By Bart J. Freedman and Benjamin A. Mayer
The U.S. Supreme Court's recent decision in Michigan v. Bay Mills Indian Community1 is a reminder to a broad range of entities, including energy companies, financial service providers, and state and local governments, that they must be fully informed when entering into commercial transactions with Indian tribes.
In Bay Mills, the Supreme Court ruled that the State of Michigan could not enforce the terms of a gaming compact under the Indian Gaming Regulatory Act (IGRA). The compact between Michigan and the Bay Mills Indian Community (Bay Mills), a federally recognized Indian tribe, expressly preserved both parties' sovereign immunity. The case involved Michigan's attempt to enjoin Bay Mills from allegedly violating the compact by conducting Las Vegas-style gambling outside Indian lands within Michigan. The Court held that Michigan's suit was barred by Bay Mills' sovereign immunity and affirmed that Indian tribes enjoy broad immunity from lawsuits in state and federal courts.
Tribal Sovereign Immunity
As domestic dependent nations, federally recognized Indian tribes exercise inherent sovereign authority.2 A central aspect of that sovereignty is immunity from suits in federal and state courts, commonly known as "tribal sovereign immunity."3
Under the doctrine of tribal sovereign immunity, an Indian tribe cannot be sued by a state, a private party or other governmental authority, such as another tribe or a municipality, unless the tribe expressly waives its sovereign immunity or Congress abrogates it.4 The Supreme Court has recognized that the words "waiver" and "sovereign immunity" are not necessary to constitute a clear waiver.5 In Michigan v. Bay Mills, Michigan asked the Supreme Court to reconsider whether tribal sovereign immunity should apply to suits arising out of a tribe's off-reservation commercial activities.6
Michigan's Suit and the Court's Decision
In 1993, Bay Mills and Michigan entered into a compact pursuant to IGRA that permits Bay Mills to conduct certain types of gaming "on Indian lands" located within Michigan's borders. The compact contained an arbitration provision to resolve disputes. The compact also provided that "[n]othing in this Compact shall be deemed a waiver" of Bay Mills' or Michigan's sovereign immunity.7
In 2010, Bay Mills opened a gaming facility on land that Michigan argued did not constitute "Indian lands" under the compact. Michigan sought to enjoin that gaming, but, curiously, did not bring a contract claim under the compact's terms. Rather, Michigan brought a statutory claim under IGRA, which permits suits in federal court to enjoin certain gaming activities conducted on Indian lands in violation of a tribal-state compact.8
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