April 22, 2018

Colorado Supreme Court: Sovereign Immunity Does Not Bar Attorney Fee Award Against Government Entity

The Colorado Supreme Court issued its opinion in C.K. v. People in Interest of L.K. on Monday, December 18, 2017.

Discovery Sanctions—Attorney Fees—Sovereign Immunity.

In this case, the Colorado Supreme Court considered the narrow question of whether sovereign immunity bars an award of attorney fees against a public entity. The court concluded that sovereign immunity does not bar an award of attorney fees against a public entity because sovereign immunity does not presumptively protect the state of Colorado and Colorado’s Governmental Immunity Act does not provide immunity for an award of attorney fees against a public entity. Accordingly, the court reversed the court of appeals’ judgment and remanded to that court for proceedings consistent with this opinion.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Officer Entitled to Bring Interlocutory Appeal Regarding Whether Sovereign Immunity Applied

The Colorado Supreme Court issued its opinion in Martinez v. Estate of Bleck on Monday, September 12, 2016.

Colorado Governmental Immunity Act—Interlocutory Appeal—Sovereign Immunity—Willful and Wanton Conduct.

Bleck was injured when Officer Jeffrey Martinez’s firearm  discharged during an attempt to subdue Bleck. Bleck filed a state law battery claim against Martinez, and Martinez filed a motion to dismiss, claiming immunity under the Colorado Governmental Immunity Act (CGIA). The trial court found that Bleck had adequately pleaded willful and wanton conduct by Martinez and thus denied Martinez’s motion. Martinez then filed an interlocutory appeal with the Court of Appeals. The Court of Appeals held that it lacked jurisdiction to hear the appeal because Martinez was only entitled to qualified immunity, which is not appealable on an interlocutory basis, not sovereign immunity, which is. The Supreme Court reversed and concluded that whether a public employee’s conduct is willful and wanton under the CGIA implicates sovereign immunity. Thus, the plain language of the CGIA affords Martinez a right to an interlocutory appeal. The Court further held that the trial court erred in (1) not deciding the issue of whether Martinez’s conduct was willful and wanton, and (2) using a negligence standard to define willful and wanton. Accordingly, the Court remanded the case for further proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Proof of Alleged Abuse Not Required Where Child Adjudicated Dependent Based on Lack of Parental Care

The Colorado Court of Appeals issued its opinion in People in Interest of L.K. on Thursday, July 14, 2016.

Dependency and Neglect—Sexual Abuse—Polygraph Examination—Treatment Plan—Testimony—Evidence—Attorney Fees—Discovery Violations—Sovereign Immunity.

L.K. alleged sexual abuse by her father, C.K. Although C.K. denied the allegations, he stipulated that L.K. was dependent and neglected because she lacked proper parental care. The court accepted his admission and adjudicated L.K. dependent and neglected. The Moffat County Department of Social Services (MCDSS) devised a treatment plan for C.K., which required, among other things, that C.K. take a polygraph examination as part of denier’s treatment. Moffat later moved to terminate C.K.’s parental rights. Among other things, the court found that C.K. had been referred for a polygraph examination but did not appear for it, and it granted the termination motion, citing C.K.’s failure to successfully complete treatment designed to address the allegations of sexual misbehavior with L.K. as sufficient evidence that he was unable or unwilling to provide nurturing and safe parenting to adequately address her needs.

On appeal, C.K. contended that the trial court committed reversible error by considering the denier’s treatment polygraph examination as evidence supporting its determination that he failed to successfully complete his treatment plan. He did not dispute either that his treatment plan required him to participate in denier’s treatment or that a polygraph examination was required in denier’s treatment. For these reasons, the court properly admitted evidence of efforts to schedule an appointment for a polygraph examination and evidence that C.K. did not keep the appointment, and the court did not err in considering this evidence in terminating C.K.’s parental rights.

Next, C.K. contended that MCDSS had the burden to prove by clear and convincing evidence that his parental rights should be terminated, but the trial court erred by unfairly shifting the burden of proof to him when he decided not to testify in the termination hearing. When C.K. failed to present evidence, the court did not improperly shift the burden of proof, infringe on his privilege against self-incrimination, or draw impermissible adverse inferences.

Finally, C.K. contended that MCDSS did not prove its case by clear and convincing evidence, asserting the absence of such evidence that he had sexually abused L.K., which was the basis for the petition in dependency and neglect. However, the factual basis for adjudicating L.K. dependent and neglected had already been established, and MCDSS’s burden was to prove the criteria for termination, including C.K.’s failure to comply with his treatment plan. The Court of Appeals rejected the contention that the evidence was insufficient to support the judgment.

On cross-appeal, MCDSS contended that the trial court erred in assessing attorney fees against it for discovery violations. Sovereign immunity precludes orders assessing attorney fees against a governmental entity for discovery violations.

The judgment was affirmed and the sanctions order was reversed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Descendants of Sand Creek Massacre Victims Not Entitled to Reparations Accounting

The Tenth Circuit Court of Appeals issued its opinion in Flute v. United States on Tuesday, December 22, 2015.

As described by the Tenth Circuit, this case arose “out of an ignominious event in the history of this Nation.” In 1864, the United States Army conducted an unprovoked attack on a group of unarmed Indians of the Arapaho and Cheyenne Tribes, who had relocated to an area next to the Sand Creek River in the Territory of Colorado at the direction and under the protection of the Territorial Governor and Superintendent of Indian Affairs, John Evans. When what has become known as the Sand Creek Massacre was over, most of the Indians were dead, including many women and children.

After an investigation, the United States publicly acknowledged its role in the tragedy and agreed to pay reparations to certain survivors of the massacre. On October 14, 1865, the United States entered into the Treaty of Little Arkansas, which expresses the United States’ condemnation of “the gross and wanton outrages perpetrated against certain bands of Cheyenne and Arrapahoe Indians . . . at Sand Creek, Colorado Territory.” On July 26, 1866, the U.S. Congress appropriated funds to pay the reparations detailed in the Treaty of Little Arkansas.

According to Plaintiffs, the funds appropriated by Congress were insufficient to compensate all the victims of the massacre. Moreover, instead of paying reparations directly to the affected individuals as directed, the Secretary of the Interior paid some of the money directly to the Tribes. What funds were not distributed to the Tribes were returned to surplus on August 30, 1872. The United States has never provided an accounting of the reparations paid or attempted to identify the individuals to whom reparations were still owed.

Plaintiffs are descendants of the victims of the Sand Creek Massacre. They brought a class action on behalf of themselves and others similarly situated, alleging the United States acted in the capacity of a trustee over the funds appropriated under the Treaty of Little Arkansas and the 1866 Appropriations Act. Plaintiffs argue the Defendants are in breach of their trust obligations for failing to provide an accounting of the reparations funds held in trust for Plaintiffs’ ancestors. The district court dismissed Plaintiffs’ complaint under Rule 12(b)(1), finding it lacked jurisdiction because the United States had not waived sovereign immunity. This appeal followed.

The Tenth Circuit began its analysis with a discussion of sovereign immunity. The sovereign immunity enjoyed by the United States and its officers extends to injunctive relief, and therefore, it bars the relief sought by Plaintiffs here—an order directing the government to provide an accounting. Thus, to proceed against the government, the Plaintiffs must identify some statutory text that expressly and unequivocally waives sovereign immunity.

The Plaintiffs argued the United States’ waiver of sovereign immunity can be found in a series of statutes enacted by Congress appropriating funds to the Department of Interior (the most recent of which occurred in a 2009 appropriations act, hereinafter “2009 Act”), including some funds specifically appropriated for programs associated with Indian tribes (hereinafter collectively referred to as “the Appropriations Acts”). The Tenth Circuit held the 2009 Act, standing alone, does not waive sovereign immunity as the text of the 2009 Act never mentions sovereign immunity, nor does the 2009 Act relieve a plaintiff of the independent obligation to identify an express waiver of sovereign immunity in order to maintain an action against the government.

Second, despite the complete absence of an express waiver of sovereign immunity, Plaintiffs insisted that the 2009 Act constitutes a waiver of sovereign immunity, relying on the Federal Circuit Case Shoshone II. The court rejected Plaintiffs’ interpretation of Shoshone II, reasoning a plaintiff must satisfy two separate requirements to pursue a claim against the government: (1) identification of an express waiver of sovereign immunity, and (2) initiation of the suit before the statute of limitations for the plaintiff’s claim runs and effectively negates that waiver. Even if the 2009 Act were applicable here, the Tenth Circuit reasoned, Plaintiffs could meet only one of these requirements because the 2009 Act contains no express waiver of sovereign immunity.

Third, the Plaintiffs argued that the Treaty of Little Arkansas, in combination with the Appropriations Acts, created an enforceable trust relationship such that they are now entitled to an accounting from the Secretary of the Interior. The court rejected this argument, noting the Appropriations Acts are limited to claims for misappropriation of trust assets, and neither the Treaty of Little Arkansas nor the 1866 Appropriations Act imposes fiduciary trust obligations on the government. And in the absence of such a trust relationship, any purported waiver of immunity contained in the 2009 Act is inapplicable to Plaintiffs’ claims. As such, even if we agreed with Plaintiffs that the 2009 Act expressly waives the United States’ immunity, the court stated, it could not do so in this case. Accordingly, Plaintiffs were unable to identify a waiver of the United States’ sovereign immunity. Absent such a waiver, the courts lack the power to grant Plaintiffs relief, the Tenth Circuit held, thereby affirming the district court’s dismissal of the action for lack of subject matter jurisdiction.

Tenth Circuit: State Does Not Waive Sovereign Immunity Under ADA by Accepting Federal Funds

The Tenth Circuit Court of Appeals issued its opinion in Levy v. Kansas Department of Social and Rehabilitation Services on Tuesday, June 16, 2015.

Paul Levy was a rehabilitation counselor for the Kansas Department of Social and Rehabilitation Services (SRS). In December 2008, he agreed to serve as a counselor for a blind co-worker, Tina Bruce, who was concerned she was not being properly accommodated. He ordered an assessment from a contractor, Brenda Umholtz, who had done extensive work for both Levy and Bruce at SRS. Umholtz’s report stated that Bruce was not receiving adequate accommodations and could not compete on a level playing field with her co-workers. In February 2009, Levy’s supervisor, Michael Donnelly, sent Levy a letter proposing Levy’s termination due to a violation of SRS’s conflict of interest policy based on Umholtz’s report. The letter provided Levy an opportunity to appear in person and respond to the allegations on February 24, 2009. Levy reported in his interrogatories that he met with Donnelly prior to receiving the termination letter, and in that meeting he told Donnelly that other counselors in the division had served as counselors for co-workers without being punished. He also stated that he informed his supervisor about Bruce’s case in January 2009 and transferred the case to his supervisor immediately when asked to do so. Levy tendered his resignation on February 25, 2009, noting that it became clear to him in the February 24 meeting that Donnelly intended to terminate him regardless of the outcome of the meeting.

Umholtz filed suit against SRS on February 11, 2011. Levy joined the suit on March 2, 2011, and Bruce joined shortly after. In the Second Amended Complaint, Levy alleged SRS retaliated against him in violation of the ADA and requested reinstatement, compensatory damages, attorney fees, and other litigation expenses. Plaintiffs subsequently amended their complaint to include Rehabilitation Act claims for Bruce and Levy, and SRS agreed not to oppose the amendment in exchange for plaintiffs’ agreement that SRS had not waived sovereign immunity. SRS filed for summary judgment on all Levy’s claims on March 23, 2012, arguing Levy’s ADA claim was barred by the Eleventh Amendment and his Rehabilitation Act claim was barred by Kansas’ two-year statute of limitations for personal injury claims. Levy countered that SRS waived its Eleventh Amendment sovereign immunity claim by accepting federal funds and the Rehabilitation Act claims were more appropriately characterized as statutorily created rights subject to Kansas’ three-year statute of limitations. The district court granted summary judgment to SRS on the ADA claim based on sovereign immunity and on the Rehabilitation Act claims due to the expiration of the statute of limitations. Levy appealed.

The Tenth Circuit found Levy’s arguments that the state waived sovereign immunity by accepting federal funds cogent, but ultimately disagreed. Levy contended the waiver provisions of the Rehabilitation Act similarly apply to the ADA because the two acts are closely linked. The Tenth Circuit agreed that the two acts were closely linked, but instead found it appropriate to apply a stringent test to determine whether the state waived its sovereign immunity. The Tenth Circuit decided that, since “Congress does not hide elephants in mouseholes,” the waiver of sovereign immunity under the ADA must be explicitly stated and not “hidden in another statute and only applied to the ADA by implication.” Particularly because the ADA was passed after the Rehabilitation Act’s waiver provisions, the Tenth Circuit found merit in its determination.

Turning next to the statute of limitations issue, the Tenth Circuit agreed that Kansas’ two-year statute of limitations for personal injury actions applied to the analogous Rehabilitation Act claims. Levy argued that the case on which the district court relied was confusing because it made several references to a Kansas statute detailing when a three-year statute of limitations applies, and argued Kansas case law supported the determination that Rehabilitation Act claims should be subject to the three-year statute of limitations because they involved statutorily created rights. The Tenth Circuit found that although the case incorrectly cited the wrong statute twice, the holding of the case was clear that the personal injury analogy should apply to Rehabilitation Act claims. The Tenth Circuit found Levy’s second argument more persuasive, since Kansas courts expressly characterized employment discrimination claims as statutorily based and subject to the three-year statute of limitations. However, the Tenth Circuit was not bound by the Kansas Supreme Court decisions, and chose to uphold its own precedent in finding Rehabilitation Act claims analogous to personal injury claims. The Tenth Circuit determined Levy’s Rehabilitation Act claims were time-barred.

The judgment of the district court was affirmed.

Tenth Circuit: Insurance Requirement for Parade Not Narrowly Tailored to Serve Government Interest

The Tenth Circuit Court of Appeals issued its opinion in iMatter Utah v. Njord on Monday, December 22, 2014.

iMatter Utah is a voluntary association concerned with climate change that sought to have a parade on State Street in Salt Lake City. The city granted iMatter a permit for the event, conditioned on the group’s ability to obtain an additional permit from the Utah Department of Transportation. Before granting a permit for a parade on a state highway (State Street is considered a state highway for this purpose), the Utah DOT requires applicants to obtain liability insurance coverage with minimums of $1,000,000 per occurrence and $2,000,000 aggregate, and also to sign a waiver of indemnity. iMatter claimed it could not afford the insurance and sought a waiver of the requirement, which the Utah DOT denied. iMatter then sought a temporary restraining order in the U.S. District Court for the District of Utah, which was denied. iMatter held its parade anyway, but because it failed to obtain the permit, it could only march on the sidewalks. iMatter held a second parade later that year, again refusing to comply with the insurance and indemnity requirements and again marching on the sidewalks. Another environmental group also held a parade on the sidewalks because it could not afford the cost of insurance. Both groups sued Utah in the U.S. District Court for the District of Utah, naming several individual defendants and alleging constitutional violations. All parties moved for summary judgment, and the district court granted plaintiffs’ motion. Utah appealed on a single question: whether its insurance and indemnification requirements violate the First Amendment.

The Tenth Circuit discussed the First Amendment’s mandate of free speech and the balance allowed for protecting government interests. The parties agreed that State Street is a traditional public forum, and in order for the government to impose restrictions on free speech in a traditional public forum, those restrictions must (1) be justified without reference to the content of the speech, (2) be narrowly tailored to serve a significant government interest, (3) leave open ample alternative channels for the communication, and (4) not delegate overly broad licensing discretion to a government official. iMatter brought facial and as-applied challenges to Utah’s insurance and indemnity requirements. The Tenth Circuit addressed the as-applied challenge first.

iMatter argued Utah’s requirements were unconstitutional as applied to its permit application because indigent applicants were not exempt from the requirements. The Tenth Circuit noted a circuit split regarding whether the government must exempt indigent applicants from otherwise constitutional permit requirements, and agreed with the First and Sixth Circuits that the constitution does not require indigency exemptions as long as there are suitable alternative forums for the speech. In the instant case, there was a suitable alternative that iMatter utilized—the sidewalk. Therefore, the as-applied challenge failed.

Turning to the facial challenge, the Tenth Circuit examined Utah’s insurance and indemnification requirements under the four criteria for restrictions on free speech in a traditional public forum. The parties agreed that the restrictions are content-neutral, satisfying the first prong. However, the Tenth Circuit found that Utah could not explain how the requirements were narrowly tailored to serve a significant government interest. Utah asserted that its insurance and indemnity requirements were necessary to maintain public order and safety, but the Tenth Circuit found no connection between the insurance and maintaining order and safety. As for Utah’s interest in protecting itself from liability, the Tenth Circuit found very little possibility that Utah would be liable for any activity connected with a parade, given the broad scope of Utah’s Governmental Immunity Act. Utah’s insurance requirement is not narrowly tailored to any objective characteristic of a parade, and as such is unconstitutional. The Tenth Circuit next examined Utah’s indemnity requirement and likewise found that it was not narrowly tailored to protect the state from financial liability.

The district court’s grant of summary judgment was affirmed.

Tenth Circuit: Published Concurrence Condemns Police Abuse of Children Under Color of Sovereign Immunity

The Tenth Circuit Court of Appeals published Judge Lucero’s concurrence in Hawker v. Sandy City Corp. on Friday, December 5, 2014.

The Tenth Circuit issued its opinion in Hawker v. Sandy City Corp. as an unpublished opinion. The facts of the case were that C.G.H., a 9-year-old boy, stole an iPad from a classmate. His grandmother, who was his legal guardian, found the iPad and asked C.G.H. to return it. When he was returning it, school officials caught him with the iPad and took it from him. He was upset, and school officials forcibly restrained him and called his grandmother and the police. C.G.H. began to calm down as his grandmother spoke to him, but then the police arrived and placed the child in a forcible twist-and-lock restraint and handcuffed him as he cried, “you’re hurting me!” The grandmother took him to the doctor later that day, where he was treated for a hairline fracture to his clavicle (collarbone). In addition to the fracture, C.G.H. suffered post-traumatic stress and anxiety from this experience. The grandmother brought suit on his behalf under 42 U.S.C. § 1983 against the officer and the city, but the district court granted summary judgment on qualified immunity grounds. The Tenth Circuit reluctantly upheld the summary judgment.

Tenth Circuit Judge Lucero wrote a separate concurrence, which was published. Judge Lucero concurred with the findings of the panel, since they followed the law, but disagreed with the state of the law that allows a 9-year-old boy to be treated so forcibly. Judge Lucero writes, “It is time for a change in our jurisprudence that would deal with petty crimes by minors in a more enlightened fashion and would not automatically extend qualified immunity for conduct such as occurred in this case.” The potential future consequences for this child and society at large are great; the child is now branded a criminal and no doubt has lost all faith in the criminal justice system. And although it would be ideal if this were an isolated incident, it is not. School districts across the country are adopting swift punishment for such childish behavior, and children as young as six are handcuffed and treated as criminals.

Judge Lucero condemns the “school-to-prison pipeline” and the myriad negative consequences created by treating children as criminals. Without the benefit of an education free from duress, children are unlikely to succeed in life, and end up populating already overcrowded prisons. Instead of swift punishment, the school’s aim should be to realign the child away from criminal behavior and encourage the pursuit of a productive and educated life. As Judge Lucero says in closing, “We should change course and instead leave it to the factfinder to determine whether the handcuffing of six- to nine-year-old children is excessive force rather than giving schools and police a bye by holding them immune from liability. A more enlightened approach to elementary school discipline by educators, police, and courts will enhance productive lives and help break the school-to-prison chain.”

Tenth Circuit: State Waived Its Right Not to be Sued in Federal Court Under Eleventh Amendment

The Tenth Circuit Court of Appeals published its opinion in Pettigrew v. State of Oklahoma on Monday, July 15, 2013.

Thomas Pettigrew filed suit in federal court in Oklahoma against the Oklahoma Department of Public Safety (DPS) after having reached a settlement with DPS on previous claims. The state moved to dismiss the second and third state law claims, arguing the claims were barred by sovereign immunity under the Eleventh Amendment. The court denied the motion. The state filed this interlocutory appeal.

This appeal presented only one issue for consideration: whether the previous settlement agreement between Pettigrew and the Oklahoma Department of Public Safety waived the state’s Eleventh Amendment right not to be sued in federal court.

The Eleventh Amendment states: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. State sovereign immunity ordinarily bars federal-court jurisdiction over private suits against a state by citizens of the state. Pettigrew did not suggest that any federal statute abrogated Oklahoma’s sovereign immunity with respect to his state-law claims. Therefore, all the Tenth Circuit had to resolve was whether the state waived its immunity.

Waiver of sovereign immunity must be knowing and voluntary, and the test for determining whether a State has waived its immunity from federal jurisdiction is a stringent one. Pettigrew contended that the Venue Provision of the Settlement Agreement was such a waiver. It stated: “In the event that any litigation is commenced by either party to enforce the terms and conditions of the Agreement, the litigation will be brought in the appropriate Oklahoma court having jurisdiction, either state or federal . . . .”

Although the language of the agreement is not explicit, the Tenth Circuit held the settlement agreement’s reference to bringing suit in federal court had no reasonable construction except as a waiver. The Court therefore held that there was a waiver and affirmed the district court.

Colorado Court of Appeals: Interlocutory Appeal of Ruling Denying Foreign Sovereign Immunities Act Immunity Is Immediately Appealable as Final Order

The Colorado Court of Appeals issued its opinion in U.S. Taekwondo Committee v. Kukkiwon on Wednesday, July 3, 2013.

Interlocutory Appeal—Jurisdiction—Foreign Sovereign Immunities Act—Final Judgment—State Doctrine Ruling—Pendent Appellate Jurisdiction—Commercial Activity.

This was an interlocutory appeal of a trial court order denying motions to dismiss a breach of contract action brought against a foreign entity. The appeal was dismissed in part and affirmed in part, and the case was remanded.

Kukkiwon is a South Korean organization that promotes the martial art of Taekwondo. It initially existed as a nongovernmental entity, and so constituted, it contracted with plaintiffs U.S. Taekwondo Committee and U.S. Kukkiwon, making plaintiffs its overseas branch in the United States. Shortly after the contract with plaintiffs was formed, the South Korean government passed a law making Kukkiwon a “special corporation,” and giving the South Korean Minister of Culture, Sports, and Tourism authority over several of Kukkiwon’s activities. Subsequently, Kukkiwon notified plaintiffs that it was unilaterally cancelling the contract, and plaintiffs filed this action for breach.

Plaintiffs contended that the Court of Appeals lacked jurisdiction to determine this appeal because it was interlocutory. An interlocutory appeal from a ruling denying Foreign Sovereign Immunities Act (FSIA) immunity is immediately reviewable as a “final judgment,” pursuant to CRS § 13-4-102(1). Therefore, the Court had appellate jurisdiction to review this issue. On the other hand, it did not have the authority to review a related act of state doctrine ruling, because it did not have pendent appellate jurisdiction.

Defendant argued that the trial court erred in finding that it did not have FSIA immunity. FSIA is a federal statute that provides immunity to any “agency or instrumentality” of a foreign state unless, as pertinent here, the claim is based on “commercial activity.” The contract at issue here constituted commercial activity because it made plaintiffs an overseas branch of Kukkiwon and contemplated activity in the United States that could create revenue and profits. Therefore, defendants were not entitled to FSIA immunity. The case was remanded to the trial court for completion of the trial.

Summary and full case available here.

Tenth Circuit: In Forma Pauperis Motions Do Not Require Claims Be Screened for Merit Before IFP Granted

The Tenth Circuit issued its opinion in Buchheit v. Green on Tuesday, November 27, 2012.

Mr. Buchheit sued Carol Green, the clerk of the Kansas state appellate courts, and Shawnee County Court Judge Daniel Mitchell, alleging that the Kansas state appellate courts had denied his request to proceed in forma pauperis (IFP) and had refused to docket his state appeals. A magistrate judge granted Mr. Buchheit’s motion to proceed IFP in federal court. Ms. Green objected on the grounds that the magistrate judge failed to screen the complaint under 28 U.S.C. § 1915(e)(2). The district court overruled the objection but dismissed the complaint for lack of subject matter jurisdiction, finding that Mr. Buchheit sought retrospective relief against the state that is barred by sovereign immunity. The Tenth Circuit affirmed.

Ms. Green argued in her cross-appeal that the language of the IFP statute, 28 U.S.C. § 1915(e)(2), requires a magistrate judge to screen cases for merit before granting IFP because the statute states in part that “the court shall dismiss the case at any time if the court determines that . . . (B) the action or appeal (i) is frivolous or malicious.” While the purpose of the IFP statute is to discourage the filing of baseless lawsuits that a paying litigant generally would not file, the court held that the statute does not require IFP cases be screened for merit before the grant of IFP.

Tenth Circuit: Time Limit On HUD Funds Investments and Return of Interest to HUD Affirmed

The Tenth Circuit issued its opinion in Muscogee (Creek) Nation Division of Housing v. U.S. Dep’t of Housing and Urban Development on Tuesday, October 30, 2012.

The Muscogee (Creek) Nation (the Nation) received block grant funds for affordable housing under the Native American Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. §§ 4101-4243. Under regulation 24 C.F.R. § 1000.58, funds invested by the Nation could not be invested for longer than two years. In 2007 and 2009, HUD issued notices regarding requirements for investing the funds and stating that for funds invested longer than two years, any interest accrued after two years must be returned to HUD. Additionally, any invested funds that were not expended on affordable housing activities by the two-year period would have to be returned to the tribe’s Line of Credit Control System account.

After a HUD review of the Nation’s use of program funds, HUD required the Nation to return $1.3 million in interest on funds invested longer than two years. The Nation returned the interest under protest, then filed suit seeking return of the funds and injunctive and declaratory relief regarding the validity of 24 C.F.R. § 1000.58(g) and the interest repayment requirement of the 2007 and 2009 notices. The district court dismissed the case based on HUD’s sovereign immunity and, in the alternative, for failure to state a claim.

The Tenth Circuit found that the Administrative Procedures Act did not waive HUD’s sovereign immunity regarding the two-year time limit on investments because “HUD’s authority to approve investment activities is committed to agency discretion as a matter of law.” Thus, the APA’s waiver of sovereign immunity did not apply and dismissal was proper for lack of jurisdiction.

In analyzing the Nation’s claims regarding the 2007 and 2009 notices requiring the return of interest, the court found a 1992 Comptroller General’s decision persuasive. The court held that the notices were interpretive, not substantive, and were consistent with federal law. It affirmed the district court’s dismissal of those claims on failure to state a claim grounds.

Tenth Circuit: Case Involving Tax Status of Land as Indian Country or Federal Land Should Have Been Dismissed Without Prejudice

The Tenth Circuit Court of Appeals issued its opinion in Northern Arapaho Tribe v. Harnsberger on Thursday, October 18, 2012.

Plaintiff-Appellant, the Northern Arapaho Tribe (“Appellant” or “Northern Arapaho”), sued various state and county officials in Wyoming, seeking an injunction against the state’s imposition of certain vehicle and excise taxes in an area that Appellant contends is Indian country. Appellant claimed that the state may not tax its members in Indian country, and that the Indian country status of the land was conclusively established by an earlier decision of the Wyoming Supreme Court. The district court dismissed the action with prejudice for failure to join a party under Federal Rule of Civil Procedure 12(b)(7) after determining that two absent entities—the Eastern Shoshone Tribe (“Eastern Shoshone”) and the United States—were necessary parties who could not feasibly be joined, and in whose absence the action could not proceed. The district court also concluded that the Indian country status of the land had not been conclusively determined by the earlier state litigation. Appellant appeals both determinations.

The Tenth Circuit agreed that the dismissal of the action was proper because the Eastern Shoshone was a necessary party  that could not feasibly be joined.  The Court explained that the Eastern Shoshone had an interest in the litigation that could be harmed by the proceeding in its absence, and proceeding in the absence of the Easter Shoshone would also place the State of Wyoming at a substantial risk of incurring multiple inconsistent obligations. The Eastern Shoshone was therefore required to be joined under Rule 19(a).  The Tenth Circuit also found that the district court correctly held that the Eastern Shoshone is a sovereign and is therefore immune from suit, so therefore could not be feasibly joined.

However, the Court VACATED the judgment and remanded with instructions to dismiss without prejudice, since the district court’s disposition was not an adjudication on the merits. Finally, the Court also DENIED as moot Appellant’s Rule 27.2(A) motion for summary disposition or remand.