Case 2:11-cv LRS Document 130 Filed 12/14/12 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON

Transcription

1 Case :-cv-00-lrs Document Filed // 0 Samuel D. Hough Luebben Johnson & Barnhouse LLP th Street N.W. Los Ranchos de Albuquerque, NM Telephone: (0) - Fax: (0) - shough@luebbenlaw.com Adam Moore Adam Moore Law Firm North Second Street Yakima, WA 0 Telephone: (0) -0 Fax: (0) - mooreadamlawfirm@qwestoffice.net Randolph H. Barnhouse Luebben Johnson & Barnhouse LLP th Street N.W. Los Ranchos de Albuquerque, NM Telephone: (0) - Fax: (0) - dbarnhouse@luebbenlaw.com (pro hac vice motion pending) Attorneys for Plaintiff for Summary Judgment - UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON The Honorable Lonny R. Suko KING MOUNTAIN TOBACCO ) CO., INC., and THE CONFEDERATED ) Case No.: CV--0-LRS TRIBES AND BANDS OF THE ) YAKAMA NATION, ) ) Plaintiffs, )REPLY TO DEFENDANT S )MEMORANDUM IN OPPOSITION )TO PLAINTIFFS MOTION FOR vs. )SUMMARY JUDGMENT ) ROBERT MCKENNA, Attorney General ) of the State of Washington, ) ) Defendant. )

2 Case :-cv-00-lrs Document Filed // 0 for Summary Judgment - ARGUMENT I. There Are No Evidentiary Inferences in Defendant s Favor. A. Defendant s attack on the standard for Treaty interpretation fails. Defendant s sole challenge to the legal standard for Indian treaty interpretation is his claim that this Court is limited to a purely legal interpretation of the Treaty determining the technical meaning of its words to learned lawyers without resort to other evidence in the record. ECF at,, citing Mescalero Apache Tribe v. Jones, U.S., - (). But Plaintiffs do not have to prove that there is an express exemption written on the face of the Treaty. Washington v. Washington State Commercial Passenger Fishing Vessel Ass n, U.S., - () (Yakama treaty must be construed, not according to the technical meaning of its words to learned lawyers, but in the sense in which they would naturally be understood by the Indians ); Yakama Indian Nation v. Flores, F.Supp., (E.D. Wash. ) (plaintiffs need only show that the Yakamas understood the Treaty to secure the right at issue). An unbroken chain of cases require that the Treaty be interpreted: ) in accordance with liberal canons of treaty interpretation; ) in the manner the Treaty was understood by the Yakamas; and ) with ambiguities resolved in favor of the Yakamas. Fishing Vessel, U.S. at -; United States v. Smiskin, F.d 0, (th Cir. 00); Cree v. Flores, F.d, (th Cir. ) (Cree II); Yakama Indian Nation v. Flores, F.Supp., (E.D. Wash. ). Indeed: the court must examine the treaty language as a whole, the circumstances surrounding the treaty, and the conduct of the parties since the treaty was signed. Cree v. Waterbury, F.d 0, () (Cree I).

3 Case :-cv-00-lrs Document Filed // 0 Defendant concedes that there is no support in the law for his face of the treaty theory. ECF at ( Cree [II] and Smiskin provide legal standards for interpreting the travel right in Article III of the Yakama Treaty. ). He also admits that historical information is critical to understanding the issues. ECF at. B. Defendant Failed to Meet His Burden of Production.. Plaintiffs met Their Burden. Citing Celotex Corp. v. Catrett, U.S., (), Defendant correctly states that the party moving for summary judgment bears the initial burden to demonstrate its right to judgment in its favor. ECF at -. Plaintiffs met that initial burden. They provided specific statements of material fact, and thirty pages of detailed legal argument. E.g., ECF at -. They cited unrebutted testimony from Yakama elders learned in oral history and in the meaning of the Treaty to the Yakamas. ECF at -. Plaintiffs submitted hundreds of pages of exhibits including reports from Dr. Deward Walker. Flores, F. Supp. at - (recognizing the experience and impressive credentials of Dr. Walker ). Plaintiffs, having demonstrated all of the material facts necessary to an award of judgment in their favor, met their initial burden.. The Burden of Production Shifted to Defendant. Plaintiffs affirmative showing shifted the burden to Defendant. Cline v. Indus. Maint. Eng g & Contracting Co., 00 F.d, (th Cir. 000) (party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of his pleadings, but... must set forth specific facts showing that there is a genuine issue for trial (quotations and citations omitted)).. Defendant Made no Attempt to Meet his Evidentiary Burden. for Summary Judgment -

4 Case :-cv-00-lrs Document Filed // 0 Once the burden shifted to Defendant, he was required either to produce evidentiary materials that demonstrate the existence of a genuine issue for trial or to submit an affidavit requesting additional time for discovery. Celotex, U.S. at 0- (White, J., concurring); Fed. R. Civ. P. (e). Acknowledging the Plaintiffs substantial evidentiary showing [ECF at, ] Defendant did not cite or argue any facts to demonstrate the existence of a genuine issue. Instead, [i]n opposing King Mountain s argument, the Attorney General relies primarily on the Treaty itself. ECF at. Although Defendant claims there is ample evidence in the record to support the Attorney General s position [Id. at ] he never identified that evidence. He did not offer his own proffered expert s reports regarding Article III, failed to identify an expert to testify regarding Article II, did not depose Plaintiffs Tribal Elder witnesses, never questioned deponents regarding Article II, and did not depose Dr. Walker. As a result, Defendant has no admissible evidence to demonstrate a genuine issue of fact and indeed admits that [t]he Attorney General agrees that any dispute over the actual facts in this case is immaterial. Id. at. Plaintiff met its initial burden, shifting the burden to Defendant. But Defendant offered nothing that would create a genuine issue of material fact; failing to meet his burden, and requiring entry of judgment in Plaintiffs favor. II. The Escrow Statutes Violate Article II Rights As a Matter of Law. A. Mescalero does not displace canons of Indian treaty interpretation. Six years after Mescalero, the Supreme Court continued to apply the canons of construction favoring Indians to interpret the Yakama Treaty. Fishing Vessel, U.S. at -. In doing so, the Court confirmed that the Treaty must be interpreted with extrinsic evidence. Oregon Dep t of Fish and Wildlife v. for Summary Judgment -

5 Case :-cv-00-lrs Document Filed // 0 Klamath Indian Tribe is not to the contrary: the language of the Yakama Treaty must be viewed in historical context and given a fair appraisal (emphasis added). See ECF at citing Klamath, U.S. at. In Fishing Vessel, the Supreme Court explained that a fair appraisal required the Court to interpret the Treaty in the context of the treaty negotiations, the Treaty language, and prior Treaty construction. U.S. at. Twenty four years after Mescalero, this Court phrased the fair appraisal requirement another way: if the language of the Treaty as naturally understood by the Yakamas is unambiguous, the court need go no further in its analysis. Flores, F.Supp. at. B. The Yakama Understood Article II to Guaranty They Would Always Have the Exclusive Use And Benefit of the Income from Their Lands. Indisputable material facts demonstrate that the Yakama negotiators understood that in exchange for ceding nearly million acres of their land, Yakamas would enjoy the use and occupancy of the land they were able to keep. ECF at -. for Summary Judgment - They understood that generations to come would have the exclusive use and benefit of these remaining lands and the income from activities on these lands. (SOF -). This understanding of exclusive use and benefit included gathering, cultivation, use and trade in tobacco. (SOF, -, -). The exclusive right to benefit from cultivation is underscored in Defendant s claimed slippery slope is unpersuasive. ECF at,. Federal laws, not intended to generate revenue, apply to Plaintiffs. Defendant s cited state statutes are not at issue here and do not apply on reservations. California v. Cabazon Band of Mission Indians, 0 U.S. 0, 0 ().

6 Case :-cv-00-lrs Document Filed // 0 Article V s promise to build an agricultural school. Stat. at. The Treaty encourages modernization of trade and farming operations. Accord Cree II, F. d at -, 0. Ignoring controlling law, Defendant provides a two page recitation of what Article II means to the Attorney General (ECF at -), overlooking the rule that the Treaty is to be construed, not according to the technical meaning of its words to learned lawyers, but in the sense in which they would naturally be understood by the Indians. Fishing Vessel, U.S. at. Defendant s Treaty language as a whole argument was rejected in Cree II, F.d at - (declining to interpret the treaty against the grain of Supreme Court precedent and in contravention of the district court s factual inquiry into the meaning of the language in the context of the Treaty. ). C. Defendant s Citations Do Not Refute Uncontested Evidence Confirming the Escrow Statutes Violate Article II Guarantees. Defendant does not contest that a state law that imposes preconditions and burdens on Yakama economic activity violates Article II guarantees of exclusive use and benefit. Instead, he declares (without evidentiary support) that the Escrow Statues contain no preconditions or burdens. He is wrong. For example, cigarettes of manufacturers who do not comply with the Escrow Statutes are contraband" and subject to seizure and forfeiture. (Wash. Rev. Code 0..00). It is unlawful to affix a stamp, possess for sale or import for sale in this state tobacco products the Defendant does not include in his directory. Wash. Rev. Code 0..00()(b). One cannot transport unstamped cigarettes. Wash. Rev. Code... The Escrow Statutes not only purport to impose these preconditions and burdens on King Mountain, they also impose an economic for Summary Judgment -

7 Case :-cv-00-lrs Document Filed // 0 burden and precondition on reservation derived resources if, as Defendant claims, King Mountain must deposit escrow payments for a period of years ostensibly to prevent it from deriving large, short term profits. Although courts have discussed Article II, none has decided the question now before the Court. ECF at. However, in Brendale v. Confederated Tribes and Bands of the Yakama Indian Nation, U.S. 0, (), the Supreme Court noted that under Article II, the Yakama have a power unknown to any other sovereignty in this Nation: a power to exclude nonmembers entirely from territory reserved for the tribe. Id. at. The Court recognized that exclusive use and benefit provided the Yakama with regulatory authority over non-indian fee land in the Reservation s closed area because it contained timber that was a major source of income. Id. at. Washington v. Confederated Tribes of Colville Indian Reservation, U.S., () is not to the contrary. First, growing tobacco and producing cigarettes on the reservation is not marketing of a state tax exemption on imported products. Second, Colville does not support allowing the state to derive income by regulating the distribution and sale of tobacco products manufactured on the Reservation. Cabazon Band, 0 U.S. at (distinguishing Colville from cases where the value marketed is generated on the reservation). Defendant s citation to Cotton Petroleum Corp. v. New Mexico, 0 U.S. () is similarly flawed. Addressing state taxes imposed on a non-indian lessee of tribal trust land, the Court adopted a pre-emption analysis requiring a particularized examination of the relevant state, federal, and tribal interests. Id. at. And use and occupation in an Executive Order is interpreted under rules of statutory construction, which are not analogous to the treaty construction necessary for Summary Judgment -

8 Case :-cv-00-lrs Document Filed // 0 here. D. Defendant Failed to Challenge Plaintiffs Article II Evidence. Defendant did not challenge or address Plaintiffs evidence confirming the proper interpretation of Article II. In apparent recognition of this shortcoming, Defendant offers inadmissible internet hearsay to establish the truth of the matter asserted his contention that in the Yakamas were only consuming or trading wild tobacco. ECF at -. In doing so, he admits the Yakama were consuming and trading tobacco, and does not explain why a distinction between wild tobacco and commercial grown tobacco is relevant. It is not. The Treaty prevented imposition of fees on hauling timber to off-reservation mills which did not begin until the late 0 s. Flores, F.Supp. at. III. The Escrow Statutes Impose Preconditions and Economic Restrictions on Article III Trade and Travel Rights. A. Article III Prohibits Economic Restrictions or Pre-Conditions on King Mountain s Trade in Tobacco. Defendant concedes that Cree I, Cree II, Flores and Smiskin confirm the Plaintiffs rights to bring goods to market free from state preconditions or restrictions that impose a fee. ECF at -. In Smiskin the Ninth Circuit refuse[d] to draw what would amount to an arbitrary line between travel and trade in this context, holding, as the Government suggests, that the Yakama Treaty does not protect the commerce at issue. F.d at. The court held that: whether the goods at issue are timber or tobacco products, the right to travel overlaps with the right to trade under the Yakama Treaty such that excluding commercial exchanges from its purview would effectively abrogate our decision in Cree II and render the Right to Travel truly impotent. Id. at -. ECF at -. Nothing in United States v. Baker, F.d for Summary Judgment -

9 Case :-cv-00-lrs Document Filed // 0 (th Cir. ) is to the contrary. Indeed, Smiskin distinguishes Baker because Baker involved application of a federal statute to a different treaty with only an implied right to trade. F.d at. Finally, and contrary to Defendant s parade of horribles, proper Treaty interpretation does not require jettisoning non-discriminatory, non-revenue generating state laws that are not a pre-condition on travel. ECF at. And neither authority nor logic supports Defendant s bald assertion that Plaintiffs do not have a right to engage in all the activities for which tribal members traveled at treaty time. Id. B. The Treaty Right to Trade Is Express. Article III s right to travel and trade is express under the Yakamas understanding as confirmed by applicable canons of construction. Smiskin, F.d at n. (Article III right is sufficiently specific ). Plaintiffs are not seeking a great extension of Smiskin. ECF at. They merely ask the Court to apply Smiskin and confirm that Article III guarantees prevent application of the escrow statutes preconditions and fees on King Mountain. F.d at -. IV. Admissions Regarding the Limits of State Taxing Power Confirm The Propriety of Judgment for Plaintiffs on Their Federal Law Claims. Defendant recognizes that enforcement of the Escrow Statutes is the raison d'être of this action. He opened his memorandum in support of his own summary judgment motion by arguing the applicability of the Escrow Statutes. ECF at -. He then committed the first nine pages of that memorandum to a detailed The Court distinguished United States v. Farris, F.d 0 (th Cir. 0) for similar reasons. Smiskin, F.d at n.. for Summary Judgment -

10 Case :-cv-00-lrs Document Filed // 0 discussion of these state laws. for Summary Judgment - Defendant also recognizes the State s determination that King Mountain s on-reservation sales are not subject to State taxation. [ECF at [Department of Revenue letter ruling states that sales by King Mountain within reservation boundaries are state tax exempt ]. And he admits that cigarettes not subject to the excise tax are exempt from escrow: The Attorney General recognizes that sales made on the Yakama reservation to Yakama members or members of compact tribes are not subject to the State s escrow requirements because the units sold definition includes only sales subject to the state excise tax. ECF at - n.. Defendant does not contest the Department of Revenue s power to determine the scope of State taxing authority. ECF at. These admissions confirm that limits on the scope of state taxing authority prohibit state taxation of King Mountain s on reservation activities. As Plaintiffs memorandum in support points out: ) King Mountain is exempt from State Escrow obligations for its on-reservation sales based on the State s determination that these sales are not taxable [ECF at (emphasis added)]; ) cigarettes sold with a Tribe tax stamp are not units sold and therefore not subject to the State Escrow obligation [Id. at (emphasis omitted)]; and ) whatever taxing authority the state might have over other taxpayers on subsequent sales of King Mountain product, King Mountain is not required to collect state or local sales taxes or affix state cigarette stamps to its products that it manufactures and sells within the reservation even if those sales are to non- Indians or non-yakama tribal members. Id. at. Plaintiffs address the fallacy of Defendant s new claim accusation in their Response in Opposition to Defendant s Motion to Strike. ECF.

11 Case :-cv-00-lrs Document Filed // 0 Other than its new claim objection, Defendant s only responsive argument is that subsequent off-reservation sales might be subject to escrow requirements even though they are made by third parties not under Plaintiffs control. Defendant seeks through the back door what it cannot achieve through the front: to exercise state police power on the Yakama Nation based on off-reservation conduct of unrelated third party non-indians. ECF at ( If state excise tax is imposed at any stage, King Mountain is required to escrow for the cigarette ). This is not minimal record keeping, but instead is a demand that on reservation Indians (over whom it has no regulatory authority) control the entire off reservation distribution of a reservation made product. Defendant does not have the power to impose that requirement on King Mountain. Cabazon, 0 U.S. at 0 (no state regulatory jurisdiction where Tribes are generating value on the reservations through activities in which they have a substantial interest ). for Summary Judgment - III. CONCLUSION The Court should enter judgment for Plaintiffs as a matter of law. Dated: December, 0 s/ Samuel D. Hough Samuel D. Hough Luebben Johnson & Barnhouse LLP th Street N.W. Los Ranchos de Albuquerque, NM Telephone: (0) - Fax: (0) - shough@luebbenlaw.com s/ Adam Moore Adam Moore Adam Moore Law Firm Yakima, WA Defendant concedes that sales to compacted reservations are not subject to escrow. ECF at.

12 Case :-cv-00-lrs Document Filed // 0 for Summary Judgment - Telephone: (0) -0 Fax: (0) - mooreadamlawfirm@questoffice.net Randolph H. Barnhouse (pro hac vice) Luebben Johnson & Barnhouse LLP th Street N.W. Los Ranchos de Albuquerque, NM Telephone: (0) - Fax: (0) - dbarnhouse@luebbenlaw.com Attorneys for Plaintiff CERTIFICATE OF SERVICE I hereby certify that on December, 0, I caused the foregoing to be electronically filed with the clerk of the court using the CM/ECF system which will send notification to the following: David M. Hankins, david.hankins@atg.wa.gov Rene D. Tomisser, renet@atg.wa.gov Joshua Weissman, joshuaw@atg.wa.gov Attorneys for Defendant Adam Moore, mooreadamlawfirm@qwestoffice.net Irwin H. Schwartz, irwin@ihschwartz.com Attorneys for Plaintiffs s/ Samuel D. Hough Samuel D. Hough