Appeals court allows cigarette prosecution despite treaty

Business | Law

Friday, October 24, 2008

Members of the Yakama Nation of Washington can't be prosecuted under a tobacco contraband law but they can face charges for racketeering, a federal appeals court ruled on Thursday.

In May 2007, the 9th Circuit Court of Appeals set precedent and ruled that the Yakama Treaty of 1855 bars tribal members from being charged under the federal Contraband Cigarette Trafficking Act. The unanimous decision said the treaty preserves the right for Yakamas to bring goods to the public market without being taxed.

But in a new case, the 9th Circuit said tribal member Roger Fiander can be prosecuted for transporting cigarettes under the federal Racketeer Influenced and Corrupt Organizations Act. The court said the Yakama man conspired with non-tribal members who aren't protected by the treaty.

As a result, while Fiander can't be prosecuted "for a substantive violation of the CCTA because of his status as a member of the Yakama Nation, he may be prosecuted for a RICO conspiracy in which the racketeering activity is contraband cigarette trafficking," Judge A. Wallace Tashima, a nominee of President Bill Clinton, wrote for the majority.

The decision revives an indictment against Fiander that had been dismissed by Judge Robert H. Whaley of the Eastern District of Washington. Whaley had thrown out the racketeering charges, citing the May 2007 precedent in US v. Smiskin.

Smiskin is one in a series of cases that focused on the Yakama Treaty of 1855. For the most part, the 9th Circuit has sided with tribal members by ruling that the "Right to Travel" provision of the treaty protects their right to engage in business activities like selling cigarettes or harvesting timber without state interference.

But officials in Washington say business owners on the Yakama Nation are skirting state and federal law by selling cigarettes without state taxes. Earlier this year, the state canceled its tobacco compact with the tribe.

The tribe, along with several business owners on the reservation, responded with a lawsuit in federal court last month. The Yakamas are again citing the 1855 treaty, as well as the 9th Circuit's decisions, to prevent the state from imposing its tobacco tax on Indian retailers. No decisions have been reached in the case.

Officials in Washington has gone after Indian retailers across the state, seizing millions of dollars in tobacco products. The state contends it has a right to collect taxes on the sale of goods to non-Indians.

In Smiskin, the 9th said there are ways for the state to collect taxes without trampling on Yakama Nation's treaty. "As the [Supreme] Court noted, states have a number of 'adequate alternatives' available to enforce taxes on cigarettes sales to non-Indians by tribal members," the court said, pointing to government-to-government negotiations.

Peter Mahoney, a member of the Coeur d'Alene Tribe of Idaho, was convicted for doing business with Fiander. In an unpublished opinion, the 9th Circuit last week said he could be prosecuted under the Contraband Cigarette Trafficking Act.

"The Coeur d'Alene Tribe, of which Mahoney is a member, is not a signatory to any treaty containing language analogous to the travel provision discussed in Smiskin," the October 16 decision stated.

9th Circuit Decisions:
US v. Fiander (October 23, 2008) | US v. Mahoney (October 16, 2008)

9th Circuit Precedent:
US v. Smiskin (May 18, 2007)