Quantum Entertainment Ltd. v. United States Department of the Interior

714 F.3d 1338, 404 U.S. App. D.C. 416, 2013 WL 1799002, 2013 U.S. App. LEXIS 8692
CourtCourt of Appeals for the D.C. Circuit
DecidedApril 30, 2013
Docket12-5133
StatusPublished
Cited by7 cases

This text of 714 F.3d 1338 (Quantum Entertainment Ltd. v. United States Department of the Interior) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Quantum Entertainment Ltd. v. United States Department of the Interior, 714 F.3d 1338, 404 U.S. App. D.C. 416, 2013 WL 1799002, 2013 U.S. App. LEXIS 8692 (D.C. Cir. 2013).

Opinion

Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge.

This appeal involves questions of statutory retroactivity, which the court analyzes under the two-part test in Landgraf v. USI Film Products, 511 U.S. 244, 280, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994). Agreeing with the Interior Board of Indian Appeals, the district court ruled that Quantum Entertainment Limited’s 1996 Management Agreement with the Santo Domingo Pueblo, a federally recognized Indian tribe, and its tribal corporation, Kewa Gas Limited, was null and void for lack of approval by the Secretary of the Interior as required by 25 U.S.C. § 81 (1994), and that it was incapable of being validated by the 2000 amendment to § 81, the application of which would be imper-missibly retroactive. Quantum challenges the Board’s determinations that application of the 2000 amendment would be im-permissibly retroactive and that § 81 applies to the 1996 Agreement.

Application of Landgraf s retroactivity test does not work in Quantum’s favor. First, Congress made no clear statement that it intended the 2000 amendment to apply retroactively, see 511 U.S. at 280, 114 S.Ct. 1483. Second, because the 1996 Agreement required Secretarial approval that was never obtained and the parties agree the Agreement would be valid without Secretarial approval under § 81 as amended, the application of the new law would give life to a null and void agreement, thereby attaching “new legal consequences” to it, id. at 269-70, 280, 114 S.Ct. 1483. Although the Pueblo may have voluntarily undertaken the stated duties and liabilities under the Agreement, such an agreement was null and void without Secretarial approval before 2000. Since the Secretary never approved the Agreement, any legislative validation of the “duties” or “liabilities]” attached to it was impermissi-bly retroactive. Id. at 280, 114 S.Ct. 1483. Quantum’s challenges to the scope of § 81 itself are unavailing. Accordingly, we affirm the grant of summary judgment, venturing no opinion on whether Quantum could recover in quantum meruit, an issue not briefed by the parties.

I.

On August 14, 1996, ■ Quantum entered into an agreement with the Pueblo, acting through its Tribal Council, and Kewa Gas to manage, supervise, and operate Kewa Gas’s gasoline distribution business on the Pueblo’s reservation in New Mexico. *1340 Quantum is a limited liability company, incorporated in the state of New Mexico, “engaged in, among other things, the business of managing gas distribution businesses.” 1996 Agreement Recitals, C. Kewa Gas was chartered in 1996 by the Tribal Council of the Pueblo for the purpose of “earryfing] on certain economic development activities on behalf of the Pueblo, including ... operation of a gasoline distribution business,” Tribal Council Res. No. S.D. 08-96-18 (Aug. 14, 1996); at the time of the Agreement it was registered as a distributor with the New Mexico Tax and Revenue Department, 1996 Agreement Recitals, A, B.

Under the terms of the Agreement, Quantum exercised nearly exclusive control over Kewa Gas’s distribution business. It supervised “the general operations ... including the purchase, marketing, sale and delivery of branded and unbranded gasoline and special fuels,” and was to “[s]elect and train personnel,” “[n]egotiate prices and coordinate deliveries,” “[m]ain-tain proper and suitable records and books of account for” Kewa Gas, and “provide for normal repairs, replacements, and maintenance of equipment.” Agreement, § 1.2(a)-(c), (e), (g). At a more general level, Quantum also “[d]evelop[ed] policies for the purpose of maximizing net income from the operations.” Id. § 1.2(d). The Agreement included a provision for capital advances by Quantum for construction of physical assets although for “any construction to expand the Gas Distribution Business or ... any capital expenditures costing in excess of $10,000,” Kewa Gas’s approval was required. Id. § 1.3. In return for the “day-to-day operation” of the business, Quantum received an annual management fee of 49% of Kewa Gas’s “Net Income,” payable monthly, a fee of $0.03 per gallon of gasoline or diesel fuel sold to the Pueblo gas station, and a “performance bonus” of $0,005 per gallon for every gallon of fuel sold in excess of 1 million gallons per month. Id. §§ 2.1-2.3.

In addition to provisions for indemnification and settlement of disputes through binding arbitration, the Agreement included a non-compete clause. The Pueblo and Kewa Gas covenanted not to have any interest in any other gas distribution business within the State of New Mexico, except with respect to the retail operation of the tribe’s Santo Domingo gas station (located adjacent to 1-25 at the N.M. State Highway 22 exit). Quantum also agreed to a non-compete covenant, except for areas of-the State that Quantum and Kewa Gas determined could not be economically serviced by Kewa Gas’s gas distribution business. The initial term of the Agreement was for 10 years, with Quantum having the option to renew it for two additional 10-year terms, subject to a management fee of 44% in- the first ten-year extension and 39% in the second.

By means of the Agreement the parties were able to benefit from a state tax exemption available to Indian Tribes. Kewa Gas, which was 100% owned by the Pueblo, was not subject to New Mexico’s gasoline and special fuel tax. Although Kewa Gas was the distributor, and the incidence of the tax fell on the distributor not the purchaser, the State had concluded that the tax was preempted by federal law, exempting Kewa Gas from the payment of taxes on the receipt and sale of gasoline and special fuels to retail outlets in the State. See New Mexico Taxation and Revenue Dep’t, Ruling No. 640-96-01 (Apr. 4, 1996) (citing Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U.S. 450, 115 S.Ct. 2214, 132 L.Ed.2d 400 (1995)). In 1999, the State replaced the exemption with a tax deduction for Indian tribal distributors like Kewa Gas for fuel sold from “a nonmobile storage container located within ... [the] reservation ... for resale outside ... [the] *1341 reservation” not in excess of 2,500,000 gallons per month. N.M. Stat. Ann. § 7-13-4(f) (1999).

Restrictions on contracting with Indian Tribes have existed since 1872. See S. Rep. (Comm. Indian Affairs) NO. 106-1501, 7-8 (1999). At the time of the 1996 Agreement, section 81 provided in part:

No agreement shall be made by any person with any tribe of Indians, ... in consideration of services for said Indians relative to their lands, ... unless such contract or agreement be executed and approved as follows:
Second. It shall bear the approval of the Secretary of the Interior and the Commissioner of Indian Affairs indorsed upon it.

25 U.S.C. §

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Bluebook (online)
714 F.3d 1338, 404 U.S. App. D.C. 416, 2013 WL 1799002, 2013 U.S. App. LEXIS 8692, Counsel Stack Legal Research, https://law.counselstack.com/opinion/quantum-entertainment-ltd-v-united-states-department-of-the-interior-cadc-2013.