not enacted wage and
hour laws, the holdings of the cases discussed above lead this
court to conclude that the overtime provisions of the FLSA
apply to the Mathesons and the intramural affairs exception
does not. Baby Zack’s is a purely commercial enterprise
engaged in interstate commerce selling out-of-state goods to
non-Indians and employing non-Indians. See Mashantucket
Sand & Gravel, 95 F.3d at 181 (“[E]mployment of non-
Indians weighs heavily against its claim that its activities
affect rights of self-governance in purely intramural matters.
In general, tribal relations with non-Indians fall outside the
normal ambit of tribal self-government. . . . When a tribal
operation affects open markets, it is unlikely that the opera-
tion is purely intramural.”). Unlike many of the businesses in
the cases discussed above, Baby Zack’s is not a tribal busi-
ness, although it is owned by tribe members. Therefore, the
district court’s finding that the intramural exception does not
apply because there is nothing profoundly intramural or
involving self-governance about the employment of Indians
and non-Indians by a retail business engaged in interstate
commerce is affirmed.
2. Treaty Rights Exception
[6] The Mathesons next argue that the Treaty of Medicine
Creek addresses employment rights and payment of overtime,
although crudely, because the Treaty states that “[t]he said
SOLIS v. MATHESON 4527
tribes and bands agree to free all slaves now held by them,
and not to purchase or acquire others hereafter.”
“Indian treaties are deemed the legal equivalent of federal
statutes and they can therefore be modified or even abrogated
by Congress. . . . Nevertheless, the presumption is that a stat-
ute does not modify or abrogate Indian treaty rights.” Great
Lakes, 4 F.3d at 493 (citing United States v. Dion, 476 U.S.
734, 738-40 (1986), and Washington v. Wash. State Commer-
cial Passenger Fishing Vessel Ass’n, 443 U.S. 658, 690
(1979)).
[7] “The text of a treaty must be construed as the Indians
would naturally have understood it at the time of the treaty,
with doubtful or ambiguous expressions resolved in the Indi-
ans’ favor.” United States v. Smiskin, 487 F.3d 1260, 1264
(9th Cir. 2007). “Ambiguities in tribal treaties are construed
liberally to favor Native Americans and to respect traditional
notions of Native American sovereignty.” Occupational
Safety & Health Review Comm’n, 935 F.2d at 185.
In Smiskin, this court distinguished its findings in a previ-
ous case, United States v. Baker, 63 F.3d 1478 (9th Cir.
1995), which analyzed a different section of the Medicine
Creek Treaty than is at issue in the present case. Baker
involved members of the Puyallup Tribe who “trafficked in
unstamped cigarettes without obtaining prior approval from
the State of Washington, in violation of Washington Adminis-
trative Code section 458-20-192. The cigarettes were there-
fore unauthorized under state law and contraband under the
CCTA [Contraband Cigarette Trafficking Act].” Smiskin, 487
F.3d at 1267.
The Smiskin opinion noted that the Medicine Creek Treaty
provided only that “[t]he said tribes and bands finally agree
not to trade at Vanzcouver’s Island, or elsewhere out of the
dominions of the United States.” 487 F.3d at 1267 (citation
omitted). The relevant part of the Treaty did not expressly
4528 SOLIS v. MATHESON
grant any right to the Puyallup Tribe and was ambiguous
regarding any “trading right.” Id. In stark contrast, the
Yakama Treaty, which is a different treaty with a different
tribe, expressly granted the “right to travel.” Id. Therefore,
this court found that the “CCTA would certainly be an imper-
missible restriction on the Yakamas’ right to travel if the Gov-
ernment could rely on it to enforce against tribal members a
state fee on the transport of unstamped cigarettes.” Id.(emphasis in original).
Great Lakes involved treaties that covered “thirteen Chip-
pewa Indian tribes that inhabit the Great Lakes region.” Great
Lakes, 4 F.3d at 492. The Great Lakes Indian Fish and Wild-
life Commission (the “Commission”) supervised the activities
and enforced the rights retained by the treaties, including
hunting and fishing. Id. The Commission did not pay time and
half for overtime to its officers. Id. at 491. The Department of
Labor sought enforcement of a subpoena seeking evidence
that the Commission was in violation of the FLSA. Id. In
order to determine whether the subpoena could be enforced,
and whether the Department had jurisdiction to regulate
wages of the Commission, the Seventh Circuit reviewed the
treaties at issue. The Seventh Circuit determined that the trea-
ties contained only “rights to hunt, fish and gather.” Id. at
493. The treaties did not mention a system for enforcing those
rights, or contain any reference to “terms of employment of
those hired to enforce it.” Id. Therefore, the court focused on
the FLSA itself and its exemption for state and local law
enforcement officers. Id.[8] Here, there is nothing in the Medicine Creek Treaty
directly on point discussing employment or wages and hours.
Moreover, the language regarding freeing all slaves is not so
ambiguous that it could be construed to cover the payment of
required wages. Therefore, the application of the overtime
provisions of the FLSA to a retail business such as Baby
Zack’s does not impact the tribe’s agreement that it would
free all slaves.
SOLIS v. MATHESON 4529
Relying on Montana v. United States, 450 U.S. 544 (1981),
the Mathesons additionally argue that their Treaty right to
occupy and exclude gives them a right to regulate employ-
ment relationships with those non-tribal members who con-
sent to employment by tribal members.
“[A] hallmark of Indian sovereignty is the power to exclude
non-Indians from Indian lands . . . .” Merrion, 455 U.S. at
141. In Montana, the Supreme Court stated that “the inherent
sovereign powers of an Indian tribe do not extend to the activ-
ities of nonmembers of the tribe.” 450 U.S. at 565. This is
because the “exercise of tribal power beyond what is neces-
sary to protect tribal self-government or to control internal
relations is inconsistent with the dependent status of the
tribes.” Id. at 564.
To be sure, Indian tribes retain inherent sovereign
power to exercise some forms of civil jurisdiction
over non-Indians on their reservations, even on non-
Indian fee lands. A tribe may regulate, through taxa-
tion, licensing, or other means, the activities of non-
members who enter consensual relationships with
the tribe or its members, through commercial deal-
ing, contracts, leases, or other arrangements. A tribe
may also retain inherent power to exercise civil
authority over the conduct of non-Indians on fee
lands within its reservation when that conduct threat-
ens or has some direct effect on the political integ-
rity, the economic security, or the health or welfare
of the tribe.
Id. at 565-66 (citations omitted).
As was the case in Montana, here also, “[n]o such circum-
stances . . . are involved in this case.” Id. at 566. First, there
is no evidence that the Puyallup Tribe asserted regulatory
authority over employment and wages for non-Indians. See
MacArthur, 497 F.3d at 1069 (“Montana only applies insofar
4530 SOLIS v. MATHESON
as the tribe in question is seeking to assert regulatory author-
ity over the activities of a nonmember.”). The Mathesons’
only argument in this regard is that they were issued a busi-
ness license by the Tribe. Such information, however, is not
in the record. Even if it were, the issuance of a license to do
business does not mean that the Puyallup Tribe has sought to
regulate wages and hours of employees.
Second, there is no evidence that the non-Indians employed
at Baby Zack’s entered into any agreements or dealings with
the Puyallup Tribe that would subject the non-Indians to tribal
civil jurisdiction. Finally, the Mathesons have not alleged that
requiring payment of time and a half for overtime imperils the
welfare of the Tribe. We, therefore, conclude that the Mon-
tana holding is inapplicable to the instant case.
The Mathesons also contend that the right to exclude and
the language preventing non-Indians from residing on their
land prevents the Department of Labor from entering the res-
ervation to investigate FLSA violations.
In Occupational Safety & Health Review Commission, the
treaty described the boundaries for the reservation and stated
that “[a]ll of which tract shall be set apart, and, so far as nec-
essary, surveyed and marked out for [the tribe’s] exclusive
use; nor shall any white person be permitted to reside upon
the same without the concurrent permission of the agent and
superintendent.” 935 F.2d at 184 (citation omitted). Constru-
ing the treaty liberally in favor of the Indians and resolving
ambiguities in their favor, this court stated that it did
not construe the term “reside” narrowly to cover
only the exclusion of non-Native Americans from
occupying reservation land. . . . [T]he Treaty was
designed to provide them land where they would be
able to separate themselves from non-Native Ameri-
cans. The Tribe’s English vocabulary at the time the
Treaty was entered into was extremely limited. Read
SOLIS v. MATHESON 4531
within the context of the entire Treaty and in light of
the history of Native American relations, the provi-
sion sets forth a general right of exclusion.
Id. at 185.
This court then determined whether the general right of
exclusion barred application of OSHA to the sawmill. This
court noted that in Coeur d’Alene we had
recognized that Native Americans possess an inher-
ent sovereign right, independent of express treaty
language, to exclude non-Native Americans from
their reservation. This right, which is analogous to
the general right of exclusion contained in the
Treaty, was insufficient to bar application of the Act.
The identical right should not have a different effect
because it arises from general treaty language rather
than recognized, inherent sovereign rights.
Id. at 186. This court also noted that our previous decisions
of Confederated Tribes of Warm Springs Reservation of Or.
v. Kurtz, 691 F.2d 878 (9th Cir. 1982) and United States v.
Farris, 624 F.2d 890 (9th Cir. 1980), superceded by statute,
Indian Gaming Regulatory Act of 1988, Pub. L. No. 100-497,
102 Stat. 2467, as recognized in United States v. E.C. Invest-
ments, Inc., 77 F.3d 327 (9th Cir. 1996), implicitly ruled that
the federal government was authorized to enter reservation
land where taxable articles are kept, and that federal officers
were authorized to enforce the gambling prohibition by enter-
ing reservation property. Occupational Safety & Health
Review Comm’n, 935 F2d at 185-86.
Therefore, this court held that because OSHA was a gener-
ally applicable statute, the conflict between the tribe’s treaty
right to exclude and the limited entry necessary to enforce
OSHA did not bar application of OSHA to the sawmill. Id. at
186. This court stated that were it to find otherwise, “the
4532 SOLIS v. MATHESON
enforcement of nearly all generally applicable federal laws
would be nullified.” Id. at 187.
[9] Accordingly, because the FLSA overtime provisions
apply to the Mathesons, we conclude that the Secretary was
authorized to make entry on to the reservation in order to
locate records via her regular procedure in her effort to
enforce the statute in question.
B. Application of Puyallup Judicial Code
The Mathesons assert that pursuant to an agreement
between the Puyallup Tribe and local governments, the Puyal-
lup Tribal Judicial Code applies to disputes involving tribal
members and those who have dealings on the reservation.
The Mathesons raised this argument for the first time in this
appeal. In addition, the Mathesons attached only a portion of
the agreement to their opening brief and there is no indication
that it was part of the record in the district court. Accordingly,
the Mathesons waived this argument. See Raich v. Gonzales,
500 F.3d 850, 869 (9th Cir. 2007) (“Because Raich did not
raise this issue below . . . we hold that Raich’s claim based
on the plain language of the Controlled Substances Act is
waived.”); Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir.
1999) (“As a general rule, we will not consider arguments that
are raised for the first time on appeal.”).
C. Receivership
The Mathesons assert that the district court erred and vio-
lated their due process rights by appointing a receiver when
there was no notice, argument, briefing, or prayer for relief in
the Complaint regarding such appointment. The Mathesons
also assert that the district failed to consider that appointment
of a receiver divests the Tribe of its right to regulate collec-
tion.
SOLIS v. MATHESON 4533
[10] The appointment of a receiver is an equitable remedy
that is usually specifically sought by a person who has an
interest in a property. See 12 CHARLES ALAN WRIGHT &
ARTHUR R. MILLER, FEDERAL PRACTICE and PROCEDURE § 2983
(2d ed. 1997) [hereinafter FPP]. A receivership may interfere
seriously with a defendant’s property rights by ousting him or
her from control. Therefore, “[t]he appointment of a receiver
is considered to be an extraordinary remedy that should be
employed with the utmost caution and granted only in cases
of clear necessity to protect plaintiff’s interests in the proper-
ty.” Id. § 2983, at 24; see also Aviation Supply Corp. v.
R.S.B.I. Aerospace, Inc., 999 F.2d 314, 316 (8th Cir. 1993).
[11] In general, a receiver should not be appointed without
notice being given. Tenn. Pub. Co. v. Carpenter, 100 F.2d
728, 731 (6th Cir. 1938) (“It is of course the general rule that
appointments of receivers are not made ex parte and without
notice.”); FPP § 2983, at 31. Receiverships are usually
imposed for a judgment creditor only after a party has had an
execution issued and returned unsatisfied. FPP § 2983, at 22.
In determining whether a receiver should be appointed, courts
often consider the following factors: whether the defendant
engaged in fraudulent conduct, whether an imminent danger
of loss of property exists, the inadequacy of available legal
remedies, and harm to the plaintiff if the request for a receiv-
ership is denied. Id. § 2983, at 25-29.
[12] It is undisputed that the Complaint did not mention or
plead any facts supporting receivership, and that it did not
request receivership as a form of relief. It is also undisputed
that the proposed judgment was the first instance in which a
receivership was mentioned. The Secretary argues only that
the Complaint requested “other further relief as may be neces-
sary and appropriate” and that under the FLSA, the district
court has equitable authority to authorize receivership.
This language in the Complaint, however, gives no notice
whatsoever that a private business, owned by Indians and
4534 SOLIS v. MATHESON
located within a reservation, could be subject to receivership
with broad powers granted to the receiver. In addition, the dis-
trict court did not consider on the record any of the relevant
factors before determining that it would automatically appoint
a receiver immediately upon the Mathesons’ failure to pay the
back wages. For example, there was no finding that the
Mathesons would refuse to pay, that they previously engaged
in fraud, or that the property would dissipate and the property
needed to be preserved for the Secretary’s interests. Placing
the Mathesons’ business in receivership upon the failure to
pay, with no opportunity for the Mathesons to respond to the
appointment and powers of a receiver, and prior to any indica-
tion that the Mathesons would fail to pay, is premature. Since
none of the facts show an urgent necessity or actual emer-
gency warranting appointment of a receiver, the district court
should have provided notice to the Mathesons that appoint-
ment of receiver was contemplated. Cf. Maxwell v. Enterprise
Wall Paper Mfg. Co., 131 F.2d 400, 403 (3rd Cir. 1942)
(“The caution which should surround the appointment of a
receiver is heightened when such appointment is sought
peremptorily in a proceeding in which the opposition has nei-
ther notice nor opportunity to be heard. In case of ‘actual
emergency’ it may be done.”). In addition, the district court
should have made findings on the relevant factors to support
the appointment of a receiver.
[13] The district court was correct that it has authority to
order a receivership, but only after evidence has been pres-
ented and findings made showing the necessity of a receiver-
ship. For this reason, we vacate the automatic appointment of
a receiver upon a failure to pay.
We AFFIRM the district court’s decision with respect to
the application of the FLSA to the Mathesons and the right of
the Secretary to audit the books. We VACATE the portion of
the Judgment regarding the automatic appointment of a
receiver if the Mathesons fail to pay. Should the Mathesons
fail to pay the amount listed in the Judgment, the Secretary
SOLIS v. MATHESON 4535
may seek on proper showing the appointment of a receiver in
the district court.
Each party to bear their own fees and costs.
Affirmed in part and Vacated in part.