Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 1 of 10

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1 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 1 of 10 MICCOSUKEE TRIBE OF INDIANS OF FLORIDA, v. Petitioner, UNITED STATES OF AMERICA, Respondent. / UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CASE NO. 10-CV GOLD/Goodman MICCOSUKEE TRIBE OF INDIANS OF FLORIDA S REPLY TO UNITED STATES RESPONSE IN OPPOSITION TO MOTION TO STAY PENDING APPEAL COMES NOW Petitioner, Miccosukee Tribe of Indians of Florida (hereinafter, the Miccosukee Tribe ), by and through its undersigned counsel, files this Reply and in support thereof states the following arguments and points of law. The actions of the federal government in connection with this and other related tax matters involving the Miccosukee Tribe strikes at the core of the tribal-federal relationship between the Miccosukee Tribe and the federal government, a relationship that spans many agencies within the federal government and which impacts the lives of each of the people in the Miccosukee Tribal community, countless employees, and countless small locally owned vendors who do business with the Miccosukee Tribe and who count on the Miccosukee Tribe. There are important legal questions in this case, and in light of the federal government s fifteen year delay to investigate the balance of the interests involved and the nature of the questions presented it is warranted that the status quo be maintained until the appellate court can review the issues as presented in this matter. 1

2 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 2 of 10 The arguments by the Respondent, the United States of America through its Department of Justice-Tax Division (hereinafter, DOJ-Tax ) in opposition to the Miccosukee Tribe s Motion to Stay pending Appeal are contrary to hundreds of years of well-established federal Indian law jurisprudence, a unilateral departure from the current policy of the United States and DOJ in their relationship with Indian tribes and a misinformed characterization of the issues involved in this case. Furthermore, DOJ-Tax asks this Court for a remedy that will have an immediate and disastrous impact on the legal relationship between the federal government and Indian tribes across the United States. The case at bar involves a bona fide dispute about whether certain provisions of the Internal Revenue Code (hereinafter, the IRC ) apply to the Miccosukee Tribe and its members. The case at bar is not about a taxpayer that is not in compliance with the provisions of the IRC or willfully avoiding the payment of federal taxes. The Miccosukee Tribe and the Miccosukee People have always strived to comply with all applicable and relevant IRC provisions. This case is about the respect and protection that must be afforded by the United States government and its agencies to Indian tribes such as the Miccosukee Tribe before a complete erosion of Indian sovereignty and tribal sovereign immunity takes place. The main issue in this dispute is whether this Court should prevent the release of the financial governmental records of the Miccosukee Tribe currently in the possession of third-party banks and financial institutions until the United States Court of Appeals for the Eleventh Circuit has made a decision on the appeal filed by the Miccosukee Tribe regarding this matter. DOJ-Tax applies an enforcement legal framework to this case, which is an incorrect approach because DOJ-Tax has not initiated enforcement procedures under 7604 of the IRC. The Miccosukee 2

3 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 3 of 10 Tribe respectfully asks this Court to prevent such release and grant the Miccosukee Tribe s Motion to Stay Pending Appeal for the following reasons. A. The Miccosukee Tribe Has Shown Likelihood of Success on the Merits The Miccosukee Tribe has shown that it will likely succeed on the merits or that this cases poses a serious legal question. Indeed, this Court in its Order denying the Miccosukee Tribe s Motion for Reconsideration and Motion to Stay stated that the Tribe correctly notes in the instant Motion that there is an issue of whether the Tribe waived its sovereign immunity or whether Congress abrogated such sovereign immunity by authorizing a suit. [D.E. No. 55]. [Emphasis added]. DOJ-Tax alleges that the Miccosukee Tribe cannot succeed on the merits because tribal sovereign immunity does not bar suits by a federal agency. DOJ-Tax has repeatedly argued that tribal sovereign immunity does not apply because this is a suit by the United States against the Tribe and it cites to Florida Paraplegic, Ass n, Inc. v. Miccosukee Tribe of Indians of Fla., 166 F.3d 1126 (11 th Cir. 1999) for support of its position. In Florida Paraplegic the Eleventh Circuit held that Title III of the Americans with Disabilities Act applies to Indian tribes, but that tribal sovereign immunity does not allow a private right of action against Indian tribes who allegedly have failed to comply with the requirements of the act in the absence of an express waiver from Congress. Florida Paraplegic, 166 F.3d at The court reasoned: The Supreme Court repeatedly has emphasized that Congress may abrogate this sovereign immunity only by unequivocal expression in the language of the relevant statute. Florida Paraplegic, 166 F.3d at The court further explained: Although the omission of this remedy may seem inconsistent with the rights granted by Title III, and even patently unfair, [i]mmunity doctrines inevitably carry within them the seeds of occasional inequities. Nonetheless, the doctrine of tribal immunity reflects a 3

4 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 4 of 10 societal decision that tribal autonomy predominates over other interests. [Emphasis added]. Id. at 1134 (quoting Wichita & Affiliated Tribes of Okla. v. Hodel, 788 F.2d 765, 761 (D.C.Cir. 1986)). DOJ-Tax states that the Eleventh Circuit already has held, in a case in which the Tribe was a party, that tribal sovereign immunity does not bar suits by the United States. United States Response in Opposition to Petitioner Miccosukee Tribe of Indians of Florida s Motion to Stay pending Appeal at 3, [D.E. No. 64]. However, this statement by the Eleventh Circuit is dicta because it was not related to any argument raised by the parties to advance their positions in the case, nor related to the issue on appeal. Dicta is not binding on this Court because [w]hatever their opinions say, judicial decisions cannot make law beyond the facts of the cases in which those decisions are announced. Watts v. Bellsouth Telecomms., Inc., 316 F.3d 1203, 1207 (11th Cir 2003); United States v. Aguillard, 217 F.3d 1319, 1321 (11th Cir. 2000). Whether tribal sovereign immunity can be raised against the United States was not decided by Florida Paraplegic. See Gibson v. Walgreen Co., No. 07 Civ. 1053, 2008 WL * 2 (M.D. Fla. July 1, 2008) (stating that [a] court decision that does not address an argument that was not raised cannot be considered to have decided the question that was not presented. ). Consequently, the holding of Florida Paraplegic is a clear affirmation of the doctrine of tribal sovereign immunity. In its Response, DOJ-Tax fails to understand the magnitude of the significance of Indian law and the relationship between Indian tribes such as the Miccosukee Tribe and the federal government. It is a well settled principle of Indian law that Sovereign immunity from suit protects Indian tribes from legal process such as subpoenas, search warrants and summonses. See NGV Gaming, LTD. v. Upstream Point Molate, LLC, Nos. 04 Civ. 3955, 05 Civ. 1605, 2009 WL 4

5 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 5 of slip op. at 4 (N.D. Cal. Nov. 24, 2009) (citing United States v. James, 980 F.2d 1314 (9th Cir. 1992)). In its Response, DOJ-Tax never rebuts the Miccosukee Tribe s argument that Congress did not authorize the IRS to initiate legal process against an Indian tribe in 26 U.S.C , 7610, DOJ-Tax also never rebuts the argument that none of the provisions of the IRC that authorize the IRS to issue summons to aid it in investigations of taxpayers express a clear and unequivocal intent by Congress to abrogate Indian tribes immunity from suit. These are very important constitutional issues that the Miccosukee Tribe has raised in its pending appeal. These issues should be decided before any release of its governmental records takes place. Contrary to the arguments presented by DOJ-Tax, the Miccosukee Tribe has shown a likelihood of success on the merits or that there is a serious legal question posed by its appeal. B. The Miccosukee Tribe Will Suffer Irreparable Harm Absent A Stay The DOJ-Tax has failed to rebut the Miccosukee Tribe s argument supported by relevant Indian law cases that show that the Miccosukee Tribe will suffer an irreparable injury. Unfortunately, DOJ-Tax is unable to recognize that this case poses an immense threat to tribal sovereignty, tribal sovereign immunity and to the special and unique relationship that the federal government has with the Miccosukee Tribe and other tribal governments across the United States. The Honorable Eric H. Holder, Attorney General of the United States, has referred to the principles of tribal sovereign immunity and tribal self-determination as sacrosanct and unequivocally articulated that it is the policy of the Department of Justice to preserve and protect these principles. See Office of the Attorney General, Letter to Tribal Leaders, November 13, 2009, Attorney General Eric H. Holder, also available at attached herein as Exhibit 1. This protection of tribal sovereign immunity has 5

6 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 6 of 10 consistently been the policy of the DOJ for many years. See Office of the Attorney General, Department of Justice Policy on Indian Sovereignty and Government to-government Relations with Indian Tribes, Attorney General Janet Reno, June 1, 1995, also available at attached herein as Exhibit 2. Just today David J. Hayes, Deputy Secretary at the Department of Interior, confirmed this policy of protecting the all-important relationship between the federal government and our First Americans. Department of Interior, Honoring Sovereignty and the Trust relationship with American Indians and Alaskan Natives, Deputy Secretary David J. Hayes, November 2, 2011, also available at Relationship-with-American-Indians-and-Alaskan-Natives.cfm, attached herein as Exhibit 3. Mr. Hayes stated : The President and all of us in his Administration will have a full agenda of topics to discuss with Indian country, including improving the health, education, public safety and economic opportunities for our First Americans. As we move forward, we will be guided by several touchstones: we must continue to right past wrongs; honor tribal sovereignty; provide a boost for Indian country when asked, but in a non-intrusive, respectful way; and, more and more, help get the federal government out of the way as tribal governments continue to step out and chart the future course for First Americans. Id. This recognition of the importance of tribal sovereignty and tribal immunity has also been expressed by the Eleventh Circuit: Indian sovereignty has deep historical roots, however, and the presumption that tribes should not be subjected to lawsuits in state or federal court remains as strong today as ever. Florida Paraplegic, 166 F.3d at The remaining legal authority relied by DOJ-Tax in its Response are factually and legally distinguishable from the case at bar. For example, DOJ-Tax cites to Church of Scientology of Cal. v. United States, 506 U.S. 9 (1992) for the premise that handing over summoned records does not cause irreparable injury because the Court may still order the Government to destroy or 6

7 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 7 of 10 return any records it may have in its possession. Id. at However, the issue in Church of Scientology was described by the court as a narrow question of whether the appeal was properly dismissed as moot when a taxpayer complies with an enforcement order. Id. There was no tribal sovereign immunity issue involved in Church of Scientology. Moreover, in Church of Scientology, the United States had sought enforcement of its summons and had obtained an enforcement order from the court, which the taxpayer had complied with. In the case at bar, there has been no enforcement action by DOJ-Tax and no issues relating to compliance with an enforcement order are involved. Furthermore, the Miccosukee Tribe is a governmental entity that has legal rights under the doctrine of governmental immunity to prevent the disclosure of its legally protected documents from disclosure while the issue is being litigated in the Court of Appeals for this district. C. A Stay Will Not Substantially Harm The Other Parties DOJ-Tax relies on the decision in United States v. Manchel, Lundy & Lessin, 477 F.Supp. 326 (E.D. Pa. 1979) to support the argument that the government will suffer substantial harm if a stay is issued. Michael, Lundy & Lessin presented the issue of whether a taxpayer could intervene in a summons enforcement proceeding filed by the government to obtain financial records kept by a law firm, which formally employed him. 477 F.Supp. at 328. The court held that no significant protectable interest existed which would allow the taxpayer to challenge enforcement of the IRS summons to his employer for records dealing with his employment. Id. at 329. Under these circumstances, the court denied a subsequent motion to stay pending appeal filed by the taxpayer. Id. at 334. In the case at bar, the right of the Miccosukee Tribe to intervene in these proceedings has never been in dispute. There is also no dispute that the Miccosukee Tribe has a significantly protectable interest in its financial records and the preservation of its governmental immunity. Therefore, the holding in Michael, Lundy & Lessin has no relevancy to 7

8 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 8 of 10 the case at bar. The same can be said about the other case relied upon by DOJ-Tax, United States v. Kis, 658 F.2d 526 (7th Cir. 1981), which involved the procedures and requirements for summons enforcement proceedings. Those issues are not present in this case. The last argument against a stay presented by DOJ-Tax that a delay would harm the public interest in effective enforcement of the tax laws is without merit. A review of the record, which includes the testimony of Agent Furnas during a deposition and at the Evidentiary Hearing granted by this Court show that the IRS has been actively conducting an investigation of the Miccosukee Tribe since Nevertheless, no summonses were issued during the last five years. It is therefore disingenuous for DOJ-Tax to now argue that a stay should not be granted pending appeal because of concerns about the statute of limitations. The IRS s lack of diligence in this case should not be rewarded at the expense of trampling upon the sovereignty rights of the Miccosukee Tribe. Furthermore, pursuant to 26 U.S.C. 7609(e) (1) the statute of limitations will be suspended while this appeal is pending. D. A Stay Will Advance The Public Interest The public interest will be advanced if a stay is granted in this case because it has long been and continues to be the policy of the federal government to protect and preserve tribal sovereign immunity and self-determination. The arguments and analysis presented by DOJ-Tax in its Response do not apply to this case because the Miccosukee Tribe, as a sovereign tribal government and federally-recognized Indian tribe is not a regular non-governmental taxpayer. Consequently, there are legal and equitable grounds that will support a stay pending appeal in this case. In a final attempt to support its position against the granting of a stay, DOJ-Tax refers to the language in Bull v. United States, 295 U.S. 247, 259 (1935), which reads: taxes are the lifeblood of government, and their prompt and certain availability an imperious need. In the case of 8

9 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 9 of 10 Indian tribes and tribal governments like the Miccosukee tribe, tribal sovereignty including tribal sovereign immunity and self-determination are the life-blood of Indian tribes and their prompt and certain protection an imperious need. In 1819, Chief Justice Marshall stated: the power to tax is the power to destroy. M Culloch v. Maryland, 17 U.S. 316 (1819). More than a century later, Justice Holmes expressed his view regarding the role of the judiciary in cases involving taxation when he stated: The power to tax is not the power to destroy while this Court sits. Panhandle Oil Co. v. State of Mississippi, 277 U.S. 218, 223 (1928) (dissenting opinion). The doctrine of tribal immunity is not a legal privilege but a legal right deeply rooted in years of federal-tribal relations and jurisprudence. In balancing the equities, the Court should afford the Miccosukee Tribe an opportunity to fully protect its rights and maintain the status quo throughout the appellate process. WHEREFORE, the Miccosukee Tribe respectfully requests this Honorable Court to grant its Motion to Stay Pending Appeal. Respectfully submitted on November 2, Bernardo Roman III, Esquire Fla. Bar No Tribal Attorney, Miccosukee Tribe of Indians of Florida P.O. Box , Tamiami Station Miami, Florida Telephone: (305) Facsimile: (305) bromanlaw@bellsouth.net 9

10 Case 1:10-cv ASG Document 66 Entered on FLSD Docket 11/02/2011 Page 10 of 10 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on November 2, 2011, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the attached Service List in the manner specified, either via transmission of Notices of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive electronically Notices of Electronic Filing. Bernardo Roman III, Esquire Tribal Attorney, Miccosukee Tribe of SERVICE LIST Miccosukee Tribe of Indians v. United States Case No. 10-Civ Gold [Lead Case] United States District Court for the Southern District of Florida William E. Farrior Robert Welsh United States Department of Justice Tax Division Civil Trial Section, Southern Region PO Box Washington, DC william.e.farrior@usdoj.gov Robert.l.welsh@usdoj.gov Sent via NEF by CM/ECF Noticing AUSA usafls-civ@usdoj.gov Sent via NEF by CM/ECF 10

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18 Case 1:10-cv ASG Document 66-3 Entered on FLSD Docket 11/02/2011 Page 1 of 2 Honoring Sovereignty and the Trust Relationship with American Indians and Alaskan Nat... Page 1 of2 DOl News onoring Sovereignty and the Trust Relationship with American Indians and Alaskan Natives EXHIBIT r i----=== David J Hayes is Deputy Secretary at the Department ofthe Interior Yesterday I was honored to deliver a keynote address to the National Congress of American Indians (NCAI) 68th Annual Conference in Portland, Oregon. On behalf ofthe Department ofthe Interior, I outlined steps that we are taking to reset the allimportant relationship between the federal government and our First Americans. The challenge was laid down by Indian country early in our Administration. As a member ofthe President's Transition Team, I hosted a group oftribal leaders at the Smithsonian Museum of the American Indian to solicit their suggestions for what our priorities should be. The tribal leaders spoke with virtually one voice. They asked the President's new team to: (1) once again respect tribes as sovereigns by engaging in a true, respectful government-togovernment relationship; (2) stop the devastating budget cuts that had reduced Indian budgets by 10 percent during the previous Administration; and (3) try to resolve the Cobell trust litigation that had so dominated and - in many cases poisoned relationships between Indian country and the federal government. More than one tribal leader in that meeting noted that the Cobell matter and the other tribal trust cases were taking "all ofthe oxygen out ofthe room," diverting attention from the many other pressing challenges in Indian country, such as health, safety, education and economic development. We listened to these requests and are making progress on all of these important fronts. We have engaged the tribes in a complete overhaul of our Department's approach to government-to government relations. The Interior Department will shortly be releasing the fruits of that effort: a groundbreaking new consultation policy that includes new accountability measures, training, and reporting. On the budget front, we have stemmed the bleeding. Despite facing government-wide budget challenges, the Indian Affairs budget has sustained an overall increase of $209.4 million from FY 2008 to the FY 2012 budget request -- a 9% increase from FY We must work together to maintain these gains. http: // 11 /2/2011

19 Case 1:10-cv ASG Document 66-3 Entered on FLSD Docket 11/02/2011 Page 2 of 2 Honoring Sovereignty and the Trust Relationship with American Indians and Alaskan Nat... Page of And by engaging at the highest levels, we were able to reach a just and fair settlement of the Cobell trust litigation - after 14 long years of conflict. $1.5 billion dollars in class action payments are poised to go out to Indian country as soon as the pending appeals are resolved. And we just wrapped up our last of several government-to-government consultation sessions with Indian country as we gear up to administer the settlement's $ l.9 billion dollar land consolidation program - a program that will convert highly fractionated lands that are so divided as to be virtually unusable into lands that are available for the development and use oftribal communities. But we are far from done. The President is hosting his third summit meeting with tribal leaders in Washington on December 2. The President and all of us in his Administration will have a full agenda of topics to discuss with Indian country, including improving the health, education, public safety and economic opportunities for our First Americans. As we move forward, we wilt be guided by several touchstones: we must continue to right past wrongs; honor tribal sovereignty; provide a boost for Indian country when asked, but in a nonintrusive, respectful way; and, more and more, help get the federal government "out ofthe way" as tribal governments continue to step out and chart the future course for First Americans. 11/2/2011