Grand Canyon Skywalkdevelopment v. 'Sa' Nyu Wa Incorporated

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GRAND CANYON SKYWALK No. 12-15634
DEVELOPMENT , LLC, a Nevada
limited liability company, D.C. No.
Plaintiff-Appellant, 3:12-cv-08030-
DGC
v.
‘SA ’ NYU WA INCORPORATED , also OPINION
named as ‘Sa’ Nyu Wa: a tribally-
charted corporation established
under the laws of the Hualapai
Indian Tribe; GRAND CANYON
RESORT CORPORATION , a tribally-
chartered corporation established
under the laws of the Hualapai
Indian Tribe; RICHARD WALERMA ,
SR.; WYNONA SINYELLA ; RUBY
STEELE; CANDIDA HUNTER; BARNEY
ROCKY IMUS; WAYLON HONGA ;
CHARLES VAUGHN , SR., each
individuals and members of the
Hualapai Tribal Council; WANDA
EASTER ; JACI DUGAN , each
individuals and Hualapai Indian
Tribe employees; DUANE
YELLOWHAWK , Honorable,
individual and judge of the Hualapai
Tribe Court,
Defendants-Appellees.
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Appeal from the United States District Court
for the District of Arizona
David G. Campbell, District Judge, Presiding
Argued and Submitted
October 19, 2012—San Francisco, California
Filed April 26, 2013
Before: Raymond C. Fisher, Richard C. Tallman,
and Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Tallman
SUMMARY*
Tribal Court Jurisdiction
Affirming the district court’s judgment in an action
concerning a dispute over a revenue-sharing contract between
a Nevada corporation and a tribally chartered corporation of
the Hualapai Indian Tribe for the building and operation of
the Grand Canyon Skywalk, the panel held that the Nevada
corporation must exhaust tribal court remedies before
proceeding in federal court on its claims challenging the
Tribe’s authority to condemn its intangible property rights in
the contract.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
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The panel concluded that the bad faith and futility
exceptions to the exhaustion requirement did not apply. It
held that where a tribal court has asserted jurisdiction and is
entertaining a suit, the tribal court must have acted in bad
faith for exhaustion to be excused; bad faith by a litigant
instituting the tribal court action will not suffice. The panel
held that the submitted evidence did not establish that the
tribal court operated in bad faith or was controlled by the
tribal council in its decision making. The panel also affirmed
the district court’s conclusion that the evidence did not meet
the narrow futility exception, which applies where exhaustion
would be futile because of the lack of adequate opportunity
to challenge the tribal court’s jurisdiction.
The panel held inapplicable the exhaustion exception for
cases in which the tribal court plainly lacks jurisdiction. The
panel stated that the main rule of Montana v. United States,
450 U.S. 544 (1981), that generally Indian tribes lack civil
authority over the conduct of nonmembers on non-Indian land
within a reservation, was unlikely to apply to the facts of this
case. The panel held that the district court correctly relied
upon Water Wheel Camp Recreation Area, Inc. v. LaRance,
642 F.3d 802 (9th Cir. 2011), which recognizes that a tribe’s
inherent authority over tribal land may provide for regulatory
authority over non-Indians on that land without the need to
consider Montana. Moreover, even if the tribal court were to
apply Montana’s main rule, the Nevada corporation’s
consensual relationship with the tribal corporation, or the
financial implications of their agreement, likely would place
the case squarely within one of Montana’s exceptions and
allow for tribal jurisdiction.
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COUNSEL
Troy A. Eid (argued) and Jennifer Weddle, Greenberg
Traurig, LLP, Denver, Colorado; Tami Denise Cowden and
Mark Tratos, Greenberg Traurig, LLP, Las Vegas, Nevada;
and Pamela Overton, Greenberg Traurig, LLP, Phoenix,
Arizona, for Plaintiff-Appellant.
Jeffrey David Gross (argued), Paul Kipp Charlton, Glen
Hallman and Christopher W. Thompson, Gallagher &
Kennedy, P.A., Phoenix, Arizona, for Defendants-Appellees.
OPINION
TALLMAN, Circuit Judge:
We must once again address the subject of tribal court
jurisdiction over disputes arising when non-Indians choose to
do business in Indian country. Underlying this jurisdictional
question is a multi-million dollar development contract
involving the building and operation of a tourist destination
overlooking one of the world’s great wonders, the Grand
Canyon. The Skywalk is a glass-bottomed viewing platform
suspended 70 feet over the rim of the Grand Canyon with the
Colorado River flowing thousands of feet below.
Grand Canyon Skywalk Development, LLC (“GCSD”),
a Nevada corporation, entered into a revenue-sharing contract
with Sa Nyu Wa (“SNW”), a tribally chartered corporation of
the Hualapai Indian Tribe. When a dispute arose over the
contract, GCSD sued SNW in Hualapai Tribal Court to
compel arbitration. While arbitration proceeded, the
Hualapai Tribal Council exercised eminent domain and
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condemned GCSD’s intangible property rights in the contract,
which practically speaking left SNW, as a tribal corporation,
in contract with the Hualapai Tribe.
GCSD responded by filing suit against SNW in the
United States District Court for the District of Arizona
seeking declaratory judgment that the Hualapai Tribe lacked
the authority to condemn its intangible property rights and
injunctive relief. The district court denied the temporary
restraining order (“TRO”) to enjoin SNW based on the
principle of comity and required GCSD to exhaust all
possible tribal court remedies before proceeding in federal
court. The district court relied on our decision in Water
Wheel Camp Recreational Area, Inc. v. LaRance, 642 F.3d
802 (9th Cir. 2011), and also concluded there was not a
sufficient basis to apply the bad faith or futility exceptions.
For the same reasons cited by the district court, we affirm.
I
On December 31, 2003, GCSD and SNW entered into a
revenue-sharing “Development and Management Agreement”
to establish a glass bridge tourist overlook and related
facilities known as the Skywalk on remote tribal land. In
addition, GCSD agreed to provide shuttle services from
locations outside the reservation to the Skywalk. The parties
signed an amended agreement on September 10, 2007, and
later created a trust to manage the shared revenues on March
10, 2010.
GCSD filed a complaint in Hualapai Tribal Court on
February 25, 2011, seeking to compel SNW to engage in
arbitration pursuant to their agreement’s dispute resolution
clause. SNW objected, but nonetheless participated, and on
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February 1, 2012, an American Arbitration Association
arbitrator set deadlines for a joint prehearing schedule and
resolution of any outstanding discovery disputes, including
depositions and subpoenas.
As arbitration proceeded, the Hualapai Tribal Council
passed Resolution No. 20-2011 on April 4, 2011, enacting
§ 2.16 of the Hualapai Law and Order Code, which codified
the Tribe’s power to invoke eminent domain to condemn
property for public use. On February 7, 2012, acting under
§ 2.16, the tribal council passed Resolution No. 15-2012 to
acquire “GCSD’s contractual interest in the Skywalk
Agreement under the power of eminent domain and to do all
things necessary to accomplish th[at] purpose.” The Hualapai
Tribal Court followed by issuing a TRO against GCSD, and
SNW filed a Declaration of Taking with the tribal court.
GCSD responded on two fronts: it filed an expedited
motion for a TRO in district court to stop the eminent domain
proceedings, and it opposed the taking in Hualapai Tribal
Court. After multiple hearings, the district court denied
GCSD’s TRO by invoking the principles of comity and
ordered GCSD to exhaust tribal court remedies prior to
review in federal court. GCSD timely appealed on March 22,
2012.
II
We have jurisdiction under 28 U.S.C. § 1292(a)(1) as an
appeal from denial of injunctive relief. Although TROs are
not typically appealable interlocutory orders, we may review
a TRO that “possesses the qualities of a preliminary
injunction” where the “district court holds an adversary
hearing and the basis for the court’s order was strongly
G RAND C ANYON S KYWALK D EV . V . ‘S A ’ N YU W A INC . 7
challenged.” Serv. Emps. Int’l Union v. Nat’l Union of
Healthcare Workers, 598 F.3d 1061, 1067 (9th Cir. 2010).
We review questions of tribal court jurisdiction and
exhaustion of tribal court remedies de novo and factual
findings for clear error. Smith v. Salish Kootenai Coll.,
434 F.3d 1127, 1130 (9th Cir. 2006); Philip Morris USA, Inc.
v. King Mountain Tobacco Co., 569 F.3d 932, 938 n.1 (9th
Cir. 2009).1
III
SNW argues, for the first time on appeal, that collateral
estoppel bars GCSD from raising similar jurisdictional
questions on appeal that it raised before the district court in
an earlier case dismissed without prejudice. Because
GCSD’s argument fails on the merits, we need not consider
either whether SNW waived this argument by failing to raise
it in the district court or whether collateral estoppel applies
here.
IV
Federal law has long recognized a respect for comity and
deference to the tribal court as the appropriate court of first
impression to determine its jurisdiction. See Nat’l Farmers
Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S. 845,
856–57 (1985); Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9,
15–16 (1987); Burlington N. R.R. Co. v. Crow Tribal Council,
940 F.2d 1239, 1244–47 (9th Cir. 1991). As support for this
1
W hile appellate review of a district court’s denial of a TRO is typically
for an abuse of discretion, the question of tribal jurisdiction and
exhaustion of tribal remedies takes priority in this case and provides the
appropriate standard of review.
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premise, the Supreme Court cites: (1) Congress’s
commitment to “a policy of supporting tribal self-government
and self-determination;” (2) a policy that allows “the forum
whose jurisdiction is being challenged the first opportunity to
evaluate the factual and legal bases for the challenge;” and
(3) judicial economy, which will best be served “by allowing
a full record to be developed in the Tribal Court.” Nat’l
Farmers, 471 U.S. at 856.
We have interpreted National Farmers as determining
that tribal court exhaustion is not a jurisdictional bar, but
rather a prerequisite to a federal court’s exercise of its
jurisdiction. Crow Tribal Council, 940 F.2d at 1245 n.3.
“Therefore, under National Farmers, the federal courts
should not even make a ruling on tribal court jurisdiction . . .
until tribal remedies are exhausted.” Stock West, Inc. v.
Confederated Tribes of the Colville Reservation, 873 F.2d
1221, 1228 (9th Cir. 1989). However, there are four
recognized exceptions to the requirement for exhaustion of
tribal court remedies where:
(1) an assertion of tribal jurisdiction is
motivated by a desire to harass or is
conducted in bad faith; (2) the action is
patently violative of express jurisdictional
prohibitions; (3) exhaustion would be futile
because of the lack of adequate opportunity to
challenge the court’s jurisdiction; or (4) it is
plain that no federal grant provides for tribal
governance of nonmembers’ conduct on land
covered by Montana’s main rule.
Burlington N. R.R. Co. v. Red Wolf, 196 F.3d 1059, 1065 (9th
Cir. 1999) (citations omitted). GCSD raises bad faith,
G RAND C ANYON S KYWALK D EV . V . ‘S A ’ N YU W A INC . 9
futility, and plain lack of tribal governance in support of its
position. We review each of these exceptions in turn but
ultimately conclude that none offers a sufficient basis to
avoid exhaustion of tribal court remedies in this case.
V
The Supreme Court has suggested that a federal court
need not wait until tribal remedies have been exhausted to
consider a case if “an assertion of tribal jurisdiction is
motivated by a desire to harass or is conducted in bad faith.”
Nat’l Farmers, 471 U.S. at 856 n.21 (internal citation
omitted). Black’s Law Dictionary defines bad faith as
“[d]ishonesty of belief or purpose.” 149 (9th ed. 2009).
National Farmers used the passive voice and neither we, nor
the Supreme Court, have expressly stated who must act in bad
faith for it to apply. We now hold that where, as here, a tribal
court has asserted jurisdiction and is entertaining a suit, the
tribal court must have acted in bad faith for exhaustion to be
excused. Bad faith by a litigant instituting the tribal court
action will not suffice.
A
The source of the bad faith exception in the tribal court
context is National Farmers, 471 U.S. at 856 n.21, which
imported it from Juidice v. Vail, 430 U.S. 327, 338 (1977).
In Juidice, the state court issued a commitment order, and the
defendant was arrested after he failed to attend a deposition,
appear for a hearing, and pay a fine. Id. at 329–30. Rather
than appeal his case in state court, he filed a 42 U.S.C. § 1983claim in district court. Id. at 328–30. Upon review, the
Supreme Court held that a federal court must abstain from
making a determination during a state proceeding based on
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the principle of comity unless the proceeding was motivated
by a desire to harass or was conducted in bad faith. See id. at
334–38. The Court looked to the proceeding and the court
overseeing that proceeding to make its determination. See id.
at 338 (holding that the bad faith exception “may not be
utilized unless it is alleged and proved that [the State Courts]
are enforcing the contempt procedures in bad faith or are
motivated by a desire to harass”). The defendant there
alleged bad faith by the plaintiffs, which the Court explicitly
held insufficient to trigger the exception. See id. (holding
that the exception was not triggered because “[w]hile some
paragraphs of the complaint could be construed to make [bad
faith] allegations as to the creditors, there are no comparable
allegations with respect to appellant justices who issued the
contempt orders”). Analogizing to this case, it must be the
Hualapai Tribal Court that acts in bad faith to avoid the
requirement to exhaust tribal court remedies.
Additionally, a broader interpretation would unnecessarily
deprive tribal courts of jurisdiction and violate the principles
of comity that underlie the exhaustion requirement. A party
would need only allege bad faith by the opposing party, or a
third party, to remove the case to federal court. Comity
principles require that we trust that our tribal court
counterparts can identify and punish bad faith by litigants as
readily as we can. GCSD’s proposed reading of the
exception would swallow the rule and undermine the
Supreme Court’s general principle of deference to tribal
courts.
GCSD points to two Ninth Circuit cases in support of its
broader interpretation of who may act in bad faith to trigger
the exception, but neither is dispositive of the issue. In A&A
Concrete, Inc. v. White Mountain Apache Tribe, the
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appellants argued that enforcement of a statutory scheme had
been in bad faith. 781 F.2d 1411, 1417 (9th Cir. 1986). We
rejected the argument because there was no evidence of bad
faith in the record. See id. Similarly, in Atwood v. Fort Peck
Tribal Court Assiniboine, we considered and rejected the bad
faith exception in a single sentence by stating that “[t]here
has been no showing that [the defendant] asserted tribal
jurisdiction in bad faith or that she acted to harass [the
plaintiff].” 513 F.3d 943, 948 (9th Cir. 2008). Although both
of these decisions looked beyond the tribal court for their bad
faith analysis, the topic received only a cursory review and
was quickly dismissed. Neither case defined the scope of bad
faith, and more importantly, neither case applied the bad faith
exception. Ultimately, where a tribe has an established
judicial system as here, the interpretation most faithful to
National Farmers is that it must be the tribal court that acts
in bad faith to exempt the party from exhausting available
tribal court remedies.
B
The facts of this case do not support a finding of bad faith
on the part of the tribal court. GCSD urges us to determine
that the Hualapai Tribal Court Evaluation,2 the proffered
testimony of its author, Executive Director Joseph Myers, and
other evidence proved that the tribal court and tribal council
were inextricably intertwined such that bad faith by the tribal
council could be imputed to the tribal court. However, the
proffered evidence does not conclusively support that claim.
The majority of the statements in the Evaluation are broad
generalizations or guiding principles. Two specific findings
2
The tribal council commissioned the Evaluation prepared by the
National Indian Justice Center.
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directly refute GCSD’s contentions: (1) “no interviewee
stated that there was any direct interference in court matters
by tribal council members;” and (2) “[t]he judiciary is
separate and apart from the tribal council.” Additionally, the
tribal council’s act of bringing in an external auditing
organization lends credibility to the tribal court system as a
whole.
GCSD challenges the district court’s refusal to hear
testimony from the Evaluation’s author, Mr. Myers. “A
district court’s evidentiary rulings should not be reversed
absent clear abuse of discretion and some prejudice.” S.E.C.
v. Jasper, 678 F.3d 1116, 1122 (9th Cir. 2012) (citation and
internal quotation marks omitted). “For us to reverse a
decision as an abuse of discretion, we must have a definite
and firm conviction that the district court committed a clear
error of judgment in the conclusion it reached.” United States
v. Comprehensive Drug Testing, Inc., 621 F.3d 1162, 1175
(9th Cir. 2010) (citation and internal quotation marks
omitted).
The district court did not abuse its discretion when it
denied GCSD’s request to introduce Mr. Myers’ testimony.
GCSD requested an emergency evidentiary hearing but failed
to notify the court of its intention to introduce witness
testimony. As a result, SNW did not have an opportunity to
subpoena defense witnesses. Out of fairness to SNW and due
to the urgency of a TRO proceeding, the court accepted only
Mr. Myers’ written report. The court reviewed the published
Evaluation and left open the possibility of an additional
evidentiary hearing if necessary.
Ultimately, the court’s denial of the admission of his
actual testimony was not an abuse of discretion because the
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Evaluation documented Mr. Myers’ findings and provided a
balanced review of the Hualapai judiciary. When considered
together, the submitted evidence does not establish that the
tribal court operated in bad faith or is controlled by the tribal
council in its decision making.
VI
Futility is also a recognized exception to the requirement
to exhaust court tribal remedies. Where “exhaustion would
be futile because of the lack of adequate opportunity to
challenge the court’s jurisdiction,” a party is excused from
exhausting claims in tribal court. Red Wolf, 196 F.3d at 1065.
Generally, this exception applies narrowly to only the most
extreme cases. See Johnson v. Gila River Indian Cmty.,
174 F.3d 1032, 1036 (9th Cir. 1999) (two-year delay called
into question the possibility of tribal court remedies);
Krempel v. Prairie Island Indian Cmty., 125 F.3d 621, 622
(8th Cir. 1997) (exhaustion not required where there was no
functioning tribal court).
GCSD has failed to show that the Hualapai Tribal Court
does not offer an adequate and impartial opportunity to
challenge jurisdiction. Although Hualapai Law and Order
Code § 2.16(K) originally precluded a judge pro tem from
hearing condemnation cases, the tribal court remedied this
separation of powers issue by invalidating that section and
appointing a neutral pro tem judge to hear this case. The
Hualapai adjudicatory process has continued, as evidenced by
submitted tribal court and tribal court of appeals orders. Both
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parties to this appeal are participating in those proceedings.3
The tribal court determined it has jurisdiction to review the
condemnation act under the catchall section of the Hualapai
Law and Order Code, § 3.1(d), which states: “the Tribal
Court may be guided by common law as developed by other
Tribal, federal or state courts” where no law is directly on
point. Even the Evaluation offered as evidence by GCSD as
proof of futility includes statements such as, “[t]he Hualapai
Tribal Court is a functional, established system with court
procedures” and “[t]he judiciary is separate and apart from
the tribal council.”
The submitted evidence supports the district court’s
finding that the tribal court operates independently from the
tribal council and the evidence presented does not meet the
narrow futility exception. GCSD is actively litigating its case
in Hualapai Tribal Court, contradicting its argument that it
has not had an “adequate opportunity to challenge the court’s
jurisdiction.” Red Wolf, 196 F.3d at 1065.
VII
Finally, we turn to the third issue raised on appeal,
whether the tribal court plainly lacked jurisdiction over this
case. The Supreme Court stated in Strate v. A-1 Contractors
that where “it is plain that no federal grant provides for tribal
governance of nonmembers’ conduct on land covered by
Montana’s main rule, it will be equally evident that tribal
courts lack adjudicatory authority over disputes arising from
3
Appellees’ outstanding Second Motion to Supplement the Record, Oct.
5, 2012, ECF No. 38, and Appellant’s outstanding Motion to Supplement
the Record, Oct. 15, 2012, ECF No. 39, are granted. Submitted materials
have been reviewed and were considered in this decision.
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such conduct.” 520 U.S. 438, 459 n.14 (1997) (Montana
“described a general rule that, absent a different
congressional direction, Indian tribes lack civil authority over
the conduct of nonmembers on non-Indian land within a
reservation.” Id. at 446). We hold that this Strate exception
does not apply here to deny the tribal court of its initial
jurisdiction.
The tribal court does not plainly lack jurisdiction because
Montana’s main rule is unlikely to apply to the facts of this
case. Furthermore, the district court correctly relied upon
Water Wheel, which provides for tribal jurisdiction without
even reaching the application of Montana. Even if the tribal
court were to apply Montana’s main rule, GCSD’s
consensual relationship with SNW or the financial
implications of the agreement likely place it squarely within
one of Montana’s exceptions and allow for tribal
jurisdiction.4
A
Montana v. United States, 450 U.S. 544 (1981), is “the
pathmarking case concerning tribal civil authority over
nonmembers.” Strate, 520 U.S. at 445. But as the district
court properly determined, a tribe’s inherent authority over
tribal land may provide for regulatory authority over non-
Indians on that land without the need to consider Montana.
See Water Wheel, 642 F.3d at 804–05. As a starting point, we
4
Although GCSD raises mobilia sequuntur personam as another means
to preclude tribal jurisdiction in the first instance, its argument conflates
the interlocutory jurisdictional question with the merits of the
condemnation action. This opinion focuses on the jurisdictional question,
and we need not determine the situs of the contract to render our decision.
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recognize “the long-standing rule that Indian tribes possess
inherent sovereign powers, including the authority to exclude,
unless Congress clearly and unambiguously says otherwise.”
Id. at 808 (citation omitted).
In Water Wheel, a non-Indian corporation entered into a
lease agreement with a group of tribes for the development
and operation of a recreational park and marina on tribal land
along the Colorado River. Id. at 805. Under the contract
Water Wheel collected fees from users and made payments
to the tribes. Id. After a dispute arose, Water Wheel stopped
making payments and refused to vacate the premises after the
lease ended. Id. The tribes filed suit in tribal court, and
Water Wheel moved to dismiss the case, arguing the court did
not have jurisdiction under Montana. Id. at 805–06. We held
that “where the non-Indian activity in question occurred on
tribal land, the activity interfered directly with the tribe’s
inherent powers to exclude and manage its own lands, and
there are no competing state interests at play, the tribe’s status
as landowner is enough to support regulatory jurisdiction
without considering Montana,” id. at 814, and unless a
limitation applies, adjudicatory jurisdiction, as well. Id. at
814–17.
Despite GCSD’s attempts to distinguish Water Wheel, the
factual differences do not diminish the reasoning or the
application of the decision here. Just as in Water Wheel,
GCSD agreed to develop and manage a tourist location on
tribal land in exchange for a fee. It is the impressive beauty
of the tribal land’s location that is the valuable centerpiece of
this controversy. Tourists visit the Skywalk because it
provides unparalleled viewing of the Grand Canyon, a
location to which the Tribe has the power to limit access
through its inherent sovereignty and the right to exclude.
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Water Wheel is instructive because there, just as here, it was
access to the valuable tribal land that was the essential basis
for the agreement.
Although this case involves an intangible property right
within a contract, rather than a leasehold as in Water Wheel,
the contract in this case equally interfered with the Hualapai’s
ability to exclude GCSD from the reservation. The dispute
between GCSD and SNW over the management of the
Skywalk property resulted in the Hualapai taking drastic
measures: passing an ordinance to condemn GCSD’s property
rights, purporting to substitute the Tribe in the place of GCSD
to carry out the management of the overlook, and spending
more than two years in litigation. With the power to exclude
comes the lesser power to regulate. South Dakota v.
Bourland, 508 U.S. 679, 689 (1993). Where a tribe has
regulatory jurisdiction and interests, such as those at stake
here, it is also likely to have adjudicatory jurisdiction as the
district court concluded. See Water Wheel, 642 F.3d at814–16.
GCSD argues the Tribe waived its inherent sovereignty
when it established SNW to manage the Skywalk contract,
but that is not the case. Merrion v. Jicarilla Apache Tribe
cautioned against conflating a tribe’s agreement to contract
with a waiver of tribal sovereignty. 455 U.S. 130, 144–48
(1982). “To presume that a sovereign forever waives the
right to exercise one of its sovereign powers unless it
expressly reserves the right to exercise that power in a
commercial agreement turns the concept of sovereignty on its
head . . . .” Id. at 148. GCSD relies on Merrion where the
Court stated “[w]hen a tribe grants a non-Indian the right to
be on Indian land, the tribe agrees not to exercise its ultimate
power to oust the non-Indian as long as the non-Indian
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complies with the initial conditions of entry.” Id. at 144. But
that argument goes to the merits of the condemnation action
and not to the jurisdictional question before us now. Read in
its entirety, Merrion holds that unless expressly waived “in
unmistakable terms” within the contract, a tribe retains its
inherent sovereignty, and as such, the tribe may have
jurisdiction. Id. at 148.
B
Furthermore, although the main rule in Montana v. United
States is that a tribal court lacks regulatory authority over the
activities of non-Indians unless one of its two exceptions
apply, this case is not Montana. Montana, 450 U.S. at565–66. Montana considered tribal jurisdiction over
nonmember activities on non-Indian land, held in fee simple,
within a reservation. Id. at 547, 565–66. The land underlying
this case, however, is federal Indian land held in trust for the
Hualapai Tribe. The dispute arose out of an agreement
related to the development, operations, and management of
the Skywalk, an asset located in Indian country.
With the exception of Nevada v. Hicks, 533 U.S. 353(2001), the Supreme Court has applied Montana “almost
exclusively to questions of jurisdiction arising on non-Indian
land or its equivalent.” Water Wheel, 642 F.3d at 809. When
deciding whether a tribal court has jurisdiction, land
ownership may sometimes prove dispositive, but when a
competing state interest exists courts balance that interest
against the tribe’s. See Hicks, 533 U.S. at 360, 370. Here, as
the dispute centers on Hualapai trust land and there are no
obvious state interests at play, the Hicks exception is unlikely
to require Montana’s application. At the very least, it cannot
be said that the tribal court plainly lacks jurisdiction.
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C
Even if Montana applied, either of its two recognized
exceptions could also provide for tribal jurisdiction in this
case. The first exception allows “Indian tribes [to] retain
inherent sovereign power to exercise some forms of civil
jurisdiction over non-Indians on their reservations” where
nonmembers enter into “consensual relationships with the
tribe or its members, through commercial dealing, contracts,
leases, or other arrangements.” 450 U.S. at 565. The second
exception exists where the conduct of a non-Indian “threatens
or has some direct effect on the political integrity, the
economic security, or the health or welfare of the tribe.” Id.
at 566. Additionally, tribal laws may be fairly imposed on
nonmembers if the nonmember consents, either expressly or
through his or her actions. See Plains Commerce Bank v.
Long Family Land & Cattle Co., 554 U.S. 316, 337 (2008).
GCSD voluntarily entered into a contract with SNW by
signing an agreement to develop and manage the Skywalk
and both parties were represented by counsel. The scope of
the agreement was extensive, lasting more than eight years at
the time the case was filed in the district court, and with
agreed upon possible damages of up to $50 million for early
termination. The parties reviewed and signed an amended
agreement and entered into a subsequent trust years later.
While the agreement was between GCSD and SNW, and not
the Tribe directly, the first exception applies equally whether
the contract is with a tribe or its members. Montana,
450 U.S. at 565. Given the consensual nature of the
relationship between the parties and the potential economic
impact of the agreement, the tribal court could conclude it has
jurisdiction over SNW’s dispute with GCSD under either of
Montana’s exceptions.
20 G RAND C ANYON S KYWALK D EV . V . ‘S A ’ N YU W A INC .
Moreover, GCSD should have reasonably anticipated
being subjected to the Tribe’s jurisdiction. See Plains
Commerce, 554 U.S. at 338. Article 2, § 2.1 of the original
GCSD/SNW agreement specifies that the “Manager [GCSD]
hereby accepts its appointment as the developer and manager
of the Project and agrees to develop, supervise, manage, and
operate the Project . . . in compliance with all applicable
federal, [Hualapai] Nation, state, and local laws, ordinances,
rules, and regulations, including all employment laws and
regulations.” (emphasis added). Thus, the necessary
corollary would be that if GCSD operated in violation of the
Tribe’s laws, it could be subjected to its jurisdiction. GCSD
consented to be bound by this language when it signed the
agreement with SNW.
VIII
The judgment of the district court requiring exhaustion of
tribal court remedies prior to proceeding with the action in
federal court is AFFIRMED.