Federal Court Affirms South Dakota Indian Tribe s Sovereignty and Near Million Dollar Verdict for Tribal Members. June 26, 2007

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1 Federal Court Affirms South Dakota Indian Tribe s Sovereignty and Near Million Dollar Verdict for Tribal Members Executive Summary June 26, 2007 In a twenty-one-page opinion released today, the U.S. Court of Appeals for the Eighth Circuit affirmed a near $1,000,000 discrimination verdict against the Plains Commerce Bank in favor of Ronnie and Lila Long, members of the Cheyenne River Sioux Tribe and co-owners of the Long Family Land and Cattle Company, Inc., a small ranching company doing business on the Cheyenne River Sioux Reservation in South Dakota. The Longs alleged that the Plains Commerce Bank, formerly known as the Bank of Hoven, discriminated against them by, among other things, withholding a previously promised loan, due to their status as members of an Indian tribe. During the harsh Plains winter of 1996 to 1997, the missing funds would have allowed the ranching company to save the lives of their cattle, over 500 of which perished in unrelenting blizzards. The Longs sued the bank in tribal court and, in 2003, a tribal court jury returned a verdict in their favor in the amount of $875, in damages, interest, and costs. This verdict was upheld on appeal to the Cheyenne River Sioux Tribal Court of Appeals. To avoid paying the $875, jury verdict, the bank filed a lawsuit in federal court, arguing that the tribe s courts had no jurisdiction to entertain the discrimination case in the first instance. Last summer, the U.S. District Court for the District of South Dakota rejected the bank s argument, issuing an opinion affirming the tribal court s jurisdiction over the case and affirming the jury verdict against the bank. Today, the U.S. Court of Appeals affirmed the judgment of the district court, thus preserving the Longs victory. In an opinion authored by Circuit Judge Diana E. Murphy, the Court of Appeals ruled that the discrimination claim arose out of a business transaction entered into voluntarily by the bank and the Longs, who are Indian tribal members, and that, under prevailing federal law, the case should be decided in tribal court. The court also held that tribal custom and common law may govern in suits in tribal courts. The court wrote that, [i]n recognition of the status of Indian tribes as distinct cultural and political communities, the federal government has long encouraged tribal self-government. Although the tribes no longer possess the full attributes of sovereignty, they nevertheless retain those internal powers necessary to their self government (Slip Opinion p. 8) In this case, the court said, the Tribe had inherent authority to regulate the bank s conduct arising out of its consensual relationship with the Longs by subjecting it to liability for tortuous conduct. (Slip Opinion, p. 13) The court said that, [b]y subjecting the bank to liability for violating tribal antidiscrimination law in the course of its business dealings with the Longs, the Tribe Page 1 of 6

2 was setting limits on how nonmembers may engage in commercial transactions with members inside the reservation. The Longs were represented by James P. Hurley of Rapid City, South Dakota. They were assisted by the Cheyenne River Sioux Tribe, which filed several influential amicus, or friend of the court, briefs in the tribal and federal courts. The Tribe was represented by Tribal Attorney Thomas J. Van Norman of Eagle Butte, South Dakota, Roger K. Heidenreich, a partner in the St. Louis office of Sonnenschien, Nath & Rosenthal LLP, and Steven J. Gunn, an associate professor of law at Washington University in St. Louis. Discriminatory lending practices are common in Indian country, and it is critical that tribes have the power to deal with offenders, says Gunn. This case establishes an important precedent that tribes can use their own laws and legal systems to combat discrimination within their reservations. According to Tribal Attorney Van Norman: This case sends out a message in support of the sovereignty of our tribal courts, which are open and fair to all who use them. The bottom line is that all people deserve fairness in business transactions, especially in difficult times, like the winter of 1996 that saw the Longs suffer profound losses. Today s decision tells the Longs and others like them that the tribal courts are an open and fair place in which they can challenge unfair business practices on the reservation. Like Gunn and Van Norman, Heidenreich is pleased with the court s decision: The court saw the justice in the position we took. The court s decision confirms that the courts of the Cheyenne River Sioux Tribe have the power to decide disputes arising out of commercial relationships with members of the tribe. The Discrimination Claim The case, Plains Commerce Bank v. Long Family Land and Cattle Company, Inc., involved a claim brought by two tribal members, Ronnie and Lila Long, against Plains Commerce Bank, formerly known as the Bank of Hoven. The Longs alleged that the bank discriminated against them due to their status as American Indians. They cited discriminatory terms and conditions in the commercial loan the bank made to their cattle company, and alleged that the bank breached the loan agreement when it failed to lend the full amount promised. In April of 1996 the bank sent the Longs a letter citing as the basis for its conduct possible jurisdictional problems if the bank ever had to foreclose on the land when it is contracted or leased to an Indian owned entity on the reservation. (Slip Opinion, page 3.) This would form a key element of the discrimination claim, since such factors typically are not considered in loans made to non-indians. The tribal court concluded that, under traditional Lakota notions of justice, fair play, and decency to others, discrimination because of race or tribal affiliation was tortuous conduct, and a violation of tribal law. (Slip Opinion, p. 6) Page 2 of 6

3 The Longs argued that the bank s failure to lend them the money they needed, when they needed it, contributed to the death of over 500 of their cows, yearlings, and horses during the severe Plains winter of 1996 and Unable to purchase hay, the Longs saw their cattle drift from protected draws and perish in the harsh winter storms. Further, because the Longs did not have money to purchase insurance, they suffered extraordinary financial losses when their livestock died. Federal Courts Reject Bank s Jurisdictional Challenge Indian tribes have long been recognized as semi-sovereign governments within the American political system, Gunn says. There are over 500 federally recognized Indian tribes in the continental United States and Alaska, and a great many of them have their own court systems. In a series of decisions issued over the last thirty years, the Supreme Court has largely limited the jurisdiction of tribal courts to disputes involving Indians, not outsiders. However, Gunn says, the Supreme Court has recognized some exceptions to this general rule. One such exception involves disputes arising out of contracts and commercial dealings between Indians and non-indians. Tribal courts have authority to adjudicate disputes involving such consensual relationships. It was this exception that the federal courts invoked to uphold the jurisdiction of the Sioux tribal courts over the Longs discrimination claim. By entering into a loan agreement with the Longs, the Court of Appeals said, the bank subjected itself to the jurisdiction of the tribal courts. [T]ribal jurisdiction does not normally extend to the conduct of nonmembers [But] the Supreme Court identified two exceptions to this general principle [T]ribes may exercise jurisdiction over nonmembers if they have entered into certain kinds of consensual relationships or if they have engaged in conduct on tribal lands which would harm tribal interests. (Slip Opinion, p. 8) The Court of Appeals found that the Longs discrimination claim arose directly from their preexisting commercial relationship with the bank. (Slip Opinion, p. 12) Thus, the court said: The Tribe had inherent authority to regulate the bank s activities in connection with its consensual business relationship with the Longs and their company. As a natural corollary, the tribal court system the institution best qualified to interpret and apply tribal law also had jurisdiction to entertain tribal law disputes arising out of those activities. (Slip Opinion, p. 16) Our tribal government works hard to ensure fairness in its court system, and this case sends a strong message upholding our tribal courts, says Tribal Attorney Van Norman. Ironically, the bank admitted it did a lot of business on the reservation, but it did not want to abide by the tribal court s rulings. Page 3 of 6

4 Federal Courts Find that Tribal Law Prohibits Discrimination The bank also argued that the Longs discrimination claim could not be heard in tribal court because, the bank contended, the discrimination claim arose under federal law. The bank based its argument, in large part, on the United States Supreme Court s ruling in Nevada v. Hicks (2001) that tribal courts are not courts of general jurisdiction and therefore cannot entertain certain federal civil rights claims. The tribe countered that the Longs discrimination claim was founded not on federal law, but on tribal common and customary law. Gunn and several of his students performed exhaustive legal and historical research into the customs of the tribe and found that those customs, which have the force of law, mandate fairness, respect for individual dignity, and equal treatment of all people regardless of race or tribal affiliation. This research informed the tribe s position in several briefs written and filed by Washington University, Sonnenschein, and the tribe s legal department. The federal courts agreed with the tribe s position, ruling that while discrimination is the subject of federal law, including federal civil rights legislation, it is also actionable under the laws of the tribe. The Court of Appeals applauded the development of antidiscrimination law in the Cheyenne River Sioux Tribe s courts: If the encouragement of tribal self governance through the development of legal institutions is to remain a federal priority, then tribal courts must be given latitude to shape their own common law to respond to the cases before them, as our own courts have done over the centuries. (Slip Opinion, p. 20) Federal Courts Reject Bank s Due Process Arguments The federal courts rejected the bank s claims that it was denied due process of law in the tribal court proceedings. In fact, the Court of Appeals concluded that, the tribal court proceedings violated no basic tenet of due process. (Slip Opinion, p. 18) The court said: The fighting issue in the trial court was whether the bank denied the Longs favorable terms on a deal solely on the basis of their race or tribal affiliation. The bank had ample opportunity to present evidence that it did not give the Longs less favorable terms than its non Indian customers or that it did so for some other permissible reason. The court also said: The bank has suggested that as a non Indian company it could not obtain a fair hearing in tribal court on a claim that it discriminated against Indians, but there is simply no evidence to support this assertion. If the bank feared prejudice form an all Indian jury, it could have requested that the tribal court exercise the discretion granted to it by the tribal code to summon non Indians to serve on the jury. It made no such request, but instead proceeded to trial without striking any jurors or challenging the composition of the panel The bank has failed to show any bias in this case. (Slip Opinion, p. 20) Page 4 of 6

5 Washington University s Collaboration with the Cheyenne River Sioux Tribe Washington University has a longstanding relationship with the Cheyenne River Sioux Tribe. Through its American Indian Law and Economic Development Program, directed by Professor Gunn, the School of Law sends law students to work and study on the reservation during the summer. Students help the tribe safeguard its rights and develop its legal institutions. Students participate in policy development, legislative advocacy, litigation, and transactional work. It was through this program that the school became involved in the case. Washington University s Collaboration with Sonnenschein Sonnenschein s involvement in the case was part of the firm s broader collaboration with the Washington University School of Law. Working with law professors and students at Washington University, the firm's attorneys have provided pro bono legal assistance in a wide variety of substantive areas, including American Indian law, domestic violence, and mediation of civil rights disputes. Sonnenschein has appreciated the opportunity to work with the faculty and students of the Washington University School of Law on such important and worthwhile projects, says Heidenreich. Contact Information Steven J. Gunn Associate Professor of Law Washington University School of Law Anheuser-Busch Hall One Brookings Drive, Campus Box 1120 St. Louis, MO Office: (314) Cell: (314) Fax: (314) sjgunn@wulaw.wustl.edu Roger K. Heidenreich, Partner Sonnenschein, Nath & Rosenthal LLP One Metropolitan Square Suite 3000 St. Louis, MO Office: (314) Fax: (314) rheidenreic@sonnenschein.com Thomas J. Van Norman Senior Tribal Attorney Page 5 of 6

6 Cheyenne River Sioux Tribe P.O. Box 590 Eagle Butte, SD Office: (605) Cell: (605) Fax: (605) Page 6 of 6

Plains Commerce Bank v. Long Family Land and Cattle Company, Inc.: An Introduction With Questions

University of South Dakota School of Law From the SelectedWorks of Frank Pommersheim 2009 Plains Commerce Bank v. Long Family Land and Cattle Company, Inc.: An Introduction With Questions Frank Pommersheim,