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Supremes Sustain Sovereignty

In a much-anticipated case, a split U.S. Supreme Court recently ruled the state of Michigan may not sue the Bay Mills Indian Community because it is protected as a sovereign entity. In her majority opinion, Justice Elena Kagan wrote Michigan has other ways to stop the tribe from operating its casino in Vanderbilt, which has been closed since 2011. The ruling supports the inviolable concept of sovereignty that rules in all of Indian Country, but is not the final word in the way states can oppose Indian casinos.

The U.S. Supreme Court last week ruled in a 5-4 decision in Michigan vs. Bay Mills Indian Community that the tribe, as a domestic sovereign entity, is protected from being sued by the state of Michigan. The tribe had briefly operated a small, off-reservation casino in Vanderbilt, in upstate Michigan. The case had been closely watched by Native American tribes concerned that an adverse ruling could lead to lawsuits against off-reservation gaming operations. It was sent back to the 6th Circuit Court of Appeals for disposal.

Justice Elena Kagan, writing for the majority, said the federal Indian Gaming Regulatory Act only allows a state to bring lawsuits challenging casinos operating on Indian lands. But the Bay Mills casino was opened outside the tribe’s reservation, beyond the law’s coverage. Therefore, Kagan wrote, since the casino does not fall under federal gaming laws, it is subject to the ordinary tribal immunity that extends to off-reservation commercial activities.

Kagan noted that Michigan officials have other options for dealing with the casino, such as bringing a lawsuit against individual tribal officials or even prosecuting tribal members under criminal laws. She was joined in her opinion by Chief Justice John Roberts and Justices Anthony Kennedy, Stephen Breyer and Sonia Sotomayor.

“We hold that immunity protects Bay Mills from this legal action,” Kagan wrote in her majority opinion. “Although Congress has plenary authority over tribes, courts will not lightly assume that Congress in fact intends to undermine Indian self-government. We ruled that way for a single, simple reason: because it is fundamentally Congress’s job, not ours, to determine whether or how to limit tribal immunity. The special brand of sovereignty the tribes retain—both its nature and its extent—rests in the hands of Congress.”

Bay Mills purchased 40 acres of land in Vanderbilt, about 100 miles from its Upper Peninsula reservation, in August 2010 with interest from a trust fund established under the Michigan Indian Land Claims Settlement Act of 1997, alleging it had not been adequately compensated for land ceded under 1800’s treaties. The tribe opened an 84-slot Class III gaming facility there on November 3, 2010. Tribal officials claimed any land purchased with settlement act funds are eligible for tribal gaming under the Indian Gaming Regulatory Act.

The state of Michigan disagreed and filed suit in federal court in December 2010, claiming Bay Mills did not have permission from the federal government and violated the terms of the gaming compact and IGRA. The Little Traverse Bay Bands of Odawa Indians joined the lawsuit. The district court ruled that the Vanderbilt land would “likely” not qualify as Indian lands under IGRA, and issued an injunction that forced the tribe to close the casino in March 2011. It has remained closed since then.

Bay Mills filed an appeal, asserting sovereign immunity. The U.S. Court of Appeals for the Sixth Circuit reversed the federal court’s decision, declaring that federal courts lack jurisdiction under IGRA, and barred the state’s claim by the doctrine of tribal sovereign immunity. Michigan appealed the Sixth Circuit decision to the U.S. Supreme Court. State Attorney General Bill Schuette argued the case before the justices in December.

In a dissent, Justice Clarence Thomas said he disagreed with the court’s 1998 case extending tribal sovereign immunity to bar lawsuits relating to a tribe’s commercial activities outside its territory. He wrote, since that decision, “tribal commerce has proliferated and the inequities engendered by unwarranted tribal immunity have multiplied.” Thomas also noted that extending tribal immunity to off-reservation commercial activity “significantly limits, and often extinguishes, the state’s ability to protect their citizens and enforce the law. This case is but one example: No one can seriously dispute that Bay Mills’ operation of a casino outside its reservation would violate both state law and the tribe’s compact with Michigan. Yet immunity poses a substantial impediment to Michigan’s efforts to halt the casino’s operation.” Justices Antonin Scalia, Ruth Bader Ginsburg and Samuel Alito joined Thomas; Scalia and Ginsburg also wrote their own dissents.

As gratifying as this decision was in upholding tribal sovereignty, it’s far from the last word on off-reservation tribal casinos in Michigan. Reporting in GamblingCompliance, Dave Palermo discuss a conference call featuring Alison Binney, a tribal lobbyist and partner in Akin Gump. In a conference call organized by the Native American Financial Officers Association (NAFOA), Binney said, “We definitely have concerns moving forward.”

“This case was really important because it was basically about whether sovereign immunity exists with regard to commercial activity that occurs outside of Indian land,” Binney said. “As tribes become more diverse in their economic development activity more of those activities are occurring off Indian lands.”

While Michigan may not be able to sue the tribes, the court left open the ability to sue individual tribal officials, casino executives and even the players who would frequent the casino.

In a statement following the decision, the Bay Mills Indian Community said, “Congress and the Supreme Court have long recognized that a state cannot interfere with an Indian tribe’s sovereignty. We are gratified that the court reaffirmed that longstanding principle today. Bay Mills, a federally recognized tribe, depends for its livelihood on revenues from gaming activities conducted in accordance with the Indian Gaming Regulatory Act. The court’s decision affords proper deference to Congress’s judgment, and it will ensure that tribes like Bay Mills can continue to fund tribal education and perform other sovereign functions.”

Schuette also released a statement in which he recognized the state’s continuing ability to fight off-reservation gambling.  

“Today the U.S. Supreme Court affirmed the state’s ability to restrain the illegal expansion of tribal gaming on state lands,” he said in a statement. “The 5-4 decision upheld the injunctive power of states to sue tribal leaders to shut down illegal casinos, and reaffirmed the states’ authority to bring criminal charges against anyone engaging in illegal gaming on state lands.” Sixteen other states had filed briefs in the case urging the court to side with Michigan.

The Bay Mills ruling could have an effect on the Sault Ste. Marie Tribe of Chippewa Indians’ proposed $245 million off-reservation casino in downtown Lansing. Schuette also challenged that action and earlier this month filed a petition asking the Supreme Court to hear the Lansing casino case separately.

Lansing Mayor Virg Bernero said, “This is great news for Lansing. It’s basically a big green light for our casino. It’ll still take a little time, but this means job, economic development, and the Lansing promise. This means four years of free education.” Bernero noted the proposed casino could create more than 1,000 permanent and construction jobs and “complete Lansing’s entertainment district.”

 “The U.S. Supreme Court ruling sends another clear signal that the Sault tribe is within our rights and federal law to move forward on our Lansing casino, which will create more than 1,500 good jobs for Mid Michigan, and millions of dollars in new revenues for greater Lansing and the entire state.”  The tribe plans to review today’s ruling to see how it may affect its next steps.

But the ruling could affect future negotiations for new and renewing gaming compacts.

“This is definitely going to have an impact on future compact negotiations,” Binney said. “The thinking is that as compacts come up for renegotiation states will want more waivers of sovereign immunity.”

Binney says states are going to ask for waivers of sovereign immunity during compact negotiations, and tribal officials and casino executives are going to ask to be indemnified before working for a tribal casino.