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Runyon v. Association of Village Council Presidents (01/30/2004) sp-5776

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            THE SUPREME COURT OF THE STATE OF ALASKA

TOM RUNYON and LAURA          )
RUNYON, as parents and next        )    Supreme Court No. S-10772
friend of B.R., a minor child,          )
                              )    Superior Court No.
             Appellants,      )    4BE-01-00210 CI
                              )
     v.                       )    O P I N I O N
                              )
ASSOCIATION OF VILLAGE        )    [No. 5776 - January 30, 2004]
COUNCIL PRESIDENTS and        )
MARY KILBUCK,            )
                              )
             Appellees.            )
________________________________)
                              )
EVAN NICK and STELLA          )
WASSILIE, as parents and next      )
friend of J.N., a minor child,          )    Supreme Court No. S-
10838
                              )
             Appellants,      )    Superior Court No.
                              )    4BE-02-00061 CI
     v.                       )
                              )
ASSOCIATION OF VILLAGE        )
COUNCIL PRESIDENTS,      )
                              )
             Appellee.             )
________________________________)



          Appeal  from the Superior Court of the  State
          of  Alaska, Fourth Judicial District, Bethel,
          Dale O. Curda, Judge.
          Appearances:  David Henderson, Law Offices of
          David Henderson, Bethel, and Charles E. Cole,
          Law  Offices  of Charles E. Cole,  Fairbanks,
          for   Appellants.   Patrick  J.  McKay,   Law
          Offices  of Patrick J. McKay, Anchorage,  for
          Appellees.   Robert  K. Stewart,  Jr.,  Davis
          Wright  Tremaine LLP, Anchorage, and Geoffrey
          D.  Strommer, Hobbs, Straus, Dean  &  Walker,
          LLP,  Portland,  Oregon,  for  Amicus  Curiae
          Bristol Bay Area Health Corporation.  Heather
          Kendall Miller, Native American Rights  Fund,
          Anchorage,   and   Lloyd   Miller,   Sonosky,
          Chambers, Sachse, Miller & Munson, Anchorage,
          for   Amicus   Curiae   Alaska   Inter-Tribal
          Council.  William  S.  Cummings,  Ashburn   &
          Mason,  Anchorage, for Amicus  Curiae  Alaska
          Academy  of   Trial  Lawyers.   Donald  Craig
          Mitchell,   Anchorage,  for   Amicus   Curiae
          Legislative    Council    of    the    Alaska
          Legislature.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          FABE, Justice.


I.   INTRODUCTION

          The Association of Village Council Presidents (AVCP  or

the Association) is a nonprofit Alaska corporation consisting  of

fifty-six  Alaska  Native villages in the  Bethel  area,  each  a

federally  recognized tribe.  It provides  a  variety  of  social

services,  including a Head Start program.  The  parents  of  two

students  in the program brought tort actions against AVCP  after

their  children suffered injuries in separate incidents allegedly

stemming  from  the inadequate training and supervision  of  Head

Start   teachers.   The  superior  court  dismissed  the   cases,

concluding that AVCP is protected by its member tribes  sovereign

immunity.   In this consolidated appeal, the parents  argue  that

AVCP is not entitled to assert the sovereign rights of its member

tribes.   Because we conclude that the villages are not the  real

parties  in  interest  in these actions  and  that  AVCP  is  not

protected  by  their sovereign immunity, we reverse the  superior

court.

II.  FACTS AND PROCEEDINGS

     A.   Factual History

          This  case  originated  as a  pair  of  suits  alleging

negligence  in  the management of the Head Start program  run  by

AVCP.   The  Association is a nonprofit corporation  serving  the

fifty-six Native villages of the Yukon-Kuskokwim Delta.   It  was

incorporated  in  1969 as a closed Corporation  representing  the

Eskimo,  Indian,  and Aleut people of the  area.   Its  board  of

directors  is  comprised of one representative from  each  member

village.   Each representative has a single, equal  vote  in  the

Association.   According  to  an  affidavit  executed   by   AVCP

associate counsel Scott Sidell:

          AVCP  operates  a wide range of traditionally
          governmental programs designed to benefit the
          member tribes, almost exclusively with  state
          and  federal funding.  These programs include
          a  variety  of  governmental  social  service
          programs  including  General  Assistance  and
          Temporary   Assistance  for  Needy   Families
          (TANF),    juvenile   programs,    vocational
          rehabilitation,  elder programs,  and  tribal
          development  and technical assistance.   AVCP
          also   coordinates   regional   village   law
          enforcement through the Village Public Safety
          Officer  Program.  AVCP contracts many  other
          programs and services with the United  States
          Government    under    the    Indian    Self-
          Determination and Educational Assistance Act,
          25  U.S.C. 450 et seq.  All AVCP services are
          designed  [to]  promote the  welfare  of  our
          member  tribal governments and  preserve  and
          protect  the  Yupik  culture  of  all  tribal
          members.
          
Moreover,  AVCP  contracts with the United States  Department  of

Health  and  Human  Services, under the  American  Indian  Native

Alaskan Program, for Head Start program funds.

          The  facts of the tort suits are not at issue here,  so

there  is no need to go into great detail.  Minors B.R. and  J.N.

were  Head  Start  students.  B.R., the child of  Tom  and  Laura

Runyon,  was  allegedly molested at school  by  another  student.

J.N.,  the child of Evan Nick and Stella Wassilie, had her middle

finger  cut  off in [a] door at the building used by Head  Start.

We  refer  to the parents collectively as the Runyons.   In  each

case,  the plaintiffs alleged that AVCP was negligent in  failing

to  train  Head  Start  teachers properly  and  in  allowing  the

incidents to occur.

     B.   Procedural History

          Both  minors parents sued AVCP; B.R.s parents also sued

the  teacher  responsible for their child  at  the  time  of  the

incidents.    Their   complaints  alleged  that   AVCPs   actions

amount[ed]   to   willful  and  wanton  misconduct,   intentional

infliction of harm and emotional distress, gross negligence,  and

extreme  carelessness evidencing a reckless  indifference  toward

and  disregard for the value of human life and the safety of  the

public, and asked for punitive damages.

          AVCP filed motions to dismiss in both actions, claiming

that  it was protected by the sovereign immunity of the fifty-six

sovereign  tribes  that  incorporated  it.   The  superior  court

granted  the  motions to dismiss in both cases on  the  basis  of

sovereign immunity.  Both sets of parents appealed to this  court

and the cases were consolidated on appeal.

III. STANDARD OF REVIEW

          The  only  issue  in  this  appeal,  whether  AVCP   is

protected by tribal sovereign immunity, is a question of law.  We

review  questions of law de novo, adopting the rule that is  most

persuasive in light of precedent, reason, and policy.1

IV.  DISCUSSION

          The essential legal question presented by this case  is

whether  AVCP   may be sued by private parties,  or  whether  the

sovereign  immunity  of its member tribes  extends  to  bar  such

suits.     Indian  tribes  are  distinct,  independent  political

communities, retaining their original natural rights.2  In  other

words,  they are sovereigns.  Although Alaska no longer  contains

Indian  country,  its  Native villages retain  those  fundamental

attributes  of sovereignty . . . which have not been divested  by

Congress  or  by  necessary implication of the  tribes  dependent

status.3   [T]ribes have long been recognized as  possessing  the

common-law immunity from suit traditionally enjoyed by  sovereign

powers.4   Each of AVCPs member tribes is therefore protected  by

tribal sovereign immunity.

          A  subdivision  of tribal government or  a  corporation

          attached to a tribe may be so closely allied with and dependent

upon the tribe5 that it is effectively  an arm of the tribe.6  It

is  then  actually a part of the tribe per se, and, thus, clothed

with tribal immunity.7  Tribal status similarly may extend to  an

institution that is the arm of multiple tribes, such as  a  joint

agency formed by several tribal governments.8  Whether the entity

is  formed  by one tribe or several, it takes on tribal sovereign

immunity  only if the tribe or tribes, the sources  of  sovereign

authority and privilege, are the real parties in interest.9

          A  corporation, agency, or other organization is an arm

of  a tribe for sovereign immunity purposes if its connection  to

the  tribe  or tribes  is so close that allowing suit against the

entity  will damage the tribal interests that immunity  protects.

Indian   tribes  enjoy  immunity  because  they  are   sovereigns

predating  the  Constitution,  and because  immunity  is  thought

necessary  to  promote  the  federal  policies  of  tribal   self

determination,  economic  development, and  cultural  autonomy.10

Protecting  the tribal treasury is a crucial aspect  of  both  of

these   grounds   for  immunity.   [P]reventing  judgments   from

depleting  state  treasuries  is a  key  reason  for  the  states

sovereign  immunity under the Eleventh Amendment to  the  federal

constitution.11  Tribal sovereign immunity, drawing on  the  same

antecedents,12 is also motivated in significant part by the  need

to  ensure  that  tribal assets are used  as  the  tribe  wishes,

without threat from litigation.13  Furthermore, protecting tribal

assets  has  long  been held crucial to the  advancement  of  the

federal policies advanced by immunity.14

          The  entitys financial relationship with the  tribe  is

therefore of paramount importance  if a judgment against it  will

not  reach the tribes assets or if it lacks the power to bind  or

obligate the funds of the [tribe], it is unlikely that the  tribe

is the real party in interest.15  If, on the other hand, the tribe

would be legally responsible for the entitys obligations, it  may

be  an  arm of the tribe.  In such a case other factors, relating

          to how much control the tribe exerts or whether the entitys work

is commercial or governmental, may assist in the determination.16

          This  case  does not require us to refine  these  other

factors   because  the  most  important  factor,  the   financial

relationship between AVCP and the villages, gives a clear answer.

Under Alaska law, the fifty-six villages of AVCP, the members  of

a  nonprofit  corporation,  are not . . . liable . .  .  on  [the

corporations] obligations.17  Any judgment against AVCP  will  be

paid  out  of the Associations coffers alone.  Even if they  fall

short,  the  villages assets will be safe from  execution.   This

legal  insulation  makes clear that AVCP is not  an  arm  of  the

villages.   The  villages therefore are not the real  parties  in

interest  to  this  lawsuit.  And AVCP is  not  entitled  to  the

protection of the villages tribal sovereign immunity.18

          We  note  that we foresaw this arrangement over twenty-

five years ago in our decision in Atkinson v. Haldane.19  There we

suggested  in dicta that a tribe might, for commercial  purposes,

wish  to form a corporation exposed to suit in order to cultivate

trust   with   business  partners.20   Although  that  discussion

considered   tribal   corporations  formed   under   the   Indian

Reorganization Act,21 its insight is relevant here.   The  tribes

use of the corporate form protects their assets from being called

upon  to answer the corporations debt.  But this protection means

that  they  are not the real party in interest. Though this  case

does  not  call upon us to decide what financial structure  would

endow  an  association  like AVCP with the tribes  immunity,  any

arrangement forgoing a liability shield and exposing  the  tribal

treasury  would go a long way toward making the tribes  the  real

parties  in interest.  The villages of the Yukon-Kuskokwim  Delta

have  chosen  to protect themselves from liability.  By  severing

their  treasuries from the corporation, they have  also  cut  off

their sovereign immunity before it reaches AVCP.

V.   CONCLUSION

          Because  the Association of Village Council  Presidents

          is not protected by tribal sovereign immunity these two lawsuits

should  have been allowed to continue.  We therefore REVERSE  the

superior courts dismissal of these two cases and REMAND  them  to

that court for proceedings consistent with this opinion.

_______________________________
     1    Bennett v. Bennett, 6 P.3d 724, 726 (Alaska 2000).

     2    Worcester v. Georgia, 31 U.S. 515, 559 (1832); see also
United States v. Kagama, 118 U.S. 375, 381-82 (1886).

     3      John  v.  Baker,  982  P.2d 738,  751  (Alaska  1999)
(citation  omitted).  We decline the invitations of  the  Runyons
and  amicus Legislative Council to revisit John v. Baker.   Stare
decisis  compels  us  to give precedential  value  to  our  prior
holdings.  Joseph v. State, 26 P.3d 459, 468 (Alaska 2001).

     4    Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978);
see  also  United States v. United States Fid. & Guar.  Co.,  309
U.S.  506  (1940);  Atkinson v. Haldane,  569  P.2d  151,  157-63
(Alaska 1977).

     5     Ransom  v. St. Regis Mohawk Educ. & Cmty. Fund,  Inc.,
658 N.E.2d 989, 993 (N.Y. 1995).

     6    Id. at 992  (quotation marks omitted).

     7     Dixon v. Picopa Contr. Co., 772 P.2d 1104, 1108 (Ariz.
1989) (citing White Mountain Apache Indian Tribe v. Shelley,  480
P.2d  654, 657 (Ariz. 1971)); see also Altheimer & Gray v.  Sioux
Mfg. Corp., 983 F.2d 803, 812 (7th Cir. 1993); Weeks Const., Inc.
v.  Oglala  Sioux Housing Auth., 797 F.2d 668, 670-71  (8th  Cir.
1986).

     8    See Pink v. Modoc Indian Health Project, Inc., 157 F.3d
1185  (9th Cir. 1998) (holding that multi-tribe agency is  Indian
tribe within meaning of 42 U.S.C.  2000e(b)); Dille v. Council of
Energy Res. Tribes, 801 F.2d 373 (10th Cir. 1986) (same).

     9    Ransom, 658 N.E.2d at 993.

     10     Am. Indian Agric. Credit Consortium, Inc. v. Standing
Rock Sioux Tribe, 780 F.2d 1374, 1378 (8th Cir. 1985).

     11     Harter  v. Vernon, 101 F.3d 334, 337 (4th Cir.  1996)
(citing  Hess v. Port Authority Trans-Hudson Corp., 513  U.S.  30
(1994)).

     12     Although the Eleventh Amendment immunity is based  on
the  constitutional  text while tribal sovereign  immunity  is  a
judicial  doctrine, they share a background of traditional  ideas
about  the power and privileges of the sovereign.  [Tribes]  have
been  placed  by the United States, substantially, on  the  plane
occupied  by  the  states  under the eleventh  amendment  to  the
constitution.  Thebo v. Choctaw Tribe of Indians, 66 F. 372,  376
(8th  Cir.  1895).  Tribal immunity is a form of  the  common-law
immunity  from  suit traditionally enjoyed by  sovereign  powers.
Santa   Clara   Pueblo,  436  U.S.  at  58.    Similarly,   cases
interpreting the Eleventh Amendment to protect states  from  suit
by private citizens are grounded in traditional understandings of
sovereignty.  See, e.g., In re State of New York, 256  U.S.  490,
497 (1921) (That a state may not be sued without its consent is a
fundamental  rule of jurisprudence . . . .); Hans  v.  Louisiana,
134  U.S. 1, 12-19 (1890) (basing state sovereign immunity in  an
interpretation  of  the Eleventh Amendment grounded  on  the  old
law);  see  also William A. Fletcher, A Historical Interpretation
of   the  Eleventh  Amendment:  A  Narrow  Construction   of   An
Affirmative  Grant  of  Jurisdiction Rather  Than  A  Prohibition
Against  Jurisdiction, 35 Stan. L. Rev. 1033, 1071  (1983)  ([The
Eleventh  Amendment]  .  .  . affirmed  .  .  .  the  traditional
principle of sovereign immunity . . . .).

     13     See  Native  Village of Stevens  v.  Alaska  Mgmt.  &
Planning, 757 P.2d 32, 41 n.24 (Alaska 1988); Atkinson, 569  P.2d
at 160.

     14      See  Thebo,  66  F.  at 376  (tribe  would  soon  be
impoverished  if  it  was  subject to  the  jurisdiction  of  the
courts);  Adams v. Murphy, 165 F. 304, 308 (8th Cir. 1908)  (Upon
considerations  of public policy . . . Indian tribes  are  exempt
from  civil  suit. . . .  If any other course were  adopted,  the
tribes  would  soon  be  overwhelmed with  civil  litigation  and
judgments.).

     15     See  Ransom, 658 N.E.2d at 992 (quoting  Altheimer  &
Gray, 983 F.2d at 809);  see also White Mountain Apache Tribe  v.
Smith  Plumbing  Co., Inc., 856 F.2d 1301, 1305 (9th  Cir.  1988)
(holding  that  sovereign immunity does not  bar  action  against
tribes  surety  because  judgment against  surety  will  not  run
against  tribe);  Dixon,  772  P.2d  at  1109-10  (holding   that
liability  insurance insulat[ing] the [tribe] from [the  entitys]
debts is relevant to the question of whether an Indian commercial
entity is an arm of a tribe).

     16     See  Gavle  v. Little Six, Inc. 555 N.W.2d  284,  294
(Minn.  1996);  Ransom, 658 N.E.2d at 992 (citing  Vetter,  Doing
Business  with  Indians and the Three Ses: Secretarial  Approval,
Sovereign Immunity and Subject Matter Jurisdiction, 36  Ariz.  L.
Rev. 169, 176 (1994)); Dixon, 772 P.2d at 1110-11.

     17    AS 10.20.051(b).

     18    Because we hold that AVCP is not immune, we do not need
to  address  the  Runyons arguments that the organization  waived
immunity either by purchasing liability insurance or through  the
wording  of  its corporate charter, or AVCPs arguments concerning
whether its agents and employees may be sued.

     19     569 P.2d 151, 170-75 (Alaska 1977).

     20    Id. at 174-75.

     21    25 U.S.C.  477 (2003).