NNI Forum: Tribal Sovereign Immunity
Native Nations Institute. "Forum on Tribal Sovereign Immunity" (roundtable forum). Native Nations Institute For Leadership, Management, and Policy, University of Arizona. Tucson, Arizona. May 14, 2007. Interview.
Joseph P. Kalt (moderator): "Like other sovereign nations around the world, Indian nations have powers of sovereign immunity to be free from lawsuits, other challenges to their authority. At the same time, the realities of a globalized economy, a very competitive world, often puts tribes under pressure to waive that immunity and tonight we're going to talk about the issue of sovereign immunity, when to waive it, when to use it, when to not waive it and we've assembled a very distinguished group really representing all walks of life here. On my right, Lance Morgan is the Chief Executive Officer of the Ho-Chunk Inc. tribal enterprise of the Winnebago of Nebraska, well known for its success over the last decade in building a conglomerate of businesses to really rebuilt and strengthen the Winnebago Nation. On my left, Professor Rob Williams from the University of Arizona Rogers School of Law and Director of the Indigenous Peoples Law and Policy Program is one of the nation's leading educators in American Indian law, has written on all aspects of law and teaches tribal audiences law students at the University of Arizona all the aspects of American Indian law and focuses a great deal on the issues of sovereign immunity. On my right, Chairman John 'Rocky' Barrett is the long-serving Chairman of the Citizen Potawatomi Nation of Oklahoma. Starting a couple decades ago with very little, it's now the engine of Shawnee, Oklahoma, and the surrounding region and noted for its success not only in its economic development, but in rebuilding a community that had been scattered across the United States. On my left, practicing attorney Gabe Galanda from Williams Kastner. Gabe is an expert working with tribes particularly in the Pacific Northwest really doing innovative things with handling sovereign immunity, its uses and misuses, providing advice to tribes, to clients, on these challenges the tribes face as they struggle with the question of when to waive their immunity, when to not waive it. And so we've assembled these folks to talk to us about their experiences, their views on this challenge that so many tribal leaders face across the United States. I'd like to begin with all of you, and maybe start with you Lance and work down here, we hear a lot about the issue of sovereign immunity, often out on the ground. Waiving sovereign immunity is equated with waiving sovereignty and you've faced this I know in your business enterprises. What are your views on that, what's the boundary there? Is waiving sovereign immunity waiving tribal sovereignty?"
Lance Morgan: "I really don't...I think they're two different things. I think they're easily confused because they both use the word 'sovereign' in it. I always say that on our reservation, if somebody were to try to take away a tribal sovereign right, maybe a state or a county or somebody else, then we'll fight to the death, it's on, we'll empty the tribal treasury to fight that one. But if it's a business transaction where we want to play a game, we want to take someone's money or we want to make sure that we do something together, I really want to make sure that we're playing the game by the same rules, and waiving sovereign immunity really is not that big a deal for us in those situations. If we want to access that capital or to enter that relationship, then it's only fair to be able to level the playing field between the two parties. So in those instances we'll waive it all the time. It really isn't that big a deal for us."
Joseph P. Kalt: "Rocky, from your point of view, tribal chairman having dealt with these issues so much, with your bank, with other aspects, what's your view on this question is waiving sovereign immunity waiving your sovereignty?"
John "Rocky" Barrett: "It's actually an exercise of sovereignty. I know from our perspective, we sort of look at it as how would we feel as lenders if someone came to us and wanted to borrow money and said, 'We're not interested in waiving sovereign immunity in dollar amounts for this particular note or this contractual obligation that we have with your bank'? Our first reaction would be, 'Well, you don't intend to pay us.' We take the same perspective at the tribe, that if we're going to behave as responsible lenders, we have done our due diligence, we know that the cash flow is there, we have reasonable expectations for the success of the project for which we're borrowing the money, and if we do not then we still feel duty bound to pay the loan off. So the waiver of tribal sovereign immunity from suit, particularly for financial transactions, we think is a part of doing business responsibly as a tribe. But it's not a waiver of your sovereignty. You as a sovereign have the ability to say, 'I'm going to, as a sovereign, I'm going to put us on equal footing in this obligation and I'm doing that as a choice.' So you're really not giving up...you're exercising your rights."
Joseph P. Kalt: "Gabe, what are you seeing with your clients and what are you telling them about this issue?"
Gabe Galanda: "Well, we look at sovereign immunity primarily through two lenses. One is the proactive use of sovereign immunity as Chairman Barrett said as an exercise of sovereignty, essentially defining the time, scope and manner by which a sovereign may consent to suit or invite lawsuit against the sovereign and ultimately the tribal treasury, so that's looking at it proactively perhaps in a means of drawing commercial investment to the reservation or other private investment to the reservation. It really becomes an exercise of sovereignty. But defensively is perhaps where the line between sovereignty and sovereign immunity blur, because defensively most common you will find tribes leveraging their immunity to withstand attack by local government or state government as Lance eluded to, and in that instance you are using sovereign immunity as a defensive mechanism to protect your sovereignty and without sovereign immunity state courts will be presented with questions of regulatory jurisdiction, in particular whether cities, counties and states have jurisdiction over affairs arising out of the reservation and as a threshold defense to that type of question which would be brought in state court by such entities, tribes can assert their sovereign immunity. So in asserting their sovereign immunity defensively, they are protecting their sovereignty, and in some instances that's where the lines between sovereignty and sovereign immunity blur."
Joseph P. Kalt: "Rob, I know you've got strong views on the origins of this concept of sovereign immunity. Where does it come from?"
Robert Williams: "Yeah, I'm always amused when I hear tribal people defend sovereign immunity as one of their inherent rights as if it was something that existed prior to contact, and actually sovereign immunity originates in the 14th, 15th century, it comes from this notion that the English king could do no wrong and that would be exactly what the old common law courts would pronounce. The king can do no wrong and since the king maintains his courts and pays the judges, the judges aren't going to dare challenge that notion. So it's really an idea that you find replicated in no tribal culture in North America. In fact, the traditions of most tribes are that leaders are totally accountable to their people, and oftentimes leaders take on additional responsibilities for their people. So it's a countercultural notion. I think the important thing to recognize is that sovereignty is really the big-picture issue, and that sovereign immunity is a tool of sovereignty and that's how governments have always looked at sovereign immunity. The United States has sovereign immunity, the federal, the state governments have sovereign immunity, tribes have sovereign immunity. The big difference has been that for the past 100 years, the federal governments and state governments have used their sovereign immunity as a tool, making strategic decisions about when to use it, when to assert it, when to waive it, when to limit it, when to cover it by insurance, and so I think what you're seeing many tribes now understand is that this is an important tool of sovereignty, of control over the reservation, of control over economic development, and it has to be used with a lot of thought and has to be used strategically."
Joseph P. Kalt: "Pick up on that, all right. I've heard a lot of tribal council members view a request by let's say an outside investor for a waiver of sovereign immunity as an insult because it says to the outside investor I don't trust your court system. I don't trust you to adjudicate any disputes between me and you. I don't trust that. And I sense sometimes there's some truth in that, that is that all you're hearing is just mistrust of tribal court system. Should tribal councils take it that way as an insult?"
Robert Williams: "I think that tribal councils should really look at what's being said when outside investors say, 'We don't trust or we don't know your court system.' That's a challenge for the tribe. Many tribes have established very effective court systems. They have courts of appeals, they have codes and business codes that they operate under, but sometimes they don't do the job they need to do to make sure that the outside investment company understands that. So if what the tribe is hearing is we don't trust your courts, we don't know about your courts, rather than look at that as an insult, I think it's better to look at that as an opportunity to educate and if the tribe really can't say to these outside investors or to entrepreneurs on the reservation -- because Indian people have to use those courts as well -- if they can't say that we have a fair court system, that we have transparency, that you can do business here, that your debts will be obligated. Rather than take that as an insult, I think what the tribe needs to do is look inside itself and make a decision about how important that is. We've talked about sovereign immunity as a tool of sovereignty, an effective judicial system, an effective dispute-resolution system is also another important tool."
Joseph P. Kalt: "Gabe, what do you see out there? You deal with tribal clients and they hear it as an insult. It's an insult to their sovereignty."
Gabe Galanda: "A lot of it, though, really depends on the way in which the request is made. As a threshold matter, if you are a non-Indian entrepreneur approaching a tribe to do business, you must appreciate that there are blurred lines between sovereign immunity and sovereignty and choice of law and choice of forum, first and foremost. And then beyond that these are not just legal terms of art that can be plugged into a boilerplate contract. These are legal terms, certainly, but they have social overtones, political overtones, cultural overtones. Along the lines of what Rob was suggesting, some people believe that they have a treaty right to tribal immunity when in fact they probably do not. But you have to understand the consciousness of Indian Country and tribal council who are elected by their people, and ultimately what their people are thinking about issues of sovereignty, jurisdiction, sovereign immunity and the like before you even approach a tribe. So it's much like going to the Far East and before you would ever go to the Far East to do business, any business person knows you would become savvy in the ways of people doing business in the Far East, the custom and traditions of those folks sitting around a board room or even a restaurant. You may take a translator. When approaching a tribe, you may take a corporate Indian lawyer who understands the philosophy of tribal government, who understands those political, social and cultural overtones and ultimately understands the pragmatic approach that tribes are taking to resolve issues of common concern. And they are valid concerns: the integrity of tribal court systems, the transparency of tribal government, the sophistication to do business in seven, eight or even nine figures. Those are very valid concerns, but it's really in the art of the delivery and in making sure that when you approach tribal government, you are doing so very sensitively and you appreciate that it may be your only approach, only opportunity to really convey to them that you are there to do business in a meaningful way and you are there to meet halfway on these very important issues."
John "Rocky" Barrett: "The exercise of sovereign immunity has become in some ways the way that Indian Country seems to be using it is presenting a threat and judges, particularly Supreme Court judges, seem to find the concept repugnant, and unless we tailor the use of sovereign immunity in the same way that state legislatures have and the federal government has, where you provide recourse in situations where tribes want to take sovereign immunity now. If they don't provide some other form of recourse, to someone with a complaint within their judicial system, they're going to find themselves on the receiving end of some very adverse rulings."
Joseph P. Kalt: "In your case, too, Rocky, I take it you all have taken this prospect of an insult and basically turned it into a challenge to build your own court systems and to be able to sit there and say our court system...I take it...Hearing you talk before, I know you think you've got a court that's just as good as any other. What have you done in that arena to build that court system?"
John "Rocky" Barrett: "We do think we have a very good court system but if a lender, if we have a project that we need a lot of money for that project from a lender and the lender...we exhaust all the lenders who say everyone says we're going to have to have a tribal sovereign immunity waiver, well, then I guess we'll have to have a sovereign immunity waiver. I'm not saying there's situational ethics there but..."
Joseph P. Kalt: "But you've built your Supreme Court."
John "Rocky" Barrett: "We have built our Supreme Court and they are a very knowledgeable, responsible group of experienced jurists."
Joseph P. Kalt: "And how do you relate to the State of Oklahoma courts?"
John "Rocky" Barrett: "We have a full faith and credit agreement with the Oklahoma courts, which has only been tried a couple times. Once, the first time not successfully, but after we appealed the process through I believe that the state is more comfortable with that process now. But the idea that we would defend ourselves from jurisdictional threats from the state governments, we would not hesitate to use sovereign immunity from suit as a defense in that matter, the same as the state would not hesitate to use it against us if we were to make a similar jurisdictional threat."
Joseph P. Kalt: "So you're looking for parity there."
John "Rocky" Barrett: "Yes."
Lance Morgan: "I think it's important to understand that you're talking about sovereign immunity and sovereignty in a couple different contexts. In the United States, the government makes up maybe 25 percent of the economy. On a reservation, typically the tribe might make up 95 percent of the economy and because of lots of reasons, the tribes are forced to be the economic engine on their own reservations also. And so you have a governmental context in this really emerging, fastly emerging commercial context in business, and they're really two separate issues and I think that what happens, the confusion is that political leaders think of it a certain way. But in a business context you have to think of it, it's a much more flexible dynamic, and that's what causes confusion I think at the local level. And tribal government leaders are right to protect sovereign interests for the government, but it becomes an impediment to the growth on the economic side that really in all cases isn't really a rational kind of reason to not go forward, and it can end up hurting you by limiting your opportunities on your own reservation."
John "Rocky" Barrett: "There's definitely a misunderstanding of what it is on the reservation, too. It's amazing what people will come up with of what their perception of sovereignty is. We recently in the performance venue of our casino, we had Three Dog Night there to perform and of course that drew all the old hippies in half the State of Oklahoma."
Joseph P. Kalt: "Did you go, by the way?"
John "Rocky" Barrett: "Oh, yeah. My hair's shorter now. One particularly grizzled, tattooed old guy showed up and immediately sat down and fired up a joint. Of course our police descend on him and put him in cuffs. He said, 'I thought you guys were sovereign.' And I said..."
Lance Morgan: "It's a crime not to care on the reservation."
John "Rocky" Barrett: "His idea of sovereignty was a total absence of law. That was his perception of it."
Robert Williams: "Let me pick up on a point there. Those full faith and credit agreements, which essentially allow tribal judgments to be enforced in state courts and state judgments to be enforced in tribal courts, there's an example of exercising your sovereignty. When you can have another court take a look at your own tribal court's judgments and say we're going to enforce those, that extends the reach of your power, and so there's an example whereby using sovereign immunity creatively, combining it with some of these other tools like the full faith and credit agreements, gives a tribe a chance to really project its sovereignty beyond the reservation borders, and that's what sovereignty is all about."
John "Rocky" Barrett: There were some practical applications that really what generated this thing was child support payments. We were having difficulty getting child support judgments enforced in state court. People would go off reservation and we could... non-Potawatomi spouse, we couldn't get child support judgments enforced and when the thing was reversed for the state where they wanted to enforce a garnishment I think or I think there may have been a child support issue, we finally sat down with the local district judge and said, it looks like we have the basis for a quid pro quo here and we worked the agreement out and filed it with the Oklahoma Supreme Court. This was back in '84. It's been a long time ago. '85 I guess.
Joseph P. Kalt: "We all work with or know tribes where they're a long way from being able to walk in and negotiate or secure for example full faith and credit agreement. Where do you start? Think about some of the tribes out there that are struggling without the economic development, without the economic resources, still saddled without a court or with an older constitution not of their own making. Where do you start in this game to build these kinds of capacities to walk in and be able to stand there toe to toe with the state of Oklahoma and say look, 'Our child support system is just as good as yours, we can do this reciprocally?' Where do you start in that?"
John "Rocky" Barrett: "We are the court for another tribe in Oklahoma. We are the court for two of the local municipalities around us who can't afford their own court and police systems. This other tribe that has come to us, we enforce their statutes. They've maintained their sovereignty from the standpoint of having adopted their own set of statutes, but our clerk, our judge, our prosecutor, our public defender, they all function on a...we do it on a contractual basis. They function to act as that tribe's court, and if it were not for that they couldn't afford the cost of the infrastructure."
Robert Williams: "And talking about sovereign immunity may be a bit of the tail wagging the dog, because to even get to the point where you can talk seriously about thinking about sovereign immunity, thinking about taking out insurance policies to cover liabilities, negotiating these types agreements with the state, you better have your self-governance act in order, you better have an effective tribal council, you better have an effective constitution, you better have a really good tribal court system with independent judges who are not afraid to make decisions that might be politically unpopular. And so in many ways, to even get to this point that we're talking about where you're going to be thinking creatively and strategically about using sovereign immunity as an economic development tool, as a sovereignty tool, there's a lot of steps that need to go beforehand that tribes need to think about seriously."
Lance Morgan: "It's a tiny piece of the puzzle. I think that sometimes people talk about sovereign immunity in a negative fashion or something you have to waive or something that will hold you back or keep people from dealing with tribes, but I think that once you get your act together and you start evolving as an entity, as a tribe and as a tribal corporation or something, sovereignty starts becoming a positive. You can use it to ward off kind of nuisance-oriented suits. You can also use it to really start asserting your rights as a tribal government. One of the examples I like to give is that we were in the tobacco business and the state controlled every element of the manufacture, the distribution and we were just at the retail end and they would just cut us off. They'd tell the non-Indian distributor don't sell to us without state taxes on it or we'll pull your license. They would never go to bat for us. But we were part of this thing in the late "˜90s where there was a tribal manufacturer, a tribal distributor and a tribal retailer all with sovereign immunity and the state would tell them...they'd call us up and they'd say, 'You better not do it.' Well, we only sold to tribes. We sold to each other. We created an entire distribution system that was protected by sovereign immunity that allowed the tribes to assert what it wanted to do, its own taxation rights on the reservation that it couldn't do before under the old system. That's just one example, but there's a hundred ways that you could use it as a way to step across the line and assert your rights."
Gabe Galanda: "And I would say at a very basic level, you have to walk before you can run as Rob is suggesting, but you can begin to empower a tribal council to begin assessing their sovereignty, just assessing what it means to have sovereignty, and maybe you're a P.L. 280 tribe which means you have by federal law ceded criminal jurisdiction to certain states. Well, that doesn't mean that you've ceded civil regulatory jurisdiction and the Cabazon case tells us that. So you may have somebody on your reservation who is a nuisance, who is causing problems, who you cannot criminally prosecute by way of P.L. 280 or Oliphant but you can civilly exclude them from your reservation and that is an exercise of sovereignty. Now best-case scenario, you're civilly excluding them through a tribal court process, but even without a tribal court the tribal council could have the inherent authority to exclude someone civilly from the reservation and they begin to establish their sovereignty in that way. You may have a reservation that's been completely allotted by the Dawes Act essentially creating a checkerboard environment, where you have fee parcels next to trust parcels next to fee parcels and so on and so forth and you're confused about who has jurisdiction over what. Well, there's a law suggesting that you have civil regulatory jurisdiction within the exterior boundaries of your reservation, irrespective of whether there are non-Indians who own fee parcels that were essentially taken from tribes and tribal people in the 1800s. So there's another exercise in sovereignty. How are you going to harness that sovereignty -- and irrespective of fee title over your reservation in the fact that it's checkerboarded -- assert civil regulatory jurisdiction over these activities that are taking place within your reservation? Maybe you begin to tax your non-Indian neighbors under your local taxing power, or maybe you begin to assert zoning authority. So there's a number of ways tribes can begin to walk again before they run to begin understanding what their sovereignty is, notwithstanding all these erosions of sovereignty that Congress and the courts have forced upon tribes, and then once they are more accustomed and more fluent in the language of sovereignty, then comes the more sophisticated discussions about building tribal justice systems, about exercising your sovereign immunity in certain ways, which ultimately is an exercise of sovereignty. And then you can begin to take those steps, and I think it becomes circular and somewhat starts to perpetual itself."
John "Rocky" Barrett: "Yeah, if you don't exercise it, it doesn't exist."
Gabe Galanda: "And if you don't exercise it Congress or the courts will."
Lance Morgan: "You don't get elected one day and all of a sudden you're a sovereign, tribal sovereignty, sovereign immunity expert. Those things evolve over time. With Chairman Barrett, you're talking about somebody who's been there and functioning and has dealt with all these situations and has learned how to approach these things. This is an evolutionary process and you've got to figure...you talked about walk before you can run. You've really got to figure out a way to internally in your tribe nurture that kind of environment where a sophisticated approach to this begins to evolve internally."
John "Rocky" Barrett: "I remember the night where we sat down and said, 'Let's sit down and list everywhere that tribal law applies or could apply if we had the statute.' And we sat down and worked with Browning Pipestem. I don't know whether you remember Browning. And Bill Rice, who's a law professor at Tulsa University Law School. And we sat down with them one night and basically walked through our set of statutes and what their experiences were with other tribes and talked about what our, what is the gambit of tribal law that could apply that we could use. Interestingly enough, from that night we probably doubled that list since then because of the evolving picture of how we interrelate because we got in the rural water district business and we started operating a state-licensed rural water district basically where the water district leases the operational facilities, the pipe and the water treatment plant and everything from the sovereign of the Citizen Potawatomi Nation and that interaction between essentially what's the state body -- which we control the board of directors of it -- back to the tribe. That's a hybrid that we never dreamed that we would have, or this hybrid of us providing the court and police for a municipality, a charter municipality. That's an interesting cross-deputization issue."
Joseph P. Kalt: "One of the dimensions here that sometimes comes up and you're starting to touch on it, so often this issue of sovereign immunity is accounted around the big business deal, the bank is depending, whatever. But so much of sovereign immunity often has to do with littler things. A tribal chairman friend of mine one time said, 'You know, if you get a reputation, someone slips and falls in your casino and hurts themselves 'cause you had improper equipment there or you had not repaired the floor or something, that reputation spreads around the community pretty fast and you start to lose business and so forth.' Maybe starting with you, Rocky, there is an element of accountability here not only with outsiders, non-Indians, but Citizen Potawatomi citizens."
John "Rocky" Barrett: "Well, for us in particular, because we operate the largest chain of tribally owned national banks in the country -- and banks are purely creatures of public confidence -- if people don't feel confident about your behavior as a sovereign in the ownership of this national bank, they'll take their money out. Obviously, we have more money loaned than we have on deposit, that's part of the nature of the banking business, and if you can't keep a reputation with the public intact that you're going to behave responsibly in all matters, it's going to end up costing you the capital of the bank. People will run from your bank."
Joseph P. Kalt: "We've started to do some research. It looks like the states in the United States with the strongest prohibitions in their constitutions against any waiver of sovereign immunity are the places with the greatest poverty and the greatest reputations for corruption and other malfeasance among the public officials."
John "Rocky" Barrett: "A lack of accountability, yeah."
Joseph P. Kalt: "Lack of accountability."
Lance Morgan: "Sovereign immunity is a wonderful thing to have in a fight. It's excellent. But it's also a responsibility. If you misuse it, you won't have it for long is my guess. If you use it in small context or small ways to hurt someone else's interest when it's really not fair, that's what you have insurance for because you need to hang on to it for the big things, when someone's attacking the tribe's assets or going after really a jurisdictional kind of right or a regulatory thing, then it becomes important. But if you use it as a run-of-the-mill thing, it's really going to be looked on as a negative, and I don't know many tribes that do that to be honest."
Robert Williams: "There's a lot of hidden costs here for tribes, and I like the point you make about when we think about sovereign immunity, we think about the big multi-million dollar deals, but if you sit around and think about what Indian people expect of their tribal governments, well, they expect them to provide an economic environment for jobs, they expect them to provide help out on healthcare, they expect them to help out on education. But suppose you can't get the teacher to come out and teach at that school because they don't think they're going to get a fair shake in an employment context because they've heard there's no protection out there for job tenure. Suppose you can't get a construction company to build that tribal health clinic because they feel that they're not going to get their contracts enforced. And so it may well be that one of the biggest barriers to exercising sovereignty in all these different areas is this one issue of sovereign immunity, because it creates a perception out there not only amongst non-Indian businesses but amongst the Indian entrepreneurs that this isn't a good place to invest, this isn't a good place..."
Joseph P. Kalt: "To be a school teacher."
Rob Williams: "This isn't a good place to work, this isn't a good place to teach, and it just might be that one little issue. I like what you said, Rocky, how you guys sat down that one night. I call that the sovereignty audit. I actually encourage tribes to do a sovereignty audit and see where you're exercising your sovereignty at, and what you'll usually find out is that you're not exercising it nearly as vigorously as you think, and it may well be because of this barrier that sovereign immunity may be creating for you."
John "Rocky" Barrett: "Well, it's claiming where your government has jurisdiction. If you claim the jurisdiction and authority, governmental authority that you're entitled to, that's basically the exercise of sovereignty. But the use of sovereign immunity defense in a court action, like Lance said, you don't just do that casually. That's using a hand grenade in a fist fight. It's too much. You just don't do that until you are attacked by a larger sovereign my guess would be."
Gabe Galanda: "I think sovereign immunity presents the most imminent threat both to business and ultimately sovereignty in the tort regime, and if you think about Mexico for example, people hesitate to drive south of the border because there's a perception that there is no law and order in Mexico. So on some level that effects their economic bottom line. People would rather just simply go to San Diego or somewhere else rather than Rocky Point or Tijuana, given that perception or even misperception. The same thing holds true to some extent for Indian Country, which is not to suggest it's not a safe place, but when you have headlines that read 'XYZ Tribe Dismissed Wrongful Death Suit Out of Court Leaving Grieving Widow Without Redress,' people are going to think twice before they head to the casino to ultimately do business and leave their money there for the tribe to then reinvest it in governmental service programs. Same thing can be said of amphitheaters, which are now opening up on the reservation. Casinos and amphitheaters, by the way, are a pretty interesting mix of alcohol and music and dancing and a whole host of things so things will naturally happen."
Joseph P. Kalt: "A lot of slip and falls."
Gabe Galanda: "There's a lot of slip and falls, there may be in fact fist fights, and that's not again to suggest that the reservation's not safe. There is law and order there, there is law enforcement and security. These industries are regulated and over-regulated as a matter of health, safety and welfare, but when headlines begin to appear in the Sunday paper people getting dismissed out of court when something happened and perhaps it was to no fault of their own, someone falling and being hurt or being assaulted by a non-Indian patron and ultimately questioning security of a tribe, those are the kind of headlines that tribes must avoid or those people will not do repeat business and in turn the economy on the reservation will suffer."
John "Rocky" Barrett: "Well, and slip and falls, our grocery store is just a lawsuit magnet. We have one tape after another of people walking in, taking out a bottle of detergent, pouring it out on the floor and laying down in it and start yelling. It is...phony slip and falls. We probably have 20, 25 a year in our grocery business."
Joseph P. Kalt: "Now those kind of situations, I think I'm seeing a trend out there of tribes more and more waiving sovereign immunity around say an enterprise or a particular...and waiving it in to their own courts. Is that what you're trying to do with your torts for example?"
John "Rocky" Barrett: 'Well, of course the first thing we do is call the insurance company. We try to insure in order to keep it out of the issue of what court has jurisdiction. We'll let the insurance company handle it as much as we can. Of course, if we can show the person that has the phony slip and fall the piece of tape and say, 'Do you want to go to court on this one?' We'll try to get it into our courts. We can't force the non-Indian to appear in our court, but we can if we can prove that person wrongfully came after us, we'll come after them civilly in our courts and test that issue. The most difficult part of dealing with non-Indians is not having criminal jurisdiction, and most tribes should invoke some form of civil code of behavior that if someone over whom they do not have criminal jurisdiction commits a crime of some kind they should pursue them civilly. In most cases, that's probably a fine is all they're going to get any way out of the issue if they're fortunate to get that."
Joseph P. Kalt: "Lance, you mentioned a moment ago that if you abuse it you'll lose it, basically. If this is used to really do what is sometimes the fear of essentially escaping responsibility, escaping accountability. I know Rob, as a tribal judge you've had some experience with this as a tribal judge. You actually have ruled in such a way as to send the signal."
Robert Williams: "And this is the point I try to make to tribal councils, is that if you look at the experience of the United States government and the state governments, they all asserted sovereign immunity and they asserted it very aggressively and what happened was in the 19th, early 20th century, judges don't like it. Judges don't ..."
Joseph P. Kalt: "No judges."
Robert Williams: "Yeah. Someone who sits as a judge, you have the sense that your job is to do justice, and here's this doctrine of sovereign immunity asserted by the State of Arizona, where there's obviously a debt owed to a contractor and this poor guy may well be going broke because the State of Arizona is asserting sovereign immunity unfairly. You're going to work very hard to find a way around that, and that's exactly what happened in other state and federal courts is the judges were starting to chip away. We're seeing that right now. We're seeing lower courts, the Supreme Court chipping away at tribal sovereign immunity because quite frankly tribes are the outlier here, that most other governments have taken a very flexible approach and many tribes haven't taken that approach. So as a tribal judge when I get a case and I feel that there's an honest debt here or that the tribe was clearly grossly negligent, I'm going to listen to the arguments for that lawyer who's trying to make a case that the tribe may have impliedly waived it here, but that's really not good public policy. You really don't want judges on the tribal court sitting there making these types of ad hoc decisions. What tribes really need to do is do what these other governments did and that is pass tort claims acts, pass administrative procedure acts where the tribe makes the sovereign decision on what forum these claims are going to be litigated at, what's the amount of liability, when, where and how to keep control over that process so that judges like me can't go off the reservation as we say and try and make law and make policy on our own."
John "Rocky" Barrett: "Best way to maintain the limits."
Joseph P. Kalt: "Now, Gabe, I've heard you express a view though that, 'Let's not get too easy about waiving sovereign immunity.' I think you've had some concern that you waive it too easily you may give up your sovereignty."
Gabe Galanda: "Yeah, and I guess what I'm talking about is the alternative to the sovereign controlling and defining the time, place and manner by which it would waive its sovereign immunity as an exercise of sovereignty. My concern is when tribes are not doing through tort claims ordinances or well-tailored alternative dispute-resolution clauses to commercial loan agreements or other such things, that Congress or courts -- be they tribal, state or federal -- are standing by waiting to define sovereign immunity and waiveall sovereign immunity for the tribal sovereign. So unless you take affirmative steps to do that, you better believe that people on Capitol Hill or in courts throughout the country -- and that includes Indian Country -- will do it for you. And so there's a number of protective pragmatic steps that tribes can take to insure that they are the ones ultimately legislating waiver."
Joseph P. Kalt: "Give us some examples of those practical steps."
Gabe Galanda: "Well, for example, just looking at the tort environment again, which I believe presents the most imminent threat to sovereign immunity, and the reaction that judges like Rob or judges on the tribal or state bench have is, 'Where is due process?' This person unknowingly perhaps came to the reservation, something happened, they were hurt and now you're suggesting by way of your 12B motion there is no redress for this person. Well, there are alternatives to even filing the motion to dismiss on sovereign immunity grounds, which in this day and age, with an increasingly skeptical bench, is not wise for tribes to do without at least carefully considering alternatives. So you have an iron-clad general commercial liability insurance policy that makes very clear in certain instances when there are acts or omissions on the reservation by tribal employees or the tribal government itself that there is liability insurance money available. What liability insurance policies give you is two things primarily: defense and indemnification. So the first thing, there is a carrier or carriers on the line who must pay your legal defense bill, and then secondly, in the event a judgment is issued against the sovereign or even an officer or an employee they will indemnify those defendants for that judgment. It all starts with iron-clad liability insurance policies and making sure that ultimately the carrier is standing by to defend and indemnify, but the tribal sovereign still retains all policy-making decisions, decision-making, including whether to assert sovereign immunity and whether to do a host of other things. So first, make sure you have a very good liability insurance policy, and then once that lawsuit is filed and between that point in time and the time when you file, even file an answer, let alone file the motion to dismiss on sovereign immunity grounds, consider alternatives to putting your sovereign immunity in play in court and ultimately your sovereignty on trial. And two, that I recommend increasingly are if the claim has merits and there are available insurance proceeds and as a result of your liability insurance you have some sovereign decision making and authority, perhaps settle the merit, the claim with merit and then again that is good business and that keeps people coming back to the reservation to do business and that avoids the Sunday morning headlines about something happening on the reservation and someone being left without any redress. Secondly, if the claim is just outright without merit like the detergent claim in the grocery store, one alternative is to simply allow that person his or her day in court and to defeat them on the merits. You have a pretty good idea at the outset of a claim whether you can win a case on the merits, and so you might move right past the jurisdictional motion practice and simply beat them on the merits of a matter of summary judgment. They can't prove that they were hurt, they can't prove that you caused their harm or they can't otherwise can't prove their case against you. So there are alternatives to filing that motion to dismiss that I think tribes need to be very, very concerned with and thoughtful about such as what I just mentioned."
John "Rocky" Barrett: "Yeah, the issue of venue almost always arises in these deals. They want to sue you in state court because they know that you're going to resist the venue. The lawyers that specialize in defending these phony slip and falls know you're going to object to the venue, and so they put you in the position of analyzing what the cost of litigation is going to be and tailor their settlement at some number under what they think your cost of litigation is going to be."
Lance Morgan: "I want to change the subject a little bit to something I want to talk about: sovereign immunity, surprisingly. I think sovereign immunity is dangerous in the hands of the politically motivated or the uninformed. I've been in so many business deals with tribes where it's about to happen, something critical that needs to happen and somebody gets up, either on the government side or in the audience in the room and they start making a speech and the speech is wonderful. I start believing it. And really it's a great speech from a sovereign context, but in a business context or development side, it doesn't make sense. But since these issues are so easily confused, lots of good things that should have happened don't happen. And I always make the comment about the proud guy who makes the speech, stops the deal, then goes back to live in his car that's got an extension cord into someone else's house, and he's talking about how sovereign he is. I'm thinking about the implications of doing these kind of things, and it really can hurt you if you don't understand it or you allow it to be used in a political kind of way."
Joseph P. Kalt: "Particularly the two of you, it sounds to me like there's got to be an educational role then, in other words to educate your own people so that you minimize the kind of speeches you're talking about that sidetrack a deal or whatever. Early on in your efforts did you have to talk this issue through or did it just evolve that you got a consensus?"
Lance Morgan: "I think what really happened, I think you're always going to have the speech problem where someone gets up and does that because you confuse the issues and what we did in our situation was is that we had this problem before, the first time the tribe started a corporation. The second time we started a corporation, 'cause we had failed -- the first one was a total disaster -- and on the second time we did it, we granted the power to waive the sovereign immunity to that corporation through a resolution of the board, so we developed our internal expertise on how to deal with this particular subject and took it out of the political context altogether, because frankly I don't know how you ever divide it other than by just separating it, because a politician thinks in a certain way and there's always a way to stop it by giving this kind of speech."
Joseph P. Kalt: "Is this an issue for you?"
John "Rocky" Barrett: "We asked for...we went back to our people for a specific constitutional amendment to put language in our constitution that authorized the tribal legislative body to waive tribal sovereign immunity in dollar amounts for contractual purposes because we thought that if people were going to do business on reservation we wanted to be able to make viable, enforceable contracts with those people and we wanted them to know that we had the authority to make that waiver. In the process of going to the people and asking them to understand this concept, I think our people came out of that with a clear understanding that waivers of tribal sovereign immunity in these kinds of situations was responsible behavior that was expected from its tribal government and it wasn't something that we were giving up, but it was a business practice."
Robert Williams: "And that's where education comes in, and I know those speeches, because I've given talks before tribal councils before about this issue and someone gets up and makes a speech and what I find is that oftentimes if you say, 'Well, let's talk about waiving tribal sovereign immunity,' someone gets up and says, 'You're asking us to give up our sovereignty,' and then what needs to be done is for the leadership to say, 'Well, not really. What we're talking about is waiving tribal sovereign immunity up to $100,000, up to the limits of liability insurance policies, of only waiving it in tribal courts, backing that up with some education and training for our own tribal judiciary and our own tribal lawyers.' In other words, part of the education process is to make the tribal membership understand that when you talk about waiving sovereign immunity, it's really limited waivers. I don't know of any tribe that's embarked upon this challenge of addressing the issue of sovereign immunity as a sovereignty tool which gives unlimited waivers of sovereign immunity. In fact, some of the research that Joe and I have done has shown that...I was actually surprised, there are many, many tribes that have selectively chosen where they're going to waive their sovereign immunity, where they're going to assert their sovereign immunity. So it's as much a...sovereign immunity -- I think, Lance, you and I have talked before -- it can be a weapon as well as a tool and it has a defensive aspect to it and an offensive aspect."
Lance Morgan: 'Well, there's really no surprise that there's confusion about this issue, because it has so many different uses and to use it smart takes awhile to get all the context of it down, so it really is an issue where education matters in these kind of things and discussing it are very important."
Robert Williams: "Yeah, and I've looked at some of the laws you guys have passed, and Rocky, and if you sit down -- and maybe I'm going to sort of pull the curtain here and sort of be the Wizard of Oz -- but if you look at tribes that have really thought about this issue and if you look at where they've waived their sovereign immunity, it's a pretty small exposure of liability there, which is exactly what states do. But let me tell you something, when you go to the state court or when you go to the federal court and you can show them all these statutes you've passed and all this legislation, what you've shown them is you take this stuff seriously and you've debated it and these are your public policy decisions and you're going to get that respected a lot more than just going into that state court and say, 'Well, what have you done on sovereign immunity?' 'Nothing, we don't have to worry about it.' And that's what happens."
John "Rocky" Barrett: "I think...I don't know how many tribal leaders have sat down and played out what happens if the United States Supreme Court essentially rules that sovereign immunity defenses are no longer allowed Indian tribes. How do you..."
Lance Morgan: "Don't even say that."
John Rocky Barrett: "Well, but it's something to look at, it's something to worry about and it's something to look at. How do you defend the treasury of the tribe, how do you shield its assets? There are still alternatives left to us in creating trusts for the cash assets of the tribe, in protecting...through the tribal courts in protecting the non-cash assets of the tribe, and of course those assets that are held in trust by the United States which can't be encumbered are in some ways protected. But if you walk through whether or not someone could -- in the absence of sovereign immunity defenses -- make an assessment against future income, there are certainly governmental functions that would shield those in how you assert your tax authority, you could protect income by asserting tax authority over your enterprises. In the event that it happens, I believe that well-thought-out strategies could...you could defend the tribe against a raid on the treasury."
Robert Williams: "And isn't it true that when you're thinking about these things, what you're really thinking about is what's the least amount we have to give up to get business on this reservation. You don't want to give away the whole store. You're really making a calculated decision about sort of the minimal amount of sovereign immunity you have to waive, right?"
Lance Morgan: "Right. It's always a calculated decision. I mentioned earlier that yeah, we do it all the time, but we're very specific about how we approach it. We don't show up with that on our forehead: we're ready to waive."
John "Rocky" Barrett: "Aren't you guys doing pretty much what we're doing? We want people to want to do business on the reservation. We want them there."
Lance Morgan: "It's a flexible dynamic. We fight hard when someone's pushing our rights. If it's a commercial transaction, we're very flexible. I bet you we have 1,000 commercial contracts and we probably have waived sovereign immunity 30 times. Most of them don't matter, they're just small potato kind of things."
Gabe Galanda: "And I guess I would just follow up what the Chairman said, and ultimately there is the threat to tribal sovereignty, most notably by and through local and state government in the event you didn't have your sovereign immunity, and there's a great case that the tribes can still use as a shield, which is the Oklahoma Tax Commission vs. Citizen Band, a Potawatomi case -- thanks to Chairman Barrett -- but the other target, if you will, is the tribal treasury as the Chairman suggested, and if or when that day comes when sovereign immunity is no longer a viable defense for tribes, they will be sued frequently like corporate America is being sued. And unfortunately the potential through litigation, class-action litigation or other personal injury litigation could ultimately bankrupt the tribe and leave them without a viable operation. So that's really what's at stake is at the end of the day tribal proceeds that are used to provide governmental services to Indian people is what's really at issue when sovereign immunity is not used responsibly."
Joseph P. Kalt: "I'm going to have to wrap this up, but I want to say first thank you to all of you. I'm struck by this conversation. What we're actually watching is this increasing sophistication of tribal governments playing on the stage with other governments, because all around the world the strategic use of things like your sovereign immunity is an asset you don't want to waste. It's what governments all around the world tussle [with] and think through all the time, and it's very encouraging, I think, to see the kinds of lessons you all are bringing to us. Thank you very much for this discussion."