Securing Victory for Tribes in Landmark Tax Case

Tribal Law. Tribal Solutions.

May 27, 2020 — On May 26, 2020, Peebles Kidder Bergin & Robinson LLP (Peebles Kidder LLP) in collaboration with SCOTUS Counsel Adam Unikowsy of Jenner & Block, along with Flandreau Santee Sioux Attorney General Seth Pearman and local counsel Shannon Falon, secured a significant victory for all tribes in the United States when the Supreme Court denied certiorari in Noem v. Flandreau Santee Sioux Tribe.

The Ruling

On September 6, 2019, the U.S. Eighth Circuit Court of Appeals ruled that the State of South Dakota cannot impose use taxes on nonmember purchases of goods and services at the Tribe’s Royal River Casino. Under the balancing test established by the Supreme Court in White Mountain Apache Tribe v. Bracker in 1980, the Tribe argued that the taxes were preempted in the arena of tribal gaming under the Indian Gaming Regulatory Act. The Supreme Court’s denial of certiorari yesterday puts an end to the state of South Dakota’s assertion of authority to tax casino amenities.

“The state’s taxation of the casino amenities would raise their cost to nonmember patrons or reduce tribal revenues from these sales,” Eighth Circuit Chief Justice Loken wrote. “Even if gaming was not thereby reduced, the impact would be contrary to IGRA’s broad policies of increasing tribal revenues through gaming and ensuring that tribes are the primary beneficiary of their gaming operations to promote economic development, self-sufficiency, and strong tribal governments.”

The Eighth Circuit Court of Appeals determined that the state’s general interest in raising revenues to provide governmental services throughout South Dakota does not outweigh the federal and tribal interests in Class III gaming, reflected in IGRA and the history of tribal independence in gaming. As in the Bracker case, the court noted, “This is not a case in which the state seeks to assess taxes in return for governmental functions it performs for those on whom the taxes fall.”

“This is a major victory for all tribes under the Indian Gaming Regulatory Act,” said Rapid City-based Peebles Kidder LLP attorney and Equity Partner Rebecca Kidder, who argued the case before the Eighth Circuit. “It’s also a victory for tribal governments and economies because it has eliminated state dual taxation of purchases made by nonmember consumers on an on-reservation, tribally owned business.”

According to Kidder, “the Supreme Court’s decision to deny certiorari in this case affirms that the Bracker balancing test remains the standard by which the Supreme Court and federal courts will balance federal and tribal interests against state interests in taxation.”

Honoring A Dynamic Team

Peebles Kidder LLP’s legal team—including Tim Hennessy, John Nyhan, and Rebecca Kidder, Flandreau Santee Sioux Tribe Attorney General Seth Pearman, and local Counsel Shannon Falon collaborated with lead Supreme Court counsel Adam Unikowsky of Jenner & Block. Kidder noted that the firm was honored to work with such a talented team including Expert witness Jonathan Taylor, all of the attorneys of the Peebles Kidder Firm (past and present), and with the Flandreau Santee Sioux Tribe’s elected leaders and employees, and the Royal River Casino employees throughout the litigation. Mrs. Kidder stated, “It was, and remains, an honor and privilege to be part of such a dynamic team of amazing individuals collaborating to protect tribal nation’s rights to self-determination”

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