Litigation

Ninth Circuit limits tribal court commercial jurisdiction

By Rob Roy Smith

In its first tribal civil jurisdiction case since last year's U.S. Supreme Court ruling in Plains Commerce Bank (see our blog entry about the case), a panel of the Ninth Circuit Court of Appeals in Philip Morris v. King Mountain Tobacco rejected tribal court jurisdiction over a lawsuit brought by a Yakama tribal member business against tobacco giant Philip Morris seeking declaratory relief in a trademark infringement dispute. 

The panel concluded, for the first time in the Ninth Circuit, that "a tribal court has jurisdiction over a nonmember only where the claim has a nexus to the consensual relationship between the nonmember and the disputed commercial contacts with the tribe."  Applying this rule, the panel majority found that even though Philip Morris had marketing contracts with various stores on the reservation, the suit was about trademark infringement on nationwide sales which had nothing to do with the contracts.  The Court narrowly construed the other two grounds by which a tribal court may acquire jurisdiction over a nonmember, by limiting such cases to those that "pose a direct threat to tribal sovereignty" and rejecting the argument that the Lanham Trademark Act granted tribal court jurisdiction to cancel federally-granted trademarks.  Judge Fletcher, writing separately, concurred in the judgment but issued a separate opinion to chastise the majority for "engag[ing] in extended dicta in an attempt to undermine" certain long-standing tribal jurisdiction cases.

This case marks a further limitation on the reach of tribal court jurisdiction over commercial cases brought against nonmember defendants.  If a tribe seeks to secure tribal court jurisdiction over a nonmember as part of a contractual relationship, it is critical both to establish clear contractual obligations that bind the nonmember to tribal court jurisdiction, and to limit any litigation to the scope of the contract.  Otherwise, state or federal forums will decide the dispute.

Full post as published by Northwest Business Litigation Blog on January 22, 2009 (boomark / email).