Law Article: Addressing court jurisdiction in tribal agreements

Contracts with Indian tribes should specify a venue for disputes arising from those agreements. A common mistake for attorneys drafting agreements involving tribes is to assume that federal courts automatically have subject matter jurisdiction over matters involving Indian tribes. In fact, the presence of an Indian tribal party in litigation invokes neither diversity nor “arising-under” federal jurisdiction. Contracts often specify a federal court as the venue for disputes, likely because tribal parties sometimes distrust state courts and non-tribal parties may distrust tribal courts, so federal court seems like a neutral choice. However, experienced Indian law attorneys know that federal courts generally lack subject matter jurisdiction over contract disputes and will summarily dismiss such actions. As a result, litigants may unexpectedly find themselves in state and tribal courts. In fact, state courts increasingly defer to tribal courts when such courts have jurisdiction and may dismiss in favor of tribal court as a matter of comity.

A related issue is the proper venue for enforcement of tribal court awards. The 2010 Florida case of Miccosukee Tribe v. Kraus-Anderson involved a construction firm’s tribal court action against the Miccosukee Tribe for breach of contract. The tribal court found for the Tribe and awarded it $1.65 million on a counterclaim. When the firm refused to pay the judgment, the Tribe sued to enforce the award in federal court. The district court granted the construction firm summary judgment, but the Eleventh Circuit reversed and remanded with instructions to dismiss for lack of subject matter jurisdiction. The Eleventh Circuit held that federal question jurisdiction did not exist merely because an Indian tribe was a party or because the case involved a contract with an Indian tribe. It further ruled that the Tribe’s presence did not establish diversity jurisdiction and that no issue of “federal common law” established jurisdiction as the Tribe has argued.