Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 1 of 11
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1 Michael J. Walleri (ABA # ) GAZEWOOD & WEINER, PC th Ave., Suite 200 Fairbanks, AK tel: (907) fax: (907) Attorneys for Defendant Newtok Village IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA ALASKA LOGISTICS, LLC vs. - Petitioners, NEWTOK VILLAGE, d/b/a NEWTOK VILLAGE COUNCIL and GOLDSTREAM ENGINEERING, INC. - Defendants. CASE NO. 3:18-cv (SEG) REPLY MEMORANDUM IN SUPPORT OF MOTION TO DISMISS (Fed. R. Civ. P. 12(b)(1)) Alaska Logistics (Plaintiff) opposes Newtok Village's (Defendant's) Motion to Dismiss on sovereign immunity grounds. Alaska Logistics accepts that Newtok Village is a Federally Recognized Tribal Entity, which possesses sovereign immunity. Alaska Logistics argues that Newtok 1) waived its sovereign immunity by asserting counterclaims against Alaska Logistics 1, and/or 2) waived its sovereign immunity by agreeing to a forum selection clause in the Transportation Agreement. 2 Both of these assertions are legally deficient. 1 See Plt. Opp To Motion To Dismiss (Doc 29) at p Id. at p Reply: Dismiss Page 1 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 1 of 11
2 I. The Tribe's Counterclaims Do Not Constitute A Waiver. As discussed below, the general rule is that a tribe does not waive its sovereign immunity by commencing litigation or otherwise bringing claims before the court. There are exceptions to this rule, however, those exceptions do not apply to the present case. a) The General Rule Is That A Tribe s Participation In Litigation Does Not Constitute A Waiver Of Sovereign Immunity. The general rule is grounded in the US Supreme Court's holding in Oklahoma Tax Commission v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 510 (1991). In that case, an Indian tribe filed suit seeking an injunction against assessment and collection of state taxes on prior cigarette sales. The State asserted counterclaims seeking to enforce the assessment and to enjoin the Tribe from making future sales without collecting and remitting state taxes. The Court held that the Tribe did not waive its inherent sovereign immunity from suit by merely by seeking an injunction against the Commission s proposed tax assessment. Id., citing United States v United States Fidelity & Guarantee Co., 309 US 506, (1940) Thus, the general rule is that a tribe s participation in litigation does not constitute a waiver of sovereign immunity. McClendon v United States, 885 F. 2d 627, 630 (9th Circ. 1989). The Ninth Circuit has routinely applied this principle. See Quinault Indian Nation v. Pearson, 868 F.3d 1093 (9 th Cir. 2017) ( Counterclaims against Plaintiff Tribe dismissed) Chemehuevi Indian Tribe v. California State Bd. of Equalization, 757 F.2d 1047 (9 th Cir. 1985) (Counterclaims against Plaintiff Tribe dismissed). Absent applicable exception, the Potawatomi, Chemehuevi and Quinault line of cases would govern, and this Court should Reply: Dismiss Page 2 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 2 of 11
3 recognize the Tribe's immunity from suit and dismiss Alaska Logistic's claims. b) The Exceptions To The General Rule Do Not Apply. Alaska Logistics argument is largely misleading in that it ignores the general rule, and cites to various exceptional cases without explanation that the cases represent exceptions, and omits explanations as to the circumstances when these exceptions apply and the limiting scope of such waivers. In exceptional cases, a Tribe may waive its immunity by conduct in litigation in a limited manner. As discussed below, those exceptions do not apply in this case. Initially, Alaska Logistics points to United States v State of Oregon, 665 F2d 1009, 1013 (9 th Cir. 1981), however, the case is clearly distinguishable from the present case. In Oregon the Tribe expressly waived its immunity in a prior settlement agreement. The issue in that case was whether a Tribe had the power to waive its immunity without express Congressional consent. The Court held that a tribe may waive its immunity, without Congressional consent if it does so in an express manner as evidenced in the prior settlement agreement signed by the Tribe. There is no express waiver in this case and the Oregon does not apply to this case because there was no signed agreement by the Tribe to waive its immunity. Alaska Logistics also points to Pistor v Garcia, 791 F. 3d 1104, 111 (9 th Cir. 2015), which is similarly distinguishable from the present case. In Pistor, the Tribe was not a party. Rather, Pistor involved a lawsuit by advantage gamblers 3 against tribal officers who were 3 Advantage gamblers are gamblers who use legal techniques to win at casino games. Id. citing Tsao v Desert Palace, Inc., 698 F. 3d 1128, 1131 (9 th Cir. 2012) Reply: Dismiss Page 3 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 3 of 11
4 sued in their individual capacities for unlawful seizure of the gamblers' winnings. The Court held that the individual tribal officials were not entitled to assert the Tribe's sovereign immunity because they were being sued in their individual capacity rather than in their official capacities. In Bassett v. Mashantucket Pequot Museum and Research Center, 221 F.Supp.2d 271 (D. Conn. 2002), Judge Droney extensively analyzed this issue of individual capacity claims against tribal officials and employees and concluded that [i]n the tribal immunity context, a claim for damages against a tribal official lies outside the scope of tribal immunity only where the complaint pleads and it is shown that a tribal official acted beyond the scope of his authority on behalf of the Tribe. Id. at 280. In this case, tribal officials are not parties, and Alaska Logistics' complaint fails to plead that tribal officials acted beyond the scope of their authority on behalf of the Tribe. Alaska Logistics clearly asserts claims against Newtok Village: i.e. the Tribe. Pistor is simply not applicable because Alaska Logistics' brought the claims against the Tribe, not its officials. Alaska Logistics also invokes the waiver-by-litigation doctrine discussed in Tohono O'odham Nation v Ducey, 174 F. Supp. 3d Supp. 1194, 1204 (D. Ariz, 2016), which involved a lawsuit brought by the Nation for declaratory judgment claiming that federal law preempts any state-law authority the State might have. The District Court in Tohono O'odham explained that This waiver-by-litigation doctrine is narrow. In a later decision, the Ninth Circuit confirmed that "[i]nitiation of a lawsuit necessarily establishes consent to the court's adjudication of the merits of that particular controversy." McClendon v. United States,, 630 (9th Cir. 1989). The Court of Appeals also explained, however, that "a tribe's waiver of sovereign immunity may be limited to the issues necessary to decide the action brought by the tribe; the waiver is not necessarily broad enough to encompass related matters, even if those matters arise from the same set of underlying facts." Id. Reply: Dismiss Page 4 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 4 of 11
5 Thus, the Court in Tohono O'odham allowed the Tribe's declaratory judgement action to proceed, but dismissed the State of Arizona's counterclaims for promissory estoppel and reformation. Under Tohono O'odham a waiver-by-litigation would only apply to hear claims initiated by the Tribe. Alaska Logistics' claims do not meet this basic threshold, since the Newtok did not initiate this lawsuit. Alaska Logistics claims that by asserting counterclaims in its answer, the Tribe affirmatively invoked the Court's jurisdiction to adjudicate its counterclaims. 4 The tribe's counterclaims arise from the same set of underlying facts: i.e. Alaska Logistic's agreement to transport machinery to Mertarvik. However, the Tribal claims that Alaska Logistics' engaged in fraud/misrepresentation/unfair and deceptive practices, breach of contract can be fully litigated without addressing the Alaska Logistics claims that the Tribe breached the contract by paying the negotiated price rather than the changed price claimed by Alaska Logistics Alaska Logistics makes too much of this aspect of the litigation by ignoring a substantial portion of the Court's holding in Tohono O'odham Nation v Ducey related to equitable recoupment. Newtok filed counterclaims, and invoked the Court's jurisdiction over those counterclaims. However, as explained in Tohono O'odham Nation v Ducey, that action did not constitute a broad waiver that would allow Alaska Logistics to bring its original claims or unrelated counterclaims. As explained in Tohono O'odham Nation v Ducey, a party facing claims brought by a Tribe may assert equitable recoupment, which is 4 Doc. 29, at p. 12. Reply: Dismiss Page 5 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 5 of 11
6 a "narrow exception" to the doctrine of sovereign immunity. United States v. Park Place Assocs., LTD.,, 932 n. 16 (9th Cir.2009). It allows a defendant sued by a sovereign to recast an affirmative defense (typically, a set-off, contribution, or indemnity defense) as a counterclaim. See Bull v. United States,, 262, 55 S.Ct. 695, 79 L.Ed (1935); United States v. U.S. Fid. & Guar. Co.,, 511, 60 S.Ct. 653, 84 L.Ed. 894 (1940). A counterclaim sounds in recoupment if it seeks to "defeat or diminish recovery by the sovereign," but not if it seeks affirmative relief. United States v. Agnew,, 514 (9th Cir.1970); see Ute Indian Tribe, 790 F.3d at 1011 (recoupment is "not a vehicle for pursuing an affirmative judgment"). Tohono O'odham Nation v Ducey, 174 F. Supp. 3d, at 1202 Thus, Alaska Logistic's claims may be heard in a very limited and narrow way: i.e. the affirmative defenses of recoupment and/or set-off against any recovery that the Tribe may make against Alaska Logistics for Alaska Logistics' tortious and illegal conduct alleged in Newtok's counterclaims. However, Alaska Logistics did not allege recoupment or set-off in its complaint nor did Alaska Logistics include recoupment and/or set-off in its affirmative defenses enunciated in its answer to the Tribe's counterclaims. As noted above, the Court in Tohono O'odham Nation v Ducey, clearly held that recoupment and set-off were affirmative defenses which must be pled as affirmative defenses in the responsive pleading (i.e. in this case, the answer to counterclaims) under Fed. R. Civ. Proc. 12(b). Recoupment and set-off are not affirmative defenses that may be brought by motion outside the pleadings. See Fed. R. Civ. Proc. 12(b). Failure to assert the affirmative defense waives the defense. Nardi v Stewart, 354 F. 3d 1134, (9 th Cir., 2004) Thus, while it may have been possible for Alaska Logistics to plead recoupment and/or set off in answer to the Tribe's counterclaims, Alaska Logistics did not do so and the defenses are waived. As a result, the one avenue under Tohono O'odham Nation that would have been available to Alaska Logistics is no longer available, and Tohono O'odham Nation is simply not relevant to this case because of Alaska Logistics' failure to plead such affirmative defenses. Reply: Dismiss Page 6 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 6 of 11
7 II. The Unsigned Transportation Agreement Did Not Consent To This Suit a) The Unsigned Agreement Is Not An Express And/Or Unequivocal Waiver. As noted in the Tribe's motion, Alaska Logistics' assertion that an unsigned transportation agreement waived the Tribe's immunity does not comport with the governing law, which requires that a tribal waiver of immunity must be express and unequivocal. Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978). Alaska Logistics fails to cite a single case in which an unsigned/unaccepted contract was found to be an express and/or unequivocal waiver of immunity by a tribe as demanded by Santa Clara Pueblo. The undersigned attorney is equally unable to find any such authority. Without supporting legal citation, Alaska Logistics argues that it its unilateral submission of a draft agreement with its bid operates as broad form waiver of immunity. The idea that Newtok never objected to the agreement is factually inaccurate. Newtok didn't sign the agreement. The actual IFB specifically states NVC reserves the right to negotiate the terms and condition of the award, quantities purchased, and may include all or portions of any individual submittal. See Doc. 1-1, p. 10 (Sec. XII, Sec. 3 of IFB) In other words, the Tribe's IFB specifically reserved the right to reject any portion of the bid, including the draft contract submitted by Alaska Logistics. It is simply not contested that the tribe declined to sign the proposed contract and did not accept the terms and conditions thereof. This was perfectly within the Tribe's rights specifically reserved in the IFB. On these uncontested facts, contained in Alaska Logistics' pleadings, this Court cannot reasonably conclude that the Tribe expressly and unequivocally consented to the terms of the transportation agreement. Reply: Dismiss Page 7 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 7 of 11
8 b) The Terms Of The Proposed Agreement Does Not Consent To This Suit. In its motion, Newtok pointed out that the draft agreement's language does say what Alaska Logistics claims it says. See Doc.19, at p. 11 et. seq. To reiterate, 1. a forum selection clause does not amount to a consent to suit under American Indian Agricultural Credit Consortium, Inc., v Standing Rock Sioux Tribe, 780 F.2d 1374, 1381 (8th Cir., 1985) 2. The terms of the forum selection clause only applied to the Western District of Washington at Seattle, not this Court. 3. The agreement, by its terms, only applied to Alaska Logistics and Goldstream; the Tribe was not a proposed party to the proposed contract. 4. The agreement only addressed contract claims, which does not include the non-contract claims brought by Alaska Logistics. Alaska Logistics failure to address these short coming in the language of the draft agreement is telling. Simply stated, the forum selection clause didn't reference this Court, didn't reference the tribe, and didn't reference any non-contract claims. There is no logical nexus between the terms of the forum selection clause and this action. Alaska Logistics obviously does not attempt to explain how such a nexus might be construed, implied or have any relevance to this case. III. Alaska Logistics Is Not Entitled To Further Discovery. Alaska Logistics proposes that this Court should permit it to go upon a fishing expedition in the hopes of finding a waiver of sovereign immunity. Doc. 29, at p. 17 Sovereign immunity "is an entitlement not to stand trial or face the other burdens of Reply: Dismiss Page 8 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 8 of 11
9 litigation" which is "effectively lost if a case is erroneously permitted to go to trial." Mitchell v. Forsyth, 472 U.S. 511, 526 (1985) This is consistent with the general view that immunity is meant to give government officials a right, not merely to avoid standing trial, but also to avoid the burdens of such pretrial matters as discovery. Behrens v Pelletier, 516 U.S. 299, 308 (1996) Once an immunity defense has been raised, discovery should not be allowed. Harlow v Fitzgerald, 457 U.S. 800, (1982) Of course, the Court has discretion in this matter, however, there are good reasons that the Court should not impose a discovery burden on the Tribe. Alaska Logistics admits that it has obtained copies of Newtok's agreements with Goldstream Engineering, and DOWL, the project engineering firms. Doc. 29, p 17. In other words, it has all the documents relevant to the relationship between the involved entities. It reports to the Court that those agreements contain limited waivers of sovereign immunity which do not extend to Alaska Logistics. Id. Alaska Logistics expresses the hope, over experience, that some theoretical waiver may exist that might theoretically extend to Alaska Logistics. That hope over experience is telling. In substance, Alaska Logistics postulates that there might be an unintentional waiver that it might exploit to the legal detriment of Newtok. Presuming that such an unintentional waiver exists does not aid Alaska Logistics. Rather to have meaning, the waiver would have to meet the demands of Santa Clara Pueblo v. Martinez, which demands that such a waiver must express and unequivocal. By definition, an unintentional waiver would not meet the express and unequivocal standard demanded by Santa Clara Pueblo v. Martinez. Thus, the discovery sought by Alaska Reply: Dismiss Page 9 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 9 of 11
10 Logistics not be helpful in this matter. Newtok's motion rests upon Alaska Logistics' pleadings and the Court should not delay dismissal of Alaska Logistic's claims. IV. Counterclaims To Counterclaims Are Not Recognized Under FRCP. The Court should strike the Counterclaims to Counterclaims. Alaska Logistics offers several unreported decisions supporting its view that Counterclaims to Counterclaims are allowed. Of course, such unreported decisions are not precedent. Most telling is holding of the Court in Electroglas, Inc. v. Dynatex Corp., 473 F. Supp (N.D. Cal. 1979) in which the Court noted although "counterclaims in reply" are not expressly authorized by the Federal Rules of Civil Procedure, the weight of authority allows plaintiffs to file such pleadings if the counterclaims are compulsory. See 5 Wright & Miller, Federal Practice & Procedure, 1188; Southeastern Industrial Tire Co. v. Duraprene Corp., 70 F.R.D. 585 (E.D.Pa.1976). For reasons of clarity and practicality, it would be better to treat a "counterclaim in reply" as an amendment to the complaint. In this case, the counterclaims are not compulsory; they are merely redundant as to Alaska Logistics originally pled claims. The Court should strike the Counterclaims. CONCLUSION This Court should dismiss Alaska Logistics' claims against the Tribe. Generally, a Tribe's assertion of claims in Court do not constitute a waiver of its immunity from claims Reply: Dismiss Page 10 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 10 of 11
11 against the Tribe, and the exceptions to this rule do not apply to this case. Alaska Logistics' proposed Transportation Agreement is neither an explicit nor unequivocal waiver of the Tribe's sovereign immunity because the Tribe 1) was not a party to Alaska Logistics' proposed Transportation Agreement, 2) did not sign or otherwise agree to the terms of the agreement, and 3) the forum selection clause in the agreement did not constitute consent to this suit. And finally, Newtok's motion relies exclusively upon the Alaska Logistics' pleadings in this matter. Alaska Logistics desire for discovery on sovereign immunity are unlikely to help resolve the issues raised by this motion. Respectfully submitted this 3 rd day of August, 2018 CERTIFICATE OF SERVICE s// Michael J. Walleri Michael J. Walleri (ABA # ) GAZEWOOD & WEINER, PC th Ave., Suite 200 Fairbanks, AK tel: (907) fax: (907) walleri@gci.net Attorney for Newtok Village d/b/a Newtok Village Council I HEREBY CERTIFY that a true and correct copy of the foregoing was served via the ECF system this 3 rd day of August, 2018, on: Dustin C. Hamilton LeGros Buchanan & Paul 4025 Delridge Way SW, Suite 500 Seattle, WA Chris Bataille Flanigan & Bataille 1007 W. 3 rd Avenue, Suite 206 Anchorage, Alaska S// Michael J. Walleri GAZEWOOD & WEINER, PC Reply: Dismiss Page 11 of 11 Case 3:18-cv SLG Document 31 Filed 08/03/18 Page 11 of 11
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