Court: District Court, W.D. Texas; October 1, 2018; Federal District Court
The Court, presided over by Judge Philip R. Martinez, denied the Defendants' motion to amend prior orders to certify for interlocutory appeal under 28 U.S.C. § 1292(b). The Defendants—Ysleta del Sur Pueblo, the Tribal Council, and Tribal Governor Carlos Hisa—sought to appeal on the grounds of tribal sovereign immunity associated with bingo activities operated by the Ysleta del Sur Fraternal Organization. The Plaintiff, the State of Texas, is challenging the legality of these bingo activities and seeks an injunction against them.
The Court allowed the Plaintiff to conduct depositions and discovery related to the Tribal Governor and the Fraternal Organization, despite Defendants’ claims of sovereign immunity. In their motion, Defendants argued that two specific issues should be appealable: whether the Fraternal Organization possesses unwaived tribal sovereign immunity and whether this immunity protects the organization and its officials from the discovery process.
According to the legal standard set forth in § 1292(b), for an order to be appealable, it must involve a controlling question of law with substantial grounds for differing opinions and must materially advance the litigation's termination. The Court emphasized that the issues presented were not exceptional and did not demonstrate a substantial ground for difference of opinion. Additionally, allowing an interlocutory appeal would delay, rather than expedite, the resolution of the case. Consequently, the Court concluded that the Tribe is not immune from the lawsuit, thereby rejecting the Defendants' motion.
The Court denied the Defendants' motion to dismiss and partially granted the Plaintiff's motion to dismiss. The ruling established that the Tribe is not immune from suit, which in turn means the Fraternal Organization, as an entity associated with the Tribe, is also not shielded from discovery. The Fraternal Organization's charter indicates that its immunity is aligned with that of the Tribe, granting it "the same immunities under federal law." Since the Restoration Act waives immunity for the Tribe, it similarly waives it for the Fraternal Organization. The Court expressed skepticism about the notion that a tribal corporation could possess greater immunity than the Tribe itself. While a Section 17 corporation can choose to waive immunity, it cannot retain it if the Tribe has waived it. The Indian Reorganization Act (IRA) was designed to allow tribal entities to engage in business without the restrictive effects of sovereign immunity, which could hinder economic development. Defendants argued that the Restoration Act does not explicitly mention the Fraternal Organization; however, the Court clarified that the Act's language, particularly Section 107(c), waives immunity without any exclusions for the Fraternal Organization. Therefore, the Act allows the state of Texas to bring actions against violations without limiting its application solely to the Tribe.
A Section 17 corporation's potential for greater immunity than its parent tribe is deemed unlikely, and the defendants failed to demonstrate that the Restoration Act does not waive the Fraternal Organization's immunity. The Fifth Circuit has not previously addressed whether the Restoration Act waives this immunity, making it a matter of first impression. However, the existence of a novel issue does not justify an interlocutory appeal, as merely having a disputed issue is insufficient to show a substantial ground for difference of opinion. Disagreement between the parties, even if fervent, does not meet the rigorous requirements set by Section 1292(b) for an interlocutory appeal.
Moreover, pursuing an interlocutory appeal is expected to delay litigation rather than expedite it, as the court believes it is more beneficial for the parties to focus on completing discovery. The court expressed skepticism about the Fraternal Organization's claim of immunity, citing its charter and the Restoration Act's provisions. Therefore, allowing discovery against the Fraternal Organization is deemed appropriate. Consequently, the defendants' motion for an interlocutory appeal is denied, and their notice of errata regarding a formatting error in their reply is acknowledged.
The Court acknowledges the Defendants' timely correction of a formatting error and accepts the attached reformatted Reply, which meets the required limits. References in the Order pertain to the original Reply (ECF No. 125). Defendants, acting as Counter-Plaintiffs, have filed counterclaims against Ken Paxton in his official role as Texas Attorney General. The Court's prior ruling on the Tribe's immunity aligns with precedents regarding the Tribe's waiver of sovereign immunity under the Restoration Act. Defendants argue that the Fraternal Organization's immunity is distinct from the Tribe's, which the Court concurs with, noting that the Fraternal Organization can waive its own immunity without affecting the Tribe's. However, the Court asserts that the Fraternal Organization cannot be sued for gaming offenses in any court other than federal court, given its complete control by the Tribe. Additionally, Section 107(a) of the Restoration Act prohibits all gaming activities banned by Texas law on Tribal lands, applying to the Fraternal Organization without any exclusion. The Restoration Act, enacted in 1987, predates the Fraternal Organization's formation in 2011, indicating that Congress did not intend to include it under the Act. Therefore, the Tribe cannot bypass the Restoration Act's provisions by establishing a chartered organization for gaming operations.
