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Salt River Project v. Reynold R. Lee; Casey Watchman; Woody Lee

March 15, 2012

SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, A MUNICIPAL CORPORATION AND POLITICAL SUBDIVISION OF THE STATE OF ARIZONA AND HEADWATERS RESOURCES, INC., A UTAH CORPORATION, PLAINTIFFS-APPELLANTS,
v.
REYNOLD R. LEE; CASEY WATCHMAN; WOODY LEE; PETERSON YAZZIE; EVELYN MEADOWS; HERB YAZZIE, HONORABLE; LOUISE G. GRANT, HONORABLE; ELEANOR SHIRLEY, HONORABLE; LEONARD THINN; SARAH GONNIE, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the District of Arizona James A. Teilborg, District Judge, Presiding D.C. No. 3:08-cv-08028-JAT

The opinion of the court was delivered by: Silverman, Circuit Judge:

FOR PUBLICATION

OPINION

Argued and Submitted February 14, 2012-San Francisco, California

Before: A. Wallace Tashima and Barry G. Silverman, Circuit Judges, and Marvin J. Garbis, Senior District Judge.*fn1

Opinion by Judge Silverman

OPINION

Two non-Indian entities brought this action to enjoin Navajo Nation tribal officials from applying tribal law to them in tribal courts. They claim that both their contract with the tribe and federal law deprive tribal officials of authority to regulate them. This appeal presents the question whether the Navajo Nation itself - which enjoys sovereign immunity and cannot be sued - is a necessary (and if so, indispensable) party under Federal Rule of Civil Procedure 19. We hold today that the tribe is not a necessary party because the tribal officials can be expected to adequately represent the tribe's interests in this action and because complete relief can be accorded among the existing parties without the tribe. This lawsuit for prospective injunctive relief may proceed against the officials under a routine application of Ex parte Young, 209 U.S. 123 (1908), and should not have been dismissed.

I. BACKGROUND

Salt River Project Agricultural Improvement and Power District co-owns, and Headwaters Resources, Inc. operates, a power plant called the Navajo Generating Station on Navajo reservation land in northern Arizona. When they fired two Navajo Nation employees who worked at the power plant, the employees filed charges with the Office of Navajo Labor Relations alleging that they were fired without just cause in violation of the Navajo Preference in Employment Act, 15 Navajo Nation Code §§ 601 et seq. The Office of Navajo Labor Relations issued right-to-sue notices to both former employees, who then filed complaints with the Navajo Nation Labor Commission. Salt River Project and Headwaters defended the claims on, among other grounds, the theory that the Navajo Nation lacked authority to regulate employment matters at the power plant under (1) the terms of a 1969 lease between the Navajo Nation and Salt River Project for the land on which the power plant is located, which waived the tribe's right to regulate employment relations at the power plant,*fn2 and (2) a federal statutory right-of-way granted pursuant to 25 U.S.C. § 323, which extinguished all Indian uses of the covered lands.*fn3 The Navajo Nation Supreme Court ultimately rejected that defense, holding that the Navajo Preference in Employment Act applied to Salt River Project and Headwaters at the power plant, and remanded the case to the Navajo Nation Labor Commission to allow the former employees' claims to proceed on the merits. Thinn v. Navajo Generating Station, No. SC-CV-25-06, 7 Am. Tribal Law 558, 560, 564-66 (Navajo 2007).

Salt River Project and Headwaters then filed this action for declaratory and injunctive relief against the Navajo officials responsible for enforcing the Act - the Director of the Office of Navajo Labor Relations, the members of the Navajo Nation Labor Commission, and the justices of the Navajo Nation Supreme Court. Their complaint alleged, inter alia, that the Navajo officials "have proceeded, and are threatening to further proceed, against [the plaintiffs] . . . in violation of federal law" and that "all such actions . . . violate federal law." The complaint sought a declaratory judgment that those Navajo officials lacked authority to regulate employment relations at the Navajo Generating Station and an injunction staying the former employees' claims.

The Navajo officials moved to dismiss under Federal Rule of Civil Procedure 12(b)(7) for failure to join a party required by Rule 19: the Navajo Nation. The district court granted the motion, concluding that the Navajo Nation was a necessary party under Rule 19(a)(1)(A) because without the tribe, the plaintiffs could not get complete relief from future attempts by the Navajo Nation to enforce the Navajo Preference in Employment Act. The district court also concluded that the tribe was a necessary party under Rule 19(a)(1)(B)(i) because proceeding without the Navajo Nation threatened to impair its interests in the scope of the 1969 lease, its economic interests in promoting full employment of Navajo Nation members, and its general interests in governing the Navajo reservation. Moreover, the district court concluded that the Navajo Nation, which sovereign immunity prevented from being joined, was an indispensable party under Rule 19(b). Accordingly, the district court dismissed the action. Salt River Project and Head-waters appeal that dismissal.

II. JURISDICTION AND STANDARD OF REVIEW

The district court had federal question jurisdiction under 28 U.S.C. ยง 1331. See Ariz. Pub. Serv. Co. v. Aspaas, 77 F.3d 1128, 1132-33 (9th Cir. 1996). We ...


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