PHOENIX -- Private companies that do business on reservations with tribes and their corporations cannot automatically ask federal courts to intercede when legal disputes erupt, a federal appeals court ruled Friday.
In a case involving the famous Grand Canyon Skywalk, the judges rejected the arguments by the Nevada company which built the famous horseshoe-shaped glass bridge hanging over the canyon that it should be able to sue the Hualapai Tribe in federal court for taking its right to operate the attraction through condemnation. Judge Richard Tallman, writing for the 9th U.S. Circuit Court of Appeals, said there was no reason to believe the firm could not get a fair hearing there.
Friday's ruling, though, will have little practical impact on much of the ongoing legal dispute.
Since the case was argued before the appellate court last October, that same tribal court concluded the firm, Grand Canyon Skywalk Development, was owed $28 million in revenues for operations between 2005 and 2008. The tribal corporation responded by declaring bankruptcy.
Attorney Troy Eid said that automatically gave the federal bankruptcy court jurisdiction. He said that means that court will determine how his client can collect those funds.
Eid acknowledged a separate legal dispute remains over profits since 2008, as well as the larger question of who has the right to operate the Skywalk. But Eid said his client is allowing that to work itself out in tribal court, which, in essence, is what the 9th Circuit said Friday needs to happen.
In any event, the ruling becomes a reminder to companies that do business with tribes on tribal land that they cannot simply seek federal court intervention when disagreements arise.
The dispute traces its roots to the 2003 agreement signed between the firm and Sa' Nyu Wa, a tribally chartered corporation of the Hualapai Tribe, to build a skywalk suspended 70 feet out from the rim of the western edge of the Grand Canyon on tribal land. That contract also required the firm to manage the visitor center and gift shop as well as provide shuttle services to the site from off the reservation.
Company officials said they spent $25 million on the project, which was opened in 2007, but that the tribe was failing to pay what it owed in profits. The tribe, in turn, complained that the firm was not living up to its contract.
Ultimately, the company sued in tribal court, with a request that the issue go to arbitration.
While that was pending, though, the Hualapai Tribal Council voted to exercise its right of eminent domain and condemn the property rights in the contract. That effectively left Sa' Nyu Wa, the tribal corporation, in contract with the tribe.
A request by the company for a federal judge to issue a temporary restraining order was rejected, resulting in this appeal.
Tallman said there is a long line of federal court cases which say that tribal courts are entitled to deference in resolving issues and determining their own jurisdiction.
He said Congress has expressed its intent that tribes have their own self-government and self-determination. And Tallman said it makes sense to have the issues first examined by tribal courts where a full record of the issues can be developed.
There are exceptions, including where assertion of tribal jurisdiction is done in bad faith. And attorneys for the corporation pointed out that their lawsuit does, in fact, claim that the tribe acted in bad faith.
But Tallman said those attorneys are misreading the law.
He said the issue is the bad faith of the tribal court and not the defendant. And Tallman said there is no such evidence here.
Similarly, the appellate judges rejected claims that it would be futile for them to pursue their case against a tribal entity in tribal court. Tallman said there is evidence that the court ``operates independently from the tribal council.'
Finally, Tallman said case law gives tribes broad powers over activities that occur on their reservation.
Most notably, he said, that includes the power to manage its own lands and exclude people from those lands.
In this case, the judge noted, the tribal lands are central to the entire dispute.
``It is the impressive beauty of the tribal land's location that is the valuable centerpiece of this controversy,' he wrote. ``Tourists visit the Skywalk because it provides unparallel viewing of the Grand Canyon, a location to which the tribe has the power to limit access through its inherent sovereignty and the right to exclude.'