Opinion Recap: Plains Commerce Bank v. Long Company

Last Wednesday, in No. 07-411, the Supreme Court held that an Indian tribal court lacks jurisdiction to hear discrimination charges brought by tribal members against a non-Indian bank concerning the bank’s sale of its fee land to another non-Indian.

The case arises out of a lending relationship between petitioner, Plains Commerce Bank, and respondents, The Long Company and its owners, Lila and Ronnie Long. The Longs are both enrolled members of the Cheyenne River Sioux Indian Tribe; petitioner is an unaffiliated South Dakota corporation. In 1996, as part of a renegotiation of the Long Company’s loans with the Bank, mortgaged land owned by Ronnie Long’s deceased father was deeded to the Bank in lieu of foreclosure. The Longs and the Bank also agreed to a two-year lease on the same land, with an option for the Longs to buy at the end of the term.

The Longs were unable to exercise their option to purchase the leased land, but they refused to vacate the property. Nevertheless, the Bank sold portions of the land (including land the Long Company and its owners were still occupying) it owned in fee simple to various non-Indians on terms more favorable than it had offered to the Longs.

The Longs sued in tribal court, alleging discrimination, breach-of-contract and bad-faith claims. Over the Bank’s objection that the tribal court lacked jurisdiction, the court allowed the case to go to trial, where a jury ruled in the Longs’ favor on three of their four claims – including the discrimination claim – and awarded them $750,000. In a supplemental judgment, the court also awarded the Longs the option to purchase the land they still occupied.

After the tribal court of appeals affirmed, the Bank filed suit in federal district court, contending that the tribal court lacked jurisdiction over the Longs’ discrimination claim. The district court found tribal court jurisdiction proper under the first exception outlined in Montana v. United States, in which the Court held that tribes lack civil jurisdiction over non-members and their fee land, but also carved out two exceptions: one, that a tribe may regulate the “activities of nonmembers who enter consensual relationships with the tribe or its members”; and, two, that when the conduct of non-Indians within the reservation threatens “the political integrity, the economic security, or the health and welfare of the tribe,” the tribe may exercise civil authority over them. The district court held, and on appeal the Eighth Circuit agreed, that because the Bank had entered into a consensual relationship with the Longs, its dealings with the Longs fell under the first Montana exception.

In its petition for certiorari, Plains Commerce Bank asked the Supreme Court only to consider whether tribal courts have jurisdiction over discrimination claims arising out of a non-Indian bank’s sale of its fee land. In an opinion written by Chief Justice Roberts, the Court reversed the Eighth Circuit’s decision and agreed with the Bank that the tribal courts do not have that jurisdiction.

The opinion first dismissed the Longs’ contention that the Bank lacked standing to raise its jurisdictional challenge because it had not suffered an “injury in fact” from the discrimination claim. Instead, the Longs had argued, their damages award stemmed from the district court’s breach-of-contract verdict. The Court ruled that because the verdict form the jury used allowed the jurors to award damages for any of the claims, it was impossible to distinguish which claim the damages award was based on. Additionally, only the discrimination claim sought the right to repurchase the land, which the district court awarded to the Longs in a supplemental judgment.

Much of the majority opinion focused the “unique and limited character” of tribal sovereignty, which centers on “land held by the tribe and on tribal members within the reservation.” The Court explained that although tribes may tax nonmembers for activities on the reservation, control membership and “domestic relations” among members, and even exclude outsiders from their tribal land, they do not possess authority over non-Indians who come onto reservations. The Court noted that Montana’s general rule is particularly strong when it applies to a nonmember’s activity on land owned by non-Indians.

The Court held that because the land in question was transferred from one non-Indian individual (Ronnie Long’s father) to another non-Indian corporation (Plains Commerce Bank), Montana’s general rule applies. Relying on its earlier precedent holding that a tribe’s adjudicative jurisdiction must never exceed its legislative jurisdiction, the majority held that because the Tribe lacks civil authority to regulate the Bank’s sale of land, it also lacks jurisdiction to hear the Longs’ discrimination claim.

Rejecting the Longs’ assertion that the first Montana exception authorizes tribal jurisdiction in this instance, the decision distinguished between nonmember conduct and nonmember sale of land, and emphasized that Montana’s first exception only grants tribes the authority to regulate nonmember conduct on the reservation. That distinction is “entirely logical,” the Court explained, because the tribe’s sovereign interests lie exclusively and entirely in managing tribal land and controlling internal relations and governance. While certain forms of nonmember conduct may “sufficiently affect the tribe as to justify tribal oversight,” the sale of land from one nonmember to another concerns land already removed from the tribe’s immediate control, so that “resale, by itself, causes no additional damage.” To regulate fee land sale would run the risk of “subjecting” nonmembers to tribal authority without their consent.

The Court declined to hold that the Bank’s extended commercial relationship with the Long Company put it “‘in for a penny, in for a Pound.’” The Bank should not and could not have anticipated that its “general business dealings” would subject it to tribal regulation of the Bank’s sale of fee simple land. Nor can the Bank’s whole course of commercial dealings with the Longs be included in the discrimination claim, because the discrimination claim was exclusively tied to the sale of land.

Briefly, the decision explained that the second Montana exception did not apply because it encompasses only conduct that threatens the tribe’s very existence. Finally, the Court dismissed the Longs’ claim that the Bank’s use of a tribal process server to serve the Longs with an eviction notice signified the Bank’s total consent to tribal court jurisdiction.

Justice Ginsburg (joined by Justices Stevens, Souter, and Breyer) filed an opinion in which she concurred in part, concurred in the judgment in part, and dissented in part. She agreed with the majority that the Bank had standing to contest the jurisdiction and concurred with the Court’s judgment “as it relates to the Tribal Court’s supplemental judgment,” in which the Tribal Court ordered the Bank to give the Longs an option to repurchase some of the land in question. However, in her view, jurisdiction for the principal tribal court judgment, which addressed the claim that the Bank treated the Longs “disadvantageously because of their tribal affiliation and racial identity,” rested entirely on Montana’s first or “consensual relationships” exception and should not be overturned. Accordingly, the Longs still ought to be awarded $750,000 plus interest in damages.

The dissent criticized the Court for resolving the case on a ground that was not addressed below – namely that a tribe may not “impose any regulation” on a non-member’s conduct regarding reservation land it owns. Justice Ginsburg questioned why the Court allows the tribe to adjudicate breach-of-contract claims but not discrimination claims arising out of the terms and conditions of those same transactions. Finally, she argued that although the tribal court granted a remedy that it did not have the authority to grant (ordering the Bank to offer the Longs an option to repurchase land it had already contracted to sell), “a court does not lose jurisdiction over a claim merely because it lacks authority to provide the form of relief a party primarily demands.”