Cohen v. Little Six, Inc.

543 N.W.2d 376, 1996 WL 56477

• Court: Court of Appeals of Minnesota
• Decided: April 16, 1996
• Docket: C6-95-928
• Status: Published

Opinions

OPINION

SHORT, Judge.

Sylvia Cohen argues an Indian gaming casino is subject to the jurisdiction of Minnesota state courts, and the trial court erred or violated her due process rights by dismissing her personal injury suit against Mystic Lake Casino.

FACTS

On October 7, 1994, Sylvia Cohen entered Mystic Lake Casino in Prior Lake, Minnesota. As Cohen attempted to sit on a chair in front of a slot machine, the chair “snapped from underneath her,” and Cohen fell to the floor. She claims the fall caused injuries that required hospitalization.

Cohen brought a personal injury action against Little Six, Inc. (LSI), d/b/a Mystic Lake Casino. LSI was created by tribal ordinance and is owned and controlled by the Shakopee Mdewakanton Sioux Community (“community”). The community is a federally-recognized Indian tribe, which operates under a constitution approved by the Secretary of the Interior. The casino is located on reservation land.

Without answering the complaint, LSI moved to dismiss on the basis of lack of jurisdiction. The trial court held LSI enjoys sovereign immunity, and dismissed Cohen’s lawsuit for want of jurisdiction.

ISSUES

I. Do Minnesota state courts have jurisdiction over a dispute in which the sole defendant is a tribal business corporation, controlled by the tribe for governmental purposes, and the underlying events occurred entirely on an Indian reservation?

II. Does dismissal for want of jurisdiction violate Cohen’s right to due process?

ANALYSIS

The jurisdiction of courts and the constitutionality of state action present questions of law, which we review de novo. Rupp v. Omaha, Indian Tribe, 45 F.3d 1241, 1244 (8th Cir.1995) (reviewing the trial court’s jurisdictional rulings de novo); see Estate of Jones v. Kvamme, 529 N.W.2d 335, 337 (Minn.1995) (evaluating the constitutionality of a statute de novo). We are asked to decide whether state courts possess jurisdiction over a tort claim brought against a tribal corporation, controlled by the tribe for governmental purposes, for injuries sustained on the reservation and whether dismissal for want of jurisdiction infringes on Cohen’s constitutional right to due process.

I.

While sovereign immunity and lack of subject matter jurisdiction both deprive courts of the authority to hear certain matters, they differ in that parties may waive the former jurisdictional defect, but not the latter. In re Prairie Island Dakota Sioux, 21 F.3d 302, 304-05 (8th Cir.1994).

A. Sovereign Immunity

Indian tribes have long possessed the immunity enjoyed by sovereigns at common law. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 1677, 56 L.Ed.2d 106 (1978). While Congress has enacted many exceptions to the absolute immunity enjoyed by foreign sovereigns, these restrictions do not apply to sovereign Indian communities. In re Greene, 980 F.2d 590, 594 (9th Cir.1992), cert. denied, — U.S. -, 114 S.Ct. 681, 126 L.Ed.2d 649 (1994); see Sac & Fox Nation v. Hanson, 47 F.3d , 1064-65 (10th Cir.) (refusing to apply “commercial exception” of the Foreign Sovereign Immunities Act to Indian communities), cert. denied, — U.S. -, 116 S.Ct. 57,133 L.Ed.2d 21 (1995); see also 28 U.S.C. §§ 1602-1611 (1988) (Foreign Sovereign Immunities Act of 1976). Absent a clear congressional or tribal waiver/ common law notions of immunity apply to Indian tribes. Sac & Fox Nation, 47 F.3d at 1063 (quoting Oklahoma Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, 509, 111 S.Ct. 905, 909, 112 L.Ed.2d 1112 (1991) and Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. at 1677). Any waiver must be express and unequivocal and cannot be implied. Santa Clara Pueblo, 436 U.S. at 58-59, 98 S.Ct. at 1677 (quoting United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 953-54, 47 L.Ed.2d 114 (1976) (quoting United States v. King, 395 U.S. 1, 4, 89 S.Ct. 1501, 1503, 23 L.Ed.2d 52 (1969))).

Cohen argues the trial court erred in allowing LSI, a separate legal entity, to assert the tribe’s sovereign immunity as a jurisdictional defense. However, case law establishes that a corporation organized under tribal laws, controlled by the tribe, and operated for governmental purposes can assert the tribe’s immunity as a defense. See, e.g., Elliott v. Capital Int’l Bank & Trust, 870 F.Supp. 733, 733-35 (E.D.Tex.1994) (dismissing, on immunity grounds, an action against a limited liability bank, which was chartered, governed, and owned by an Indian tribe); Namekagon Dev. Co. v. Bois Forte Reservation Housing Auth., 395 F.Supp. 23, 26 (D.Minn.1974) (acknowledging tribes can confer immunity upon tribally-owned and -created corporations), aff'd, 517 F.2d 508 (8th Cir.1975); Duluth Lumber & Plywood Co. v. Delta Dev., Inc., 281 N.W.2d 377, 378, 383-84 (Minn.1979) (determining a tribally-ereated corporation fulfilling a governmental purpose was equivalent to the tribe, but lacked sovereign immunity because of an express waiver)-, see also Dixon v. Picopa Constr. Co., 160 Ariz. 251, 256-258, 772 P.2d 1104, 1109-11 (1989) (holding a tribally-created corporation did not enjoy immunity because it was a simple business venture, having no responsibility for promoting tribal welfare or development). This approach is consistent with applications of the absolute common law immunity formerly enjoyed by foreign sovereigns. See, e.g., In re Investigation of World Arrangements with Relation to the Production, Transportation, Refining & Distribution of Petroleum, 13 F.R.D. 280, 288-91 (D.D.C.1952) (recognizing a corporation’s power to invoke sovereign immunity because it was organized under British law, was controlled by the British government, and served the government’s purpose of ensuring access to oil). Even under the restrictive view of sovereign immunity, corporations owned by foreign governments are entitled to assert immunity unless they fall within an exception contained in the Foreign Sovereign Immunities Act. 28 U.S.C. §§ 1603(a) (a “foreign state” includes its agencies and instrumentalities), 1603(b) (an “agency or instrumentality of a foreign state” includes an entity in which the foreign state holds a majority share), 1604 (a “foreign state” enjoys immunity unless it falls within one of the act’s exceptions).

The record establishes: (1) LSI was created by tribal ordinance; (2) the community owns LSI’s single share of stock; (3) members of the tribe’s General Council may call special meetings of the corporation; (4) all community members may vote at LSI meetings; (5) LSI cannot exercise many of its powers, including approval of its annual budget, without consent of the tribe’s voting members; and (6) LSI’s purpose, as set forth in its articles of incorporation, is to “seek * * ⅜ to improve the business, financial, or general welfare of the Corporation, the Members of the Corporation, and the Community.” Raising revenue and redistributing it for the welfare of a sovereign nation is manifestly a governmental purpose. Because the tribe created, owns, and controls LSI to further a legitimate governmental purpose, LSI is entitled to assert the tribe’s sovereign immunity. But see Gavle v. Little Six, Inc., 534 N.W.2d 280, 284 (Minn.App.1995) (considering LSI’s activities nongovernmental in nature), review granted (Minn. Sept. 28, 1995).¹

Cohen also argues operation of a gaming hall under the authority of the Indian Gaming Regulatory Act (IGRA), 25 U.S.C. §§ 2701-2721 (1988 & Supp. V 1993), is a waiver of sovereign immunity. However, that statute creates only a limited waiver. See Maxam v. Lower Sioux Indian Community, 829 F.Supp. 277, 281-82 (D.Minn.1993) (holding the IGRA waives sovereign immunity for enforcement actions, but not suits for money damages); Ross v. Flandreau Santee Sioux Tribe, 809 F.Supp. 738, 745 (D.S.D.1992) (same); see also Davids v. Coyhis, 869 F.Supp. 1401, 1407, 1410 (E.D.Wis.1994) (holding the IGRA does not waive sovereign immunity even for enforcement actions). LSI’s operation of a gaming hall subjects it to a non-tribal court’s authority to enforce compliance with the IGRA, not claims for money damages.

Cohen also argues the community waived sovereign immunity by registering as a foreign corporation in Minnesota. See Minn.Stat. § 303.13, subd. 1 (1994) (subjecting registered foreign corporations to service of process). However, appointment of an agent for the service of process waives only personal jurisdiction defenses, not sovereign immunity. Canadian Overseas Ores v. Compania de Acero Del Pacifico, 528 F.Supp. 1337, 1346 (S.D.N.Y.1982), aff'd, 727 F.2d 274 (2nd Cir.1984); see Duluth Lumber, 281 N.W.2d at 383 (holding that an entity subject to state court jurisdiction may still assert sovereign immunity as a defense).

Cohen further argues registration as a foreign corporation constituted a waiver of sovereign immunity because foreign corporations “shall be subject to the laws of this state.” Minn.Stat. § 303.09 (1994). While that statute provides a means of gaining personal jurisdiction, it does not waive sovereign immunity. See Rykoff-Sexton, Inc. v. American Appraisal Assocs., 469 N.W.2d 88, 90 (Minn.1991) (applying the statute as a means of gaining personal jurisdiction); State ex rel. Ohsman & Sons v. Starkweather, 214 Minn. 232, 235-36, 7 N.W.2d 747, 748-49 (1943) (describing the statute’s function as a method of achieving personal jurisdiction over a foreign corporation); see also Canadian Overseas Ores, 528 F.Supp. at 1346 (submission to personal jurisdiction does not waive sovereign immunity); Duluth Lumber, 281 N.W.2d at 383 (concluding that, even if the court otherwise had jurisdiction, tribal sovereign immunity might bar suit). Even if we concluded the statute amounted to a choice-of-law provision, there is no basis on which to find a clear and unequivocal waiver of sovereign immunity. See American Indian Agric. Credit Consortium v. Standing Rock Sioux Tribe, 780 F.2d 1374, 1379-81 (8th Cir.1985) (finding no waiver of sovereign immunity in a promissory note containing a choice-of-law clause). While a choice-of-law clause sets forth the rules governing the parties’ duties and obligations, it does not constitute an explicit statement that the parties have agreed to submit disputes regarding those rules to adjudication in a particular forum. See id. at 1380-81 (implying courts should not transform a choice-of-law clause into a choice of forum). By registering in Minnesota as a foreign corporation, the community did not unequivocally waive sovereign immunity.

B. Subject Matter Jurisdiction²

By virtue of the United States Constitution, the federal government enjoys paramount authority over Indian tribes. Williams v. Lee, 358 U.S. 217, 219-20 & n. 4, 79 S.Ct. 269, 270 & n. 4, 3 L.Ed.2d 251 (1959); Maryland Casualty Co. v. Citizens Nat’l Bank, 361 F.2d 517, 520 (5th Cir.), cert. denied, 385 U.S. 918, 87 S.Ct. 227, 17 L.Ed.2d 143 (1966). Thus, state courts cannot exercise subject matter jurisdiction over Indians or activities on Indian lands unless a federal statute provides for such jurisdiction, or the exercise of jurisdiction will not infringe upon Indians’ right to self-governance. Williams, 358 U.S. at 220, 79 S.Ct. at 270-71; Duluth Lumber, 281 N.W.2d at 380-82.

Public Law 280 (28 U.S.C. § 1360(a) (1988)) provides Minnesota state courts shall, except with regard to activities occurring on the Red Lake Reservation, “have jurisdiction over civil causes of action between Indians or to which Indians are parties.” While Public Law 280 applies to actions involving “Indians,” this grant of jurisdiction does not apply to Indian tribes, thus preserving the vitality of Indian sovereignty and preventing the transformation of Native American communities into “little more than ‘private, voluntary organizations.’ ” Bryan v. Itasca County, Minn., 426 U.S. 373, 388-89, 96 S.Ct. 2102, 2111, 48 L.Ed.2d 710 (1976) (quoting United States v. Mazurie, 419 U.S. 544, 557, 95 S.Ct. 710, 718, 42 L.Ed.2d 706 (1975)). Thus, the federal statute’s jurisdictional gap protects against infringement on the tribe’s status as a sovereign. See Parker Drilling Co. v. Metlakatla Indian Community, 451 F.Supp. 1127, 1139 (D .Alaska 1978) (construing Public Law 280 as having more in common with sovereign immunity than with traditional notions of subject matter jurisdiction). Under these circumstances, it would be illogical to impute the tribe’s status to LSI for sovereign immunity purposes, but to prevent LSI from sharing other jurisdictional defenses designed to safeguard the tribe’s sovereign status. See In re World Arrangements, 13 F.R.D. at 290-91 (allowing a British corporation to assert sovereign immunity because it was owned and controlled by Britain for a governmental purpose and, thus, was indistinguishable from the sovereign). As a consequence, we construe Public Law 280 as inapplicable to tribal corporate entities that are equivalent to the tribe for purposes of sovereign immunity. See Bryan, 426 U.S. at 388-89, 96 S.Ct. at 2111 (holding Public Law 280 does not confer jurisdiction over tribes); Duluth Lumber, 281 N.W.2d at 378, 383-84 (treating a tribally-created corporation, serving a governmental purpose, as the tribe); cf. Parker Drilling, 451 F.Supp. at 1139 (holding a federally-incorporated tribe not to be an “Indian” for purposes of Public Law 280).

In the absence of a federal law authorizing state court jurisdiction, states may exercise jurisdiction over matters involving Indians if doing so will not infringe on their right to self-governance. Williams, 358 U.S. at 220, 79 S.Ct. at 270-71; Duluth Lumber, 281 N.W.2d at 380-82. If jurisdiction does not attach under Public Law 280 and the disputed events occurred wholly within the confines of an Indian reservation, state court jurisdiction over the matter interferes with tribal self-governance. Duluth Lumber, 281 N.W.2d at 382. Because we conclude jurisdiction is unavailable under Public Law 280 and the events giving rise to Cohen’s cause of action transpired wholly within the reservation, we lack authority to hear the merits of this action.³

II.

Cohen argues the jurisdictional immunities afforded to Indian tribes leave her without a remedy and, thus, violate her right to due process. We disagree. Cohen has not been deprived of her day in court, but only of her day in the court of her choice. See Bank of Okla. v. Muscogee (Creek) Nation, 972 F.2d 1166, 1169 (10th Cir.1992) (finding no due process violation in the relegation of the plaintiff’s claim to tribal court). Moreover, there is no state action that is necessary to a due process claim; the tribe’s assertion of sovereign immunity is not an affirmative act, but a claim of status. Greene, 980 F.2d at 596. Similarly, a proper dismissal for lack of jurisdiction serves merely as recognition of the court’s lack of authority to act. See Duenow v. Lindeman, 223 Minn. 505, 511, 27 N.W.2d 421, 425 (1947) (quoting Sache v. Wallace, 101 Minn. 169, 172, 112 N.W. 386, 387 (1907) and stating subject matter jurisdiction is the “authority to hear and determine the particular questions the court assumes to decide”).

DECISION

First, LSI may assert the tribe’s sovereign immunity. Second, no federal statute authorizes state jurisdiction over this case and state court jurisdiction would infringe on tribal self-governance. And third, by dismissing this action for want of jurisdiction, the trial court did not violate Cohen’s right to due process.

Affirmed.

1 . However, under a common law sovereign immunity analysis, the activity’s purpose, not its nature, controls the result. See In re World Arrangements, 13 F.R.D. at 288-91 (recognizing the immunity of governmental corporation because of the purpose it served).

2 . Although the trial court never reached the question, LSI argues Minnesota state courts lack subject matter jurisdiction over this case. While we typically review only questions decided by the trial court, subject matter jurisdiction presents an issue falling outside of this general rule. See Minn. R. Civ. P. 12.08(c) (providing that a party may question subject matter jurisdiction at any time); Berke v. Resolution Trust Corp., 483 N.W.2d 712, 714 (Minn.App.1992) (resolving a claimed lack of subject matter jurisdiction raised for the first time on appeal), review denied (Minn. May 21, 1992).

3 . Even if the trial court had concurrent subject matter jurisdiction over this dispute, federal policy would require it to abstain from acting with regard to the matter until after its final resolution in tribal court. See Bowen v. Doyle, 880 F.Supp. 99, 123, 127 (W.D.N.Y.1995) (holding even if they have jurisdiction and the matter is not currently pending before a tribal court, state courts must abstain from hearing suits arising on reservations until after tribal courts have resolved the matter); Smith v. Babbitt, 875 F.Supp. 1353, 1366-67 (D.Minn.1995) (stating a non-tribal court must abstain from hearing a matter arising on Indian land until the plaintiff has exhausted its remedies in tribal court).