Appeals court rules against Winnebago tribal corporation in tobacco case

Thursday, July 5, 2018  

Businesses owned by the Winnebago Tribe must turn over tobacco records to federal authorities, an appeals court ruled this week.

Ho-Chunk Inc., the tribe's economic development arm, argued that it wasn't covered by a particular recordkeeping provision of the Contraband Cigarette Trafficking Act. Section 2343(a) of the federal law does not specifically mention tribal governments or their businesses.

But the D.C. Circuit Court of Appeals said Ho-Chunk Inc. was wrong about the law. In a unanimous decision, a panel of three judges determined that tribal businesses must comply with the recordkeeping requirements because they are "persons," just like any other corporation.

"They are not 'persons,' they argue, because they are 'tribal instrumentalities,' which assumes that a tribal instrumentality – and for that matter, a tribe itself – cannot be a 'person,'" Judge A. Raymond Randolph wrote in summing up the dispute. "Both assumptions are mistaken."

The nine-page decision comes after agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives swarmed the Winnebago Reservation in Nebraska and seized records from Ho-Chunk Inc. and its tobacco manufacturing subsidiaries. The raid took place in late January, while the appeal to the D.C. Circuit was pending, but before the court had the opportunity to hear the recordkeeping case.

The tribe has blamed the "attack on sovereignty" on the state and has since filed a lawsuit in federal court against officials in Nebraska, seeking to protect its rights. The state has yet to respond to the complaint.

But the federal government is paying attention. A motion to intervene filed on May 31 asked the court to halt the lawsuit, pending the resolution of "ongoing federal criminal proceedings" that are apparently linked to the raid on the reservation.

A decision has not been issued on the request. But Ho-Chunk Inc. is characterizing the "criminal proceedings" as a ruse to prevent the tribe from moving forward with its case against Nebraska.

In a June 14 objection to the government's motion, the firm pointed out that "no grand jury has been impaneled, no indictments have issued [and] no target letters have been received" with respect to the federal criminal investigation.

The following day, the magistrate who was assigned to the lawsuit gave the state more time to response to the complaint, effectively delaying the case until the federal government's motion to intervene has been resolved.

But then Michael D. Nelson, an attorney who has worked as a federal criminal defender, disqualified himself from further proceedings, acknowledging that his "impartiality might reasonably be questioned." He did not explain his potential conflicts in his June 15 order of recusal.

In light of the delay -- Nebraska's response to the complaint would have been due on June 15 -- Ho-Chunk Inc., in a notice filed on June 22, called on the court to make a decision on the federal government's request to intervene "as soon as possible" in light of the "important issues of federal law and tribal sovereignty at issue in this case."

Ho-Chunk Inc. owns Indianz.Com. The website is operated by a different subsidiary of the corporation and is not involved with the tobacco operations.

Winnebago Tribe takes advantage of new 'Opportunity Zone' designation (April 27, 2018)
Winnebago Tribe fights back in court after 'attack on sovereignty' (April 24, 2018)
Frank LaMere: Native people are still fighting for our own rights (February 12, 2018)
Winnebago Tribe slams raid on businesses as attack on sovereignty (January 31, 2018)
Winnebago Tribe corporation cooperates with federal tobacco investigation (January 30, 2018)