Summary
The Ninth Circuit reversed the dismissal of a civil RICO action against officials of the Colorado River Indian Tribes. The court held that the officials were not entitled to tribal sovereign immunity because they were sued individually for damages payable from their own assets, and that the Tribe was not a required party under Federal Rule of Civil Procedure 19. The case was remanded for consideration of the defendants’ Rule 12(b)(6) motion and whether amendment should be allowed.
Topics
Practice areas
Questions Presented
- Whether the tribal defendants were entitled to invoke the Colorado River Indian Tribes' sovereign immunity in an individual-capacity action seeking money damages.
- Whether the Colorado River Indian Tribes was a required party under Federal Rule of Civil Procedure 19(a)(1), such that the action had to be dismissed under Rule 12(b)(7) because the Tribe could not be joined.
- Whether the dismissal should be reversed and the case remanded for the district court to address the defendants' unadjudicated Rule 12(b)(6) motion and the plaintiffs' request for leave to amend.
Holdings
- Tribal officials sued in their individual capacities for money damages are not entitled to the Tribe's sovereign immunity when the judgment would run against the officials personally rather than against the Tribe or its treasury. The defendants therefore could not invoke CRIT's sovereign immunity.
- CRIT was not a required party because the plaintiffs sought damages from individual defendants and did not seek to reinstate, invalidate, or otherwise alter CRIT's lease, real-property interests, or contractual rights.
- The dismissal under Rules 12(b)(1) and 12(b)(7) was reversed, and the case was remanded for the district court to consider in the first instance whether the complaint states a claim under Rule 12(b)(6) and, if not, whether leave to amend should be granted.
Key quotations
“After Lewis, the relevant inquiry when determining whether tribal officials enjoy sovereign immunity is “whether the remedy sought is truly against the sovereign.”” (9)
“The critical inquiry is who may be legally bound by the court’s adverse judgment.” (10)
“The outcome of this litigation will not affect CRIT’s real property or contractual rights.” (12)
Factual background
In 2015, WW Young Money, LLC entered a five-year lease with the Colorado River Indian Tribes to operate a smoke shop on the Tribe's reservation; the lease was renewed in 2020. In 2021, tribal officials Rebecca Loudbear and Amelia Flores sent a notice terminating the lease for alleged violations of tribal property law, including untimely rent, continued occupancy, nuisance, and property damage. The plaintiffs alleged that the tribal officials and a former plaza manager engaged in RICO predicate acts, illegally terminated the lease, converted and sold inventory, demanded extortionary payments, and supplied false information to federal authorities, and they sought money damages from the individual defendants rather than reinstatement of the lease.
Procedural history
The Welshes sued three officials of the Colorado River Indian Tribes under 18 U.S.C. § 1964(c), alleging that the officials engaged in racketeering activity to terminate their smoke-shop lease and damage their business. The district court dismissed under Rules 12(b)(1) and 12(b)(7), concluding that the defendants were protected by tribal sovereign immunity and that the Tribe was a required party whose joinder was barred by sovereign immunity. The Ninth Circuit reversed and remanded for the district court to address the defendants' Rule 12(b)(6) motion and, if appropriate, whether leave to amend should be granted.
Remand instructions
The district court must consider the tribal defendants' motion to dismiss under Rule 12(b)(6) and, if the complaint fails to state a claim, determine whether leave to amend should be granted.