Citizen Potawatomi Nation hits end of the line at Supreme Court

Monday, October 15, 2018

The Citizen Potawatomi Nation has been turned away by the U.S. Supreme Court.

The tribe asked the justices to review a ruling which struck down a key provision on its Class III gaming compact. The provision had been used to secure a favorable award in an arbitration dispute with the state of Oklahoma.

But, without comment, the justices on Monday refused to grant the petition in Citizen Potawatomi Nation v. Oklahoma. That means the 10th Circuit Court of Appeals ruling against the tribe will stand.

“The state asked the federal courts to strike the arbitration clause from its own gaming compact,” George Wright, the tribe's attorney, said after the 10th Circuit's decision in February. “The court’s ruling alters the gaming compacts of all Oklahoma tribes, making the compacts more difficult to enforce by both the tribes and the state itself.”

The U.S. Supreme Court denied the petition in Citizen Potawatomi Nation v. Oklahoma in an order list on October 15, 2018.

The dispute itself was not related to gaming. At issue was the state's attempt to impose its sales tax on transactions at all tribally-owned businesses. Additionally, the state asserted jurisdiction over the sale of liquor at tribal businesses.

The tribe fought back and won an arbitration decision in 2016. The ruling confirmed that the tribe could not be forced to collect the state's sales tax.

“Since 2014, the state of Oklahoma has attempted to unlawfully impose its taxation jurisdiction on the Nation,” Wright said . “In 2016, the Nation prevailed in arbitration against the state, which was conducted before a former Oklahoma Supreme Court justice.”

The state appealed after a federal judge confirmed the arbitration award. The 10th Circuit -- without ruling on the legality of the state's taxation efforts -- said the arbitration provision was invalid and must be stricken from the compact.

In doing so, the court rejected the tribe's concerns about invalidating the arbitration provision. The parties can always go to federal court in case future disputes arise, Judge Michael R. Murphy wrote, but that also means the tribe must waive its sovereign immunity, which the compact specifically said was supposed to be protected.

"The Nation has not identified, and this court has not found, any precedent indicating federal courts are empowered to overlook material provisions of a contract, especially when those material provisions are intended to protect the sovereign interests of a tribe and a state, on the basis of what this court might perceive to be sound public policy," Murphy wrote in the 10th Circuit's February 6 decision.

Though the Supreme Court did not explain why it rejected the tribe's petition in an order list issued on Monday, the action reflects a familiar pattern. The justices rarely agree to review a decision which went against tribal interests -- of the five recent Indian law petitions rejected by the court, all were filed by tribes seeking to reverse decisions they had lost in the lower courts.

In contrast, the Supreme Court appears more than eager to overturn favorable decisions secured by tribes. Of the three Indian law cases that are being heard during the October 2018 term, two fall in that category. During the October 2017 term , two of the three cases addressed victories that tribes had won in the lower courts.

Tribes signed onto the so-called "model gaming compact" after voters in Oklahoma approved casino-style gaming in 2004. The agreement is due to expire in 2020 and negotiations are expected after the state elects a new governor in November. The Republican candidate is Kevin Stitt, a citizen of the Cherokee Nation who has vowed to take a fair look at the agreement.

10th Circuit Court of Appeals Decision

Citizen Potawatomi Nation v. Oklahoma (February 6, 2018)