Justices limit tribal courts' jurisdiction (June 25, 2008)

In a case clarifying the scope of Indian tribal courts' jurisdiction over non-members, a divided Supreme Court held that these courts do not have authority to hear lawsuits involving non-tribal members.

The case, Plains Commerce Bank v. Long Family Land & Cattle Co., No. 07-411, was originally brought by Ronnie and Lila Long, two Sioux Nation members whose family had been in the cattle ranching business for forty years.

The Longs' cattle company had done business with the Plains Commerce Bank for seven years when the family patriarch died. The bank grew reluctant to make operating loans to the younger generation but eventually agreed to a deal to loan the company annual operating expenses if the company would deed its farmland and house to the bank. The bank gave the company two years to buy back its house at a cost of half a million dollars.

The Longs claim that after the agreement was completed, the bank refused to make the operating loan, resulting in the starvation of more than 500 cattle and the failure of the family business. Because the Longs could not afford to buy back their land, the bank sought to remove it an the Longs filed suit in the local tribal court seeking a temporary restraining order blocking the land transfer and charging the bank with tortious discrimination.

The bank protested that the tribal court did not have jurisdiction of the claim, but nevertheless mounted a defense. The tribal court ruled against the bank and ordered it to pay about $700,000 to the Longs. the bank then filed suit in federal district court in South Dakota, asking for a declaratory judgment that the tribal court had improperly exercised jurisdiction over the claim. The district court found that the tribal court did have jurisdiction and the Eighth Circuit Court of Appeals affirmed.

In seeking Supreme Court review, the bank argued that the appeals court had "exponentially" expanded the authority of tribal courts. It pointed to the Court's leading case in tribal court authority, Montana v. U.S., No. 450 U.S. 544 (1981), which set forth two exceptions to the general rule that tribal courts have no power over those outside of the tribe: (1) tribes may regulate through taxation, licensing or other means the activities of nonmembers who enter consensual relationships with members and (2) tribes may exercise civil authority over nonmembers who are on non-reservation property within the reservation's boundaries if their activities pose a threat to the tribe's political, economic or bodily security.

The Eighth Circuit had held that the case fell within the first exception because the bank had entered into a consensual relationship with the Longs. The bank countered that the first exception permits only regulation of nonmember activity rather than authority over standard civil lawsuits. The Longs argued that Montana implicitly approved tribal authority over civil suits because it referred with approval to Williams v. Lee, 358 U.S. 217 (1959), a case allowing such a suit.

While the bank argued that the Court's most recent case addressing tribal court authority, Nevada v. Hicks, 533 U.S. 353 (2001) expressly reserved judgment on the question under review, the Longs maintained that Hicks was not applicable and that federal courts whose geographic reach encompasses tribal lands have repeatedly allowed tribal courts to adjudicate civil suits against non-members who voluntarily did business with members.

On June 25, a 5-4 court divided along familiar ideological lines struck down the appeals court decision.

"Our cases have made clear that once tribal land is converted into fee simple, the tribe loses plenary jurisdiction over it," Chief Justice John Roberts wrote for the majority.

Justice Ruth Bader Ginsburg dissented, joined by Justices John Paul Stevens, David H. Souter and Stephen G. Breyer.

While the dissent agreed with the majority that Plains Commerce Bank had standing, Ginsburg wrote that she disagreed with the final conclusion “to the extent that it overturns the Tribal Court’s principal judgment awarding the Longs damages in the amount of $750,000 plus interest.

"That judgment did not disturb the Bank’s sale of fee land to non-Indians. It simply responded to the claim that the Bank, in its on reservation commercial dealings with the Longs, treated them disadvantageously because of their tribal affiliation and racial identity."