United States: Indian Tribes Lack Jurisdiction Over Consumer Protection And Common Law Tort Claims

Last Updated: January 18 2018
Article by Michelle Yeary

Jurisdiction is hardly the spiciest of topics we discuss on this blog and yet it definitely qualifies for frequent-blogging status. That's likely because as defendants, we don't get first choice of jurisdiction. We get hauled into the court of plaintiff's preference after which we are afforded some ability to change jurisdiction but that often requires putting up a fight – such as challenging fraudulent joinder or misjoinder. So, jurisdiction becomes a recurring theme. An undertaking at the start of each new case. Do I want to be in this court? If not, do I have a viable alternative?

Those questions predominately involve whether the federal courts have some basis for subject matter jurisdiction. Today's case, while about jurisdiction, is about a type we rarely, if ever, have discussed here or have much experience with – the boundaries of tribal court jurisdiction. And while the case involves pharmacies and wholesalers, the court's rationale for its decision would apply to other non-tribal entities sued on similar theories, such as drug and device manufacturers.

In McKesson Corp. v. Hembree, 2018 WL 340042 at *2 (N.D. Okla. Jan. 9, 2018), three pharmacies and three wholesalers who had been sued by the Cherokee Nation in the District Court for the Cherokee Nation filed for a petition for a preliminary injunction to halt the underlying action on the ground that the Cherokee Nation lacked jurisdiction. There are two components to the underlying lawsuit. First, the Cherokee Nation brought a parens patriae action on behalf of tribal members for violations of the Cherokee Nation Unfair and Deceptive Trade Practices Act ("CNUDPA"). Id. at *1-2. Second, the Cherokee Nation also asserted common law claims for nuisance, negligence, unjust enrichment, and civil conspiracy. Id. at *2. All of the claims are based on allegations that the pharmacies and wholesalers either knowingly or negligently distributed or dispensed prescription opioid drugs to the detriment of the tribe and its members. Id.

The defendants sought the injunction in federal court because the scope of a tribal court's jurisdiction is a federal question. Id. at *3. The opinion contains a discussion of whether defendants were required to seek relief from the tribal court first and also examines whether defendants met the requirements for a preliminary injunction. We won't address those aspects of the decision here, but wanted you to know they existed if you are interested. We focus on the substance of the ruling that the tribal court did not have jurisdiction.

Indian tribes in the United States have a recognized type of self-government but it is limited to "managing tribal land, protecting tribal self-government, and controlling internal relations." Id. (citation omitted). The exercise of trial power is limited and tribal courts are not courts of general jurisdiction. One major limitation is that tribal jurisdiction does not extend to nonmembers of the tribe, with two narrow exceptions:

[a] tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealings, contracts, leases, or other arrangements. [And]

[a] tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.

Id. Essentially there is a "presumption against tribal civil jurisdiction over non-Indians." Id. at *4. In this legal framework, the court analyzed whether the Cherokee Nation had jurisdiction over the two types of claims brought by plaintiff – CNUDPA and common law.

In its complaint, the Cherokee Nation alleged that the pharmacies and wholesalers violated the CNUDPA by violating the federal Controlled Substances Act ("CSA"). The CSA, however, like the FDCA, does not provide a private right of action. Id. at *5. So, we would say the claim is facially invalid regardless of jurisdiction. But that wasn't the question the before the court and regardless of whether the claim was valid, the tribal court had no jurisdiction over a CSA claim, because there is no provision in the CSA that provides a tribal court jurisdiction over such a claim. Id. Remember, tribal courts are not courts of general jurisdiction. So, for example, the CSA differs from federal statutes the specifically allow tribal court jurisdiction over matters such as child custody disputes and mortgage foreclosure actions. Without such a provision, the court found that the tribe lacked jurisdiction over the CNUDPA claim because it was an unauthorized attempt to privately enforce the CSA. Id.

As to the common law claims, because they were being brought against non-tribe members, the court looked to see if they fit one of the two exceptions to the rule prohibiting such jurisdiction. The first exception is based on consensual relations which the Cherokee Nation said the pharmacies and wholesalers entered in with the tribe and its members by distributing products within the tribe's jurisdictional area. But the exception is not so broad as to allow jurisdiction for any dealings with non-members:

Because nonmembers have no say in the laws and regulations that govern tribal territory[,] ... those laws and regulations may be fairly imposed on nonmembers only if the nonmember has consented, either expressly or by his actions. Even then, the regulation must stem from the tribe's inherent sovereign authority to set conditions on entry, preserve tribal self-government, or control internal relations.

Id. at *6 (citation omitted). The opinion details the extent, or lack thereof, of the relationship between the defendants and the Cherokee Nation, concluding that "at most, any relationships between Plaintiffs and the Cherokee Nation or its members are simply routine business or consumer transactions." Id. ("the mere act of doing business with a tribe or its members even on tribal land, does not subject a nonmember to broad tribal civil authority"). Given that drug and device manufacturers are even more removed from direct dealings with individuals and health care plans, they would have an even more attenuated relationship that should not fit within this exception.

This first exception typically applies to a tribe's right to tax or regulate business activities of nonmembers on tribal lands, not to claims of negligence or unjust enrichment. The pharmacies and wholesalers did not have contractual relationships with the Cherokee Nation relating to opioids and their conduct was not specifically directed at the Cherokee Nation or its members. Finally, there is no nexus between the allegations of the complaint and the Cherokee Nation's sovereign authority over conditions on entry, self-government, or control of internal relations. Id. at *7.

The second exception has to do with conduct that threatens or directly impacts "the right of reservation Indians to make their own laws and be ruled by them." Id. The Cherokee Nation offered declarations attesting to the harm done to tribe members from the opioid epidemic arguing that the conduct alleged in the complaint rises to a "mass tort." Id. The court was sympathetic, as we all are, to the damage being done by opioid abuse. "However, a generalized threat of injury to the tribe or to its members for tortious conduct is not enough to confer tribal jurisdiction." Id. at *8. The threat which invokes the exception is a threat to "tribal sovereignty." Therefore, even if the conduct occurred on tribal lands, it does not constitute a threat to the tribe as a whole and the second exception does not apply.

With no applicable exception, the court granted the preliminary injunction to prevent the case against the pharmacies and wholesalers from moving forward. This is a completely legal analysis, with broad applicability in any alleged "mass tort." Therefore, another significant jurisdictional victory for defendants.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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