FMC Corporation v. Shoshone-Bannock Tribes

Filing 43

MEMORANDUM DECISION AND ORDER. NOW THEREFORE IT IS HEREBY ORDERED, that with regard to FMCs due process claim contained in Section IV.C of the First Amended Complaint, FMC may raise its argument that two Tribal Judges were biased against it, but may not conduct discovery on that claim. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (st)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
FMC CORPORATION
Plaintiff,

Case No. 4:14-CV-489-BLW

v.

MEMORANDUM DECISION AND
ORDER

SHOSHONE-BANNOCK TRIBES,
Defendant.

INTRODUCTION
This case was originally assigned to Judge Lodge who referred discovery matters
to Magistrate Judge Dale. On March 23, 2015, Judge Dale held a conference with
counsel and directed both sides to file briefs on the discovery issue. Those briefs were
subsequently filed by both sides. On September 10, 2015, the case was reassigned to me,
and a week later I withdrew the reference to Judge Dale as part of my general policy not
to refer discovery issues. I have now reviewed the briefs and will resolve the discovery
issue below.
LITIGATION BACKGROUND
In this lawsuit, FMC challenges a Shoshone-Bannock Tribal Court judgment (1)
finding that the Tribes have jurisdiction to require FMC to obtain a permit to store
hazardous waste on Reservation fee lands owned by FMC, and (2) ordering FMC to pay
the Tribes $20 million representing ten years of unpaid permit fees. See Judgment (Dkt.
No. 35-7). FMC argues that the judgment should not be enforced because “the court was
Memorandum Decision & Order – page 1

controlled by the Tribes, denying FMC any semblance of a fair hearing.” See FMC Brief
(Dkt. No. 36) at p. 2. The dispute to be resolved in this decision is whether FMC is
entitled to conduct discovery on the fairness of the Tribal Court process or whether it is
limited to the existing record of that process.
ANALYSIS
A federal court has authority to enforce a tribal court judgment as a matter of
comity so long as the defendant was afforded due process and the tribal court has
personal and subject matter jurisdiction. See Wilson v. Marchington, 127 F.3d 805 (9th
Cir. 1997). Due process means “there has been opportunity for a full and fair trial before
an impartial tribunal that conducts the trial upon regular proceedings after proper service
or voluntary appearance of the defendant, and that there is no showing of prejudice in the
tribal court or in the system of governing laws.” Id. at 811.
Thus, if FMC can show “prejudice in the tribal court,” FMC would have a defense
to enforcement of the Tribal Court judgment. Under Rule 26(b)(1), FMC may conduct
discovery regarding any matter “that is relevant to” its claims or defenses. Certainly,
discovery concerning the fairness of the Tribal Court process would be relevant to FMC’s
claim that its due process rights were violated.
The Tribes argue, however, that FMC was required to exhaust its due process
argument in Tribal Court, failed to do so, and cannot now conduct discovery on its due
process claim as if it had no duty to exhaust. The Supreme Court has mandated the
exhaustion of tribal remedies as a prerequisite to a federal court’s exercise of its
jurisdiction: “[E]xhaustion is required before such a claim may be entertained by a
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federal court.” National Farmers Union Ins. Cos. v. Crow Tribe of Indians, 471 U.S.
845, 851-53 (1985). This is true even for non-Indian defendants sued in a tribal court
who allege that the proceedings exceed tribal sovereign jurisdiction. Burlington Northern
R. Co. v. Crow Tribal Council, 940 F.2d 1239, 1244 (9th Cir. 1991).
In National Farmers, the Supreme Court recognized that tribal courts are capable
of resolving difficult jurisdictional issues. 471 U.S. at 856–57. That decision teaches
that tribal courts (1) should be afforded a “full opportunity” to determine their own
jurisdiction, (2) are capable of “rectifying errors,” (3) will create a more complete record
for eventual federal court review, and (4) will provide federal courts with the benefit of
tribal court “expertise.” Id. “The requirement of exhaustion of tribal remedies is not
discretionary; it is mandatory.” Id. at 1245.
Exhaustion is not required, however, when (1) “an assertion of tribal jurisdiction is
motivated by a desire to harass or is conducted in bad faith; (2) the assertion of
jurisdiction “patently violat[es] . . . express jurisdictional prohibitions,” or (3) exhaustion
would be futile because of the lack of adequate opportunity to challenge the court’s
jurisdiction.” Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9, 19, n. 12.
FMC does not attempt to argue that one of these exceptions applies. For example,
FMC does not argue that it was deprived of an opportunity to challenge the Tribal
Court’s jurisdiction or was the victim of harassing or bad faith conduct on the part of the
Tribal Court.
Instead, FMC argues that the Tribal Court process was biased. But “allegations of
local bias and tribal court incompetence . . . are not exceptions to the exhaustion
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requirement.” Burrell v Armijo, 456 F.3d 1159, 1168 (10th Cir. 2006). If a litigant could
avoid exhaustion simply by arguing bias, he would sneak under the higher standard
required by National Farmers that he show harassment or bad faith, rendering that
standard a nullity.
In fact, the reasons cited by National Farmers and Iowa Mutual for requiring
exhaustion apply with equal strength to claims of a due process violation. Exhausting
due process claims gives the tribal court an opportunity to cure the problem, make a
complete record, and provide its expertise for review by the federal district court – the
very reasons supporting exhaustion cited by National Farmers and Iowa Mutual.
The Court therefore finds that FMC had an obligation to exhaust its due process
claims. FMC argues that its due process rights were violated in two principal ways: (1)
The Tribal Courts are improperly influenced by the Tribal Business Council; and (2) Two
judges on the Tribal Appellate Court were biased against FMC, ignored many of FMC’s
legal arguments, and made major rulings adverse to FMC.
With regard to the first alleged due process violation, FMC presents no argument
here that it exhausted this argument in the Tribal Court system. Thus, FMC is precluded
from raising the argument and conducting discovery on it in this Court.
FMC is on stronger ground with its second due process allegation regarding the
two biased judges. An “impartial tribunal” is an important tenet of due process that every
tribal court must provide to its litigants. Wilson, 127 F.3d at 811. FMC filed two briefs
with the Tribal Appellate Court arguing that two judges on the Court – who had
participated in decisions adverse to FMC and who had since been replaced – were biased
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against FMC. See Exhibit 7-2 (Dkt. No. 35-10). FMC produced a transcript of public
comments made by the judges at a legal conference allegedly showing their bias, and
sought to set aside the decisions in which these two judges participated. Id.
With these arguments, FMC clearly exhausted its claim that the two judges were
not impartial. While the record before this Court does not show that the Tribal Appellate
Court addressed FMC’s argument, it is enough for exhaustion purposes that FMC raised
the argument.
Thus, FMC may argue to this Court that it was deprived of due process because of
the bias of those two Tribal Judges. The Court will review FMC’s due process argument
de novo. Bird v. Glacier Electric Coop., 255 F.3d 1136, 1140-41 (9th Cir. 2001). To
support that argument, FMC may offer the same material it presented to the Tribal
Appellate Court, specifically the transcript of the public comments.
FMC wants more, however; it wants to conduct discovery on the issue. The
Tribes object, arguing that FMC has waived its right by failing to conduct discovery at
the Tribal Court level and present a full argument to the Tribal Courts.
To support this objection, the Tribes point out that one of FMC’s attorneys,
Maureen Mitchell, was present on March 23, 2012, when the two Tribal Judges were
alleged to make their statements of bias against FMC at a conference held at the
University of Idaho. See Mitchell Declaration (Dkt. No. 35-15). About three months
later, on June 26, 2012, those two Judges joined a third to issue a decision for the Tribal
Appellate Court adverse to FMC. See Order (Dkt. No. 35-4).

Memorandum Decision & Order – page 5

By June 26, 2012, therefore, FMC knew that the two Judges had issued an adverse
decision and had earlier made comments which were allegedly biased against the
company. The Tribes argue that FMC sat on this information for almost a year before
revealing it in the briefing filed with the Tribal Appellate Court, long past the time when
discovery could have been conducted.
But to present these allegedly biased statements, FMC needed to produce them in
an admissible form such as a transcript. However, the host of the conference, the
University of Idaho, refused to produce a transcript, requiring FMC to file a lawsuit to
force the University to release the transcript. See Mitchell Declaration, supra at ¶ 4. The
litigation ended with a court order that the University release the transcript in January of
2013. Id. at ¶ 5; see also Exhibit B (showing transcript preparation date of January 30,
2013).
Thus, by the end of January 2013, FMC had a ripe claim of judicial prejudice, and
also had some evidence (the transcript) to support that claim. FMC did not request or
conduct discovery on this claim in the Tribal Court despite the fact that the ShoshoneBannock Law & Order Code §3.26 allows for some forms of discovery. FMC does not
argue that discovery was unavailable in the Tribal Court. Instead of requesting or
conducting discovery on the judicial bias claim, FMC waited about three months before
raising the claim in its briefing: It was not until May 6, 2013, that FMC filed its two
briefs arguing for the first time that the two judges were biased.
The Tribes argue that FMC could have conducted discovery on the bias between
January and May of 2013, to present a full case to the Tribal Courts, but failed to take
Memorandum Decision & Order – page 6

advantage of that opportunity. FMC offers no rebuttal as to why it did not seek discovery
on this issue during those months.
To allow a litigant to conduct full-blown discovery here, after he failed to conduct
discovery in the tribal court litigation, would ignore National Farmers and Iowa Mutual.
Those cases directed that all issues be fully presented to the tribal court so that it might
cure any problems and give the federal court the benefit of its expertise. If a due process
issue like judicial bias is not fully developed through discovery before being presented to
the tribal court – and the litigant simply sits on his discovery rights until he gets into
federal court – the tribal court never gets a chance to review the discovery, apply its
expertise, and cure any unfair judicial bias revealed by the discovery. That is antithetical
to the analysis of National Farmers and Iowa Mutual.
Accordingly, the Court holds that FMC cannot conduct the discovery here that it
should have conducted in the Tribal Court. At the same time, as discussed above, FMC
may raise the judicial bias argument here and may offer to this Court the same material it
presented to the Tribal Appellate Court.
ORDER
In accordance with the Memorandum Decision above,
NOW THEREFORE IT IS HEREBY ORDERED, that with regard to FMC’s due
process claim contained in Section IV.C of the First Amended Complaint, FMC may
raise its argument that two Tribal Judges were biased against it, but may not conduct
discovery on that claim.

Memorandum Decision & Order – page 7

DATED: November 9, 2015

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

Memorandum Decision & Order – page 8