Cash Advance and Preferred Cash Loans v. State

242 P.3d 1099

CASH ADVANCE AND PREFERRED CASH LOANS, Petitioners/Cross-Respondents

v.STATE of Colorado, ex. rel. John W. Suthers, Attorney General and Laura E. Udis, Administrator, Uniform Consumer Credit Code, Respondents/Cross-Petitioners.

No. 08SC639.

Supreme Court of Colorado, En Banc.

Nov. 30, 2010.

Jones & Keller, P.C., Edward T. Lyons, Jr., Thomas J. Burke, Jr., Denver, Colorado, Fredericks & Peebles, LLP, Conly J. Schulte, Shilee T. Mullin, Omaha, Nebraska, Attorneys for Petitioners/Cross-Respondents.

John W. Suthers, Attorney General, Daniel D. Domenico, Solicitor General, Jan M. Zavislan, Deputy Attorney General, Paul Chessin, Senior Assistant Attorney General, Denver, Colorado, Attorneys for Respondents/Cross-Petitioners.

Wynkoop & Thomas P.C., Rick Wynkoop, Denver, Colorado, Attorneys for Amici Curiae AARP, Center for Responsible Lending, Consumer Federation of America, National Association of Consumer Advocates, and National Consumer Law Center.

Greenberg Traurig LLP, Jennifer H. Weddle, Denver, Colorado, Attorneys for Amicus Curiae the Colorado Indian Bar Association.

Peter Ortego, Towaoc, Colorado, Attorney for Amicus Curiae the Ute Mountain Ute Tribe.

American Indian Law Clinic, University of Colorado School of Law, Jill Tompkins, Boulder, Colorado, Attorneys for Amicus Curiae the University of Colorado School of Law, American Indian Law Clinic.

American Indian Law Center, Inc., Helen Padilla, Albuquerque, New Mexico, Attorneys for Amicus Curiae the American Indian Law Center, Inc.

Thomas J. Miller, Iowa Attorney General, Jessica J. Whitney, Assistant Attorney General and Deputy Administrator of the Iowa Consumer Credit Code, Des Moines, Iowa, Attorneys for Amici Curiae Group of 13 State Attorney Generals and the National Association of Consumer Credit Administrators.

Justice MARTINEZ delivered the Opinion of the Court.

This tribal sovereign immunity case requires us to address the relationship between the State of Colorado and sovereign American Indian tribes, as that relationship is governed by federal law. We are charged with applying the doctrine of tribal sovereign immunity in the context of a state investigative subpoena enforcement action against two entities operating under the trade names Cash Advance and Preferred Cash Loans and asserting they are entitled to immunity as "arms" of the Miami Nation of Oklahoma and the Santee Sioux Nation, both federally recognized Indian tribes.

The tribal entities appealed from the trial court's denial of their motion to dismiss the action for lack of subject matter jurisdiction. The court of appeals reversed and remanded, finding that the trial court erred in denying the motion on the basis that tribal sovereign immunity does not apply to the state's investigatory subpoena enforcement action. State ex rel. Suthers v. Cash Advance, 205 P.3d 389, 399 (Colo.App.2008). The court of appeals directed that the trial court determine on remand whether Cash Advance and Preferred Cash Loans are arms of the tribes entitled to immunity and articulated an eleven-factor test for the trial court to apply. After compelling the tribal entities to produce additional information relevant to the immunity determination, the court of appeals further determined that tribal sovereign immunity does not extend to individual tribal officers in this case; that the tribal entities may have waived their immunity via contract with Colorado consumers; and that the state bears the burden of proof to show that Cash Advance and Preferred Cash Loans are not entitled to immunity.

The parties cross-petitioned for a writ of certiorari, which we granted. Although we affirm the judgment of the court of appeals, we disagree with portions of its analysis and its directions to the trial court on remand.

We hold that tribal sovereign immunity applies to state investigatory enforcement actions. The trial court, on remand, must determine whether Cash Advance and Preferred Cash Loans act as arms of the Miami Nation of Oklahoma and the Santee Sioux Nation, respectively, such that their activities are properly deemed to be those of the tribes. In making this determination, the trial court shall consider the following factors, each of which focuses on the relationship between the tribal entities and the tribes: (1) whether the tribes created the entities pursuant to tribal law; (2) whether the tribes own and operate the entities; and (3) whether the entities' immunity protects the tribes' sovereignty.

Recognizing that sovereign tribes necessarily act through individuals, we hold further that tribal sovereign immunity protects tribal officers acting within the scope of their lawful authority, as defined by the tribe and limited only by federal law.

Additionally, we hold that tribal sovereign immunity is jurisdictional in nature. Because it is akin to subject matter jurisdiction, we find that tribal sovereign immunity is properly raised in a C.R.C.P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction. Consequently, on remand, the state bears the burden of establishing by a preponderance of the evidence that the trial court has subject matter jurisdiction over Cash Advance and Preferred Cash Loans.

To assure that the trial court is not misled by the court of appeals' discussion of waiver, we also hold that any waiver of tribal sovereign immunity must be explicit and unequivocal.

Finally, we hold that the tribal entities, by voluntarily providing the state with certain information relevant to the immunity determination, unequivocally waived any immunity they might possess with respect only to that information directly relevant to their entitlement to immunity. Accordingly, on remand, the trial court must determine whether discovery requests are properly tailored to the immunity determination and therefore fall within the scope of the tribal entities' waiver.

Thus, we affirm the judgment of the court of appeals and remand the case for further proceedings consistent with this opinion.

I. Facts & Procedural History

In January 2005, the Colorado Attorney General and the Administrator of the Uniform Consumer Credit Code (collectively "the state") issued investigative, administrative subpoenas to lenders operating under the trade names Cash Advance and Preferred Cash Loans. The subpoenas ordered production of documents related to Cash Advance's and Preferred Cash Loans' lending activities with Colorado consumers.¹ This subpoena enforcement action arose out of Cash Advance's and Preferred Cash Loans' failure to comply with the investigative subpoenas. Upon application by the state, the trial court entered an order enforcing the subpoenas on February 14, 2005. Cash Advance and Preferred Cash Loans did not respond. On June 20, 2005, the trial court granted the state's motion for issuance of contempt citations, ordering Cash Advance and Preferred Cash Loans to show cause why they should not be held in contempt for failure to comply with the court's order enforcing the subpoenas.

On July 20, 2005, in response to the contempt citations, two corporations, claiming they do business as Cash Advance and Preferred Cash Loans and asserting they are wholly owned subdivisions of federally recognized Indian tribes, filed a joint motion to dismiss for lack of subject matter jurisdiction pursuant to C.R.C.P. 12(b)(1), lack of personal jurisdiction pursuant to C.R.C.P. 12(b)(2), and insufficiency of service of process pursuant to C.R.C.P. 12(b)(4). Miami Nations Enterprises, Inc. ("MNE") of the Miami Nation of Oklahoma claimed it conducts business under the trade name Cash Advance; SFS, Inc. ("SFS") of the Santee Sioux Nation claimed it conducts business under the trade name Preferred Cash Loans. This opinion refers to MNE and SFS collectively as "the tribal entities." With respect to the trial court's subject matter jurisdiction over the subpoena enforcement action, the tribal entities asserted that, because they are owned and operated by the tribes and do business as Cash Advance and Preferred Cash Loans, they are entitled to the tribes' sovereign immunity.

The aboriginal territory of the Miami people is located in what today are Ohio, Indiana, Illinois, lower Michigan, and lower Wisconsin. The 1795 Treaty of Greenville ceded much of this territory to the United States. Then, in 1846, the U.S. government forcibly removed the Miami people from what remained of their homeland, first to present-day Kansas and later to "Indian Territory," now Oklahoma. Via the Oklahoma Indian Welfare Act of 1936, ch. 831, § 1, 49 Stat.1967 (codified at 25 U.S.C. § 501 (2006)), the U.S. government formally recognized the Miami Tribe of Oklahoma and subsequently approved the tribe's constitution. See also Federally Recognized Indian Tribe List Act of 1994, Pub.L. No. 103-454, § 104, 108 Stat. 4791, 4792 (1994) (codified at 25 U.S.C. § 479a-1 (2006)); 73 Fed.Reg. 18553, 18555 (Apr. 4, 2008). Citing "a critical need for the development of economic activities ... to provide for the well being of the citizens of the Miami Tribe," the tribe established MNE as "a subordinate economic enterprise of the Miami Tribe of Oklahoma having the purposes, powers, and duties as herein or hereafter provided by tribal law." AmendedMiami Nation Enterprises Act, §§ 2(a), 101(a) (May 10, 2005). ²

The ancestral homeland of the Santee division of the Sioux people is located in present-day Minnesota. Following the 1862 hanging in Mankato, Minnesota of thirty-eight Santee Sioux charged with rape or murder-the largest mass-execution in U.S. history-the U.S. government abrogated its prior treaties with the Santee Sioux and forcibly relocated them first to present-day South Dakota and later to present-day northeastern Nebraska. Via the Indian Reorganization Act of 1934, ch. 576, § 1, 48 Stat. 984 (codified at 25 U.S.C. §§ 461-479 (2006)), the U.S. government officially recognized the Santee Sioux Nation and subsequently approved the tribe's constitution. See...