New York Times

Justices Bar Michigan From Suing Tribe Over Casino

By ADAM LIPTAK MAY 27, 2014

WASHINGTON — Michigan may not sue an Indian tribe to shut down a casino opened far from the tribe’s reservation, the Supreme Court ruled on Tuesday in a 5-to-4 decision.

Justice Elena Kagan, writing for the majority, said that Indian tribes were entitled to sovereign immunity that bars suits against them over commercial activities outside Indian lands.

The ruling, Justice Clarence Thomas wrote in dissent, “renders the tribes largely litigation-proof” for activities as varied as gambling, cigarette sales, banks, payday lenders and ski resorts. Justice Kagan responded that states retain other tools, including lawsuits against individuals, to regulate casinos and other commercial enterprises operated by tribes away from reservations.

The Bay Mills Indian Community runs a casino on its reservation in Michigan’s Upper Peninsula. In 2010, it opened another one, 125 miles away in Vanderbilt, Mich. The state sued to stop it, and a federal trial judge issued an injunction shutting it down.

Justice Kagan said the injunction was improper under a 1998 Supreme Court decision, Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc. That ruling said that tribes had sovereign immunity for their off-reservation commercial activities unless Congress says otherwise.

Michigan’s argument that Congress has already done so, Justice Kagan added, “comes up snake eyes.”

Chief Justice John G. Roberts Jr. and Justices Anthony M. Kennedy, Stephen G. Breyer and Sonia Sotomayor joined the majority opinion. In a concurrence, Justice Sotomayor wrote that “history and proper respect for tribal sovereignty,” along with contemporary challenges, supported the ruling in the case, Michigan v. Bay Mills Indian Community, No. 12-515.

Justice Thomas, joined by Justices Antonin Scalia, Ruth Bader Ginsburg and Samuel A. Alito Jr., said the court should have overruled the 1998 ruling.

“The decision was mistaken then,” Justice Thomas wrote, “and the court’s decision to reaffirm it in the face of the unfairness and conflict it has engendered is doubly so.”

“Immunity poses a substantial impediment to Michigan’s efforts to halt the casino’s operation permanently,” Justice Thomas explained. “The problem repeats itself every time a tribe fails to pay state taxes, harms a tort victim, breaches a contract, or otherwise violates state laws, and tribal immunity bars the only feasible legal remedy. Given the wide reach of tribal immunity, such scenarios are commonplace.”

Justice Scalia, who had been in the majority in the 1998 decision, said he had erred and was now eager to “clean up a mess that I helped make.”

Justice Kagan responded that the court should be wary of “overthrowing our precedent and usurping Congress’s current policy judgment.”

In a second development on Tuesday, the court agreed to hear a major tax case, Maryland v. Wynne, No. 13-485. The question for the justices is whether state and local governments must allow residents to deduct taxes paid to other states.

Maryland allows such deductions but its counties do not. A Maryland court ruled that the counties’ approach was unconstitutional.

In urging the Supreme Court to hear the case, the Justice Department said the state court’s decision would have “significant financial consequences for Maryland” and “may lead to challenges to similar tax schemes in other jurisdictions.”

A version of this article appears in print on May 28, 2014, on page B3 of the New York edition with the
headline: Justices Bar Michigan From Suing Tribe Over Casino.