Equal Employment Opportunity Commission v. Peabody Western Coal Co.

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

EQUAL EMPLOYMENT OPPORTUNITY 
COMMISSION,
Plaintiff-Appellant, No. 06-17261
v.
 D.C. No.
CV-01-01050-MHM
PEABODY WESTERN COAL COMPANY;
NAVAJO NATION, Rule 19 OPINION
defendant,
Defendants-Appellees.

Appeal from the United States District Court
for the District of Arizona
Mary H. Murguia, District Judge, Presiding

Argued and Submitted
September 22, 2008—San Francisco, California

Filed June 23, 2010

Before: Procter Hug, Jr., Andrew J. Kleinfeld, and
William A. Fletcher, Circuit Judges.

Opinion by Judge William A. Fletcher

9199
 EEOC v. PEABODY WESTERN COAL 9203

COUNSEL

Susan R. Oxford, EEOC APPELLATE SECTION, Washing-
ton, D.C., Katherine Kruse, EEOC, Phoenix, Arizona, for the
appellant.

Mary E. Bruno, John F. Lomax, Jr., Lawrence J. Rosenfeld,
GREENBERG TRAURIG LLP, Phoenix, Arizona, Louis
Denetsosie, NAVAJO NATION DEPARTMENT OF JUS-
TICE, Window Rock, Arizona, Lisa M. Enfield, Paul E. Frye,
FRYE LAW FIRM, Albuquerque, New Mexico, for the
appellees.

OPINION

W. FLETCHER, Circuit Judge:

The Equal Employment Opportunity Commission
(“EEOC”) appeals various rulings of the district court in its
suit against Peabody Western Coal Company (“Peabody”).
Peabody leases mines from the Navajo Nation (“the Nation”),
9204 EEOC v. PEABODY WESTERN COAL
and maintains a preference for employing Navajo workers at
these mines. EEOC alleges that in maintaining its employ-
ment preference Peabody discriminates against non-Navajo
Indians, including two members of the Hopi Nation and one
member of the Otoe tribe, in violation of Title VII, 42 U.S.C.
§ 2000e-2(a)(1). The district court first dismissed EEOC’s
suit in 2002. EEOC v. Peabody Coal Co. (“Peabody I”), 214
F.R.D. 549 (D. Ariz. 2002). We heard EEOC’s appeal from
that dismissal in EEOC v. Peabody Western Coal Co.
(“Peabody II”), 400 F.3d 774 (9th Cir. 2005). We reversed,
holding that it was feasible to join the Nation under Federal
Rule of Civil Procedure 19 and that the suit did not present
a nonjusticiable political question. On remand, the district
court granted summary judgment to Peabody. EEOC appeals.

In this appeal, we address questions arising out of the join-
der of two different parties. We first address the joinder of the
Nation. We hold that the amended complaint filed by EEOC
after our remand does not render it infeasible to join the
Nation. We next address the joinder of the Secretary of the
Interior (“the Secretary”). We hold that the Secretary is a
required party under Rule 19(a), and that joining him is not
feasible. We hold further that Peabody and the Nation may
not bring a third-party damages claim against the Secretary
under Federal Rule of Civil Procedure 14(a), and that EEOC’s
claim against Peabody for damages must therefore be dis-
missed under Rule 19(b). However, we hold that Peabody and
the Nation may bring a third-party claim against the Secretary
for prospective relief under Rule 14(a), and that EEOC’s
injunctive claim against Peabody should therefore be allowed
to proceed.

We vacate the remainder of the district court’s rulings and
remand for further proceedings consistent with this opinion.
 EEOC v. PEABODY WESTERN COAL 9205
I. Background

A. Factual Background

Peabody mines coal at the Black Mesa Complex and
Kayenta Mine on the Navajo and Hopi reservations in north-
eastern Arizona. Peabody does so pursuant to leases with the
Navajo and Hopi tribes inherited from its predecessor-in-
interest, Sentry Royalty Company (“Sentry”). This case
involves two leases Sentry entered into with the Nation: a
1964 lease permitting it to mine on the Navajo reservation
(lease no. 8580) and a 1966 lease permitting it to mine on the
Navajo portion of land jointly used by the Navajo and Hopi
nations (lease no. 9910).

Both leases require that Peabody provide an employment
preference to Navajo job applicants. The 1964 lease provides
that Peabody “agrees to employ Navajo Indians when avail-
able in all positions for which, in the judgment of [Peabody],
they are qualified,” and that Peabody “shall make a special
effort to work Navajo Indians into skilled, technical and other
higher jobs in connection with [Peabody’s] operations under
this Lease.” The 1966 lease provides similarly, but also states
that Peabody may “at its option extend the benefits of this
Article [containing the Navajo employment preference] to
Hopi Indians.” We will refer to these provisions as “Navajo
employment preference provisions.” Many business leases on
the Navajo reservation contain similar employment prefer-
ences for Navajo job applicants.

As we noted in Peabody II, the Department of the Interior
(“DOI”) approved both mining leases, as well as subsequent
amendments and extensions, under the Indian Mineral Leas-
ing Act of 1938 (“IMLA”). Peabody II, 400 F.3d at 776; see
25 U.S.C. §§ 396a, 396e; see also United States v. Navajo
Nation (“Navajo Nation I”), 537 U.S. 488, 493 (2003)
(explaining that DOI’s approval is necessary before leases on
reservation land become effective). Former Secretary of the
9206 EEOC v. PEABODY WESTERN COAL
Interior Stewart Udall, who served as Secretary during the
period the leases were drafted and approved, stated in a decla-
ration submitted to the district court that DOI drafted the
leases and required the inclusion of the Navajo employment
preferences. This statement is undisputed. The leases provide
that, if their terms are violated, both the Nation and the Secre-
tary retain the power to cancel them after a notice and cure
period. Amendments to the leases must be approved by the
Secretary.

B. Procedural Background

This is the latest in a series of cases involving Navajo
employment preferences. See Dawavendewa v. Salt River
Project Agric. Improvement & Power Dist. (“Dawavendewa
II”), 276 F.3d 1150, 1163 (9th Cir. 2002); Dawavendewa v.
Salt River Agric. Improvement & Power Dist.
(“Dawavendewa I”), 154 F.3d 1117, 1124 (9th Cir. 1998). We
discussed the history of Navajo employment preferences in
detail in the first appeal in this case. See Peabody II, 400 F.3d
at 777.

EEOC filed this suit against Peabody in June 2001, alleging
that Peabody was unlawfully discriminating on the basis of
national origin by implementing the Navajo employment pref-
erences contained in the leases. EEOC’s complaint charged
that Peabody had refused to hire non-Navajo Indians includ-
ing two members of the Hopi and one now-deceased member
of the Otoe tribe, as well as unspecified other non-Navajo
Indians, for positions for which they were otherwise qualified.
EEOC alleged that such conduct violated Title VII, 42 U.S.C.
§ 2000e-2(a)(1), which prohibits employers from refusing to
hire applicants because of their national origin. EEOC’s posi-
tion throughout this litigation has been that the Indian prefer-
ence exception of Title VII, § 2000e-2(i), permits
discrimination in favor of Indians living on or near a particu-
lar tribe’s reservation, but does not permit discrimination
against Indians who live on or near that reservation but are
 EEOC v. PEABODY WESTERN COAL 9207
members of another tribe. Peabody II, 400 F.3d at 777-78.
EEOC alleged further that Peabody had violated the record-
keeping requirements of § 2000e-8(c). EEOC requested three
forms of relief: (1) an injunction prohibiting Peabody from
continuing to discriminate on the basis of national origin and
requiring Peabody to provide equal employment opportunities
for non-Navajo Indians living on or near the Navajo reserva-
tion; (2) damages, including back pay with interest, compen-
satory damages, and punitive damages; and (3) an order
requiring Peabody to make and preserve records in compli-
ance with Title VII.

Peabody moved for summary judgment and for dismissal of
the action. Peabody argued, first, that Rule 19 required dis-
missal because the Nation was a necessary and indispensable
party to the action and, second, that the action presented a
nonjusticiable political question between EEOC and DOI
because DOI had approved the mining leases. The district
court agreed and granted Peabody’s motion to dismiss on both
grounds. Peabody I, 214 F.R.D. at 559-63. The district court
also dismissed EEOC’s recordkeeping claim, even though
Peabody had not sought dismissal of this claim. Id. at 563.

We reversed in Peabody II. First, we held that the Nation
was a necessary party under Rule 19, but that EEOC’s suit
need not be dismissed because joinder of the Nation was fea-
sible. Peabody II, 400 F.3d at 780-81. Because EEOC is an
agency of the United States, the Nation could not assert sover-
eign immunity as a defense to joinder. Although EEOC
lacked statutory authority to state a cause of action against the
Nation, joinder of the Nation for the purposes of res judicata
was still possible and would be effective in providing “com-
plete relief between the parties.” Id. at 781. Second, we held
that EEOC’s claim did not present a nonjusticiable political
question. Id. at 784-85. Third, we held that the district court
erred in dismissing EEOC’s recordkeeping claim. Id. at 785.
We remanded for further proceedings with the Nation joined
under Rule 19. Id. at 785.
9208 EEOC v. PEABODY WESTERN COAL
On remand, EEOC filed an amended complaint that
included the same claims and prayer for relief as its initial
complaint. The newly joined Nation moved to dismiss under
Rule 19, arguing, inter alia, that EEOC’s amended complaint
impermissibly seeks affirmative relief against the Nation, and
that the Secretary of the Interior is a necessary and indispens-
able party. Peabody filed its own motion to dismiss. Inter
alia, it agreed with the Nation’s argument that the Secretary
was a necessary and indispensable party. This was the first
time in this litigation that anyone had argued that the Secre-
tary was a necessary and indispensable party.

The district court converted the motions to dismiss into
motions for summary judgment. The district court granted
summary judgment against EEOC, holding, in the alternative,
that (1) EEOC was seeking affirmative relief against the
Nation in its amended complaint, and that the Nation there-
fore could not be joined under Rule 19; (2) the Secretary was
a necessary and indispensable party for whom joinder was not
feasible; and (3) the Rehabilitation Act of 1950, 25 U.S.C.
§ 631-638, authorized the tribe-specific preferences chal-
lenged by EEOC. The district court also granted the Nation’s
motions to strike two EEOC exhibits and to strike an EEOC
footnote reference. Finally, the court denied EEOC’s motion
to strike two forms upon which Peabody relied. EEOC timely
appealed all of the district court’s rulings.

We reach only holdings (1) and (2), as to which we reverse
the district court. We vacate the rest of the court’s decision
and remand for further proceedings.

II. Standard of Review

We review a district court’s decision on joinder for abuse
of discretion, and we review the legal conclusions underlying
that decision de novo. Peabody II, 400 F.3d at 778.
 EEOC v. PEABODY WESTERN COAL 9209
III. Discussion

[1] This case continues to present somewhat complex com-
pulsory party joinder issues. As we explained in Peabody II,
Federal Rule of Civil Procedure 19 governs compulsory party
joinder in federal district courts. In its recently amended form,
Rule 19 provides, in relevant part:

(a) Persons Required to Be Joined if Feasible.

(1) Required Party.

A person who is subject to service of pro-
cess and whose joinder will not deprive the
court of subject-matter jurisdiction must be
joined as a party if:

(A) in that person’s absence, the court
cannot accord complete relief among
existing parties; or

(B) that person claims an interest relating
to the subject of the action and is so situ-
ated that disposing of the action in the
person’s absence may:

(i) as a practical matter impair or
impede the person’s ability to protect
the interest; or

(ii) leave an existing party subject to a
substantial risk of incurring double,
multiple, or otherwise inconsistent
obligations because of the interest.

(2) Joinder by Court Order.

If a person has not been joined as required,
the court must order that the person be
9210 EEOC v. PEABODY WESTERN COAL
made a party. A person who refuses to join
as a plaintiff may be made either a defen-
dant or, in a proper case, an involuntary
plaintiff.

...

(b) When Joinder Is Not Feasible.

If a person who is required to be joined if feasible
cannot be joined, the court must determine whether,
in equity and good conscience, the action should
proceed among the existing parties or should be dis-
missed. The factors for the court to consider include:

(1) the extent to which a judgment rendered
in the person’s absence might prejudice that
person or the existing parties;

(2) the extent to which any prejudice could
be lessened or avoided by:

(A) protective provisions in the judg-
ment;

(B) shaping the relief; or

(C) other measures;

(3) whether a judgment rendered in the per-
son’s absence would be adequate; and

(4) whether the plaintiff would have an ade-
quate remedy if the action were dismissed
for nonjoinder. . . .

Fed. R. Civ. P. 19. Although the wording of Rule 19 has
changed since the district court dismissed this case, its mean-
 EEOC v. PEABODY WESTERN COAL 9211
ing remains the same.1 When dealing with the amended rule
in this opinion, we will use the new language.

[2] A Rule 19 motion poses “three successive inquiries.”
Peabody II, 400 F.3d at 779. “First, the court must determine
whether a nonparty should be joined under Rule 19(a).” Id.
That nonparty (or “absentee”) is now referred to as a “person
required to be joined if feasible.” If an absentee meets the
requirements of Rule 19(a), “the second stage is for the court
to determine whether it is feasible to order that the absentee
be joined.” Id. “Finally, if joinder is not feasible, the court
must determine at the third stage whether the case can pro-
ceed without the absentee” or whether the action must be dis-
missed. Id. A nonparty in whose absence an action must be
dismissed is one who “not only [has] an interest in the contro-
versy, but [has] an interest of such a nature that a final decree
cannot be made without either affecting that interest, or leav-
ing the controversy in such a condition that its final termina-
tion may be wholly inconsistent with equity and good
conscience.” Shields v. Barrow, 58 U.S. 130, 139 (1855).
1
As of December 1, 2007, Rule 19 no longer refers to “necessary” or
“indispensable” parties. Instead, it refers to “persons required to be joined
if feasible” and persons in whose absence, if they cannot be joined, the
action should not proceed.
The advisory committee notes indicate that the 2007 amendments to the
civil rules were merely stylistic. With respect to Rule 19, they state:
The language of Rule 19 has been amended as part of the gen-
eral restyling of the Civil Rules to make them more easily under-
stood and to make style and terminology consistent throughout
the rules. These changes are intended to be stylistic only.
Former Rule 19(b) described the conclusion that an action
should be dismissed for inability to join a Rule 19(a) party by
carrying forward traditional terminology: “the absent person
being thus regarded as indispensable.” “Indispensable” was used
only to express a conclusion reached by applying the tests of
Rule 19(b). It has been discarded as redundant.
Fed. R. Civ. P. 19 advisory committee’s note (2007).
9212 EEOC v. PEABODY WESTERN COAL
With these principles in mind, we consider the Rule 19
joinder of both the Navajo Nation and the Secretary of the
Interior.

A. Joinder of the Navajo Nation under Rule 19

[3] In Peabody II, we held that the Navajo Nation was a
necessary party for whom joinder was feasible. Peabody II,
400 F.3d at 778. It is undisputed that the Nation was a neces-
sary party, and is now, under the amended rule, a person
required to be joined if feasible. As we explained in Peabody
II, the Nation is a party to the leases whose employment pref-
erence is challenged in this lawsuit.

If the EEOC is victorious in this suit but the Nation
has not been joined, the Nation could possibly initi-
ate further action to enforce the employment prefer-
ence against Peabody, even though that preference
would have been held illegal in this litigation. Pea-
body would then be, like the defendant in Dawa-
vendewa II, 276 F.3d at 1156, “between the
proverbial rock and a hard place — comply with the
injunction prohibiting the hiring preference policy or
comply with the lease requiring it.” By similar logic,
we have elsewhere found that tribes are necessary
parties to actions that might have the result of
directly undermining authority they would otherwise
exercise.

Id. at 780. We held that it was feasible to join the Nation even
though under Title VII no affirmative relief was available to
EEOC against the Nation.

After our remand, EEOC amended its complaint to add the
Nation as a defendant. The district court held that EEOC
sought affirmative relief against the Nation in its amended
complaint even though we had specifically held in Peabody
II that such relief was not available. Under its reading of
 EEOC v. PEABODY WESTERN COAL 9213
EEOC’s amended complaint, the district court dismissed
EEOC’s suit on the ground that the Nation could not, after all,
be joined. For the reasons that follow, we hold that the district
court should not have dismissed EEOC’s amended complaint
on this ground.

In Peabody II, Peabody made two arguments why joinder
of the Nation was not feasible. We disagreed with both of
them. First, Peabody argued that the Nation could not be
joined because of sovereign immunity. Id. at 780. We held
that the Nation’s sovereign immunity did not shield it from a
suit brought by EEOC and therefore did not bar its joinder. Id.
at 781. We explained, “Tribal sovereign immunity does not
‘act as a shield against the United States,’ even when Con-
gress has not specifically abrogated tribal immunity.” Id.
(quoting United States v. Yakima Tribal Ct., 806 F.2d 853,
861 (9th Cir. 1986)).

[4] Second, Peabody argued that because Title VII
exempts the Nation from the definition of employer, 42
U.S.C. § 2000e(b), EEOC could not state a claim against the
Nation. Peabody II, 400 F.3d at 781. Therefore, Peabody
argued, the Nation could not be joined in a suit brought by
EEOC. But “a plaintiff’s inability to state a direct cause of
action against an absentee does not prevent the absentee’s
joinder under Rule 19.” Id. An absentee can be joined under
Rule 19 in order to subject it, under principles of res judicata,
to the “minor and ancillary” effects of a judgment. Gen. Bldg.
Contractors Ass’n, Inc. v. Pennsylvania, 458 U.S. 375, 399
(1982). We wrote that

EEOC has no claim against the party it seeks to join
and is not seeking any affirmative relief directly
from that party. Joinder is necessary for the “sole
purpose” of effecting complete relief between the
parties . . . by ensuring that both Peabody and the
Nation are bound to any judgment upholding or
striking down the challenged lease provision.
9214 EEOC v. PEABODY WESTERN COAL
Peabody II, 400 F.3d at 783.

On remand, the district court concluded that EEOC’s
amended complaint sought affirmative relief against the
Nation. The district court found that “with the benefit of the
filing of the Amended Complaint and limited discovery, it is
apparent to this Court that the EEOC is not merely seeking
relief against Peabody Coal, but all parties acting in concert
with it, which includes the Navajo Nation.” In so holding, the
district court relied on the language in the amended complaint
seeking “a permanent injunction enjoining Peabody . . . and
all persons in active concert or participation with it, from
engaging in discrimination on the basis of national origin.”
The court found that

there can be no doubt that the Navajo Nation falls
within the scope of affirmative relief sought by the
EEOC. . . . Should the EEOC prevail in this suit and
obtain the broad relief sought, the Navajo Nation
would then be enjoined from implementing and
requiring such lease provisions in the future as it
would already be subject to injunctive relief from
this Court based upon the determination that such
provisions are contrary to Title VII. As such, there
can be little doubt that the EEOC seeks affirmative
relief not only against Peabody Coal but the Navajo
Nation as well.

The language added to the amended complaint pro-
vides, in its entirety:

Defendant Navajo Nation is a party to a lease agree-
ment with the Defendant employer, Peabody Coal
Company, and is therefore named as a party pursuant
to Rule 19(a) of the Federal Rules of Civil Proce-
dure, in that, in its absence, complete relief cannot be
accorded among those already parties, and it has an
interest in the subject of this action.
 EEOC v. PEABODY WESTERN COAL 9215
This added language says nothing about any kind of relief
against the Nation.

The original complaint was before us when we decided
Peabody II. The language in the amended complaint upon
which the district court relied to conclude that EEOC was
seeking affirmative relief is word-for-word the same as in the
original complaint. It is, in its entirety:

Wherefore, the Commission respectfully requests
that this Court:

A. Grant a permanent injunction enjoining Pea-
body, its officers, successors, assigns, and all per-
sons in active concert or participation with it, from
engaging in discrimination on the basis of national
origin.

Some of this added language is standard boilerplate drawn
from Rule 65(d)(2)(C), describing the “persons bound” by
“every injunction” as including “other persons who are in
active concert or participation” with the party or parties
served with an injunction.

There are two possible readings of the amended complaint.
Under one reading, EEOC is not seeking any injunctive relief
against the Nation. The Nation is “bound” by the injunction
only in the sense that it is res judicata as to the Nation, not in
the sense that the injunction affirmatively requires the Nation
to do something. In our view, this is the better reading of the
boilerplate language in the complaint, given that the explicit
premise of our holding in Peabody II was that EEOC has no
cause of action against the Nation under Title VII and that, as
a necessary corollary, EEOC can obtain no injunctive relief
against the Nation. However, the district court did not adopt
this reading.

[5] Under the reading adopted by the district court, EEOC
sought injunctive relief against the Nation in its amended
9216 EEOC v. PEABODY WESTERN COAL
complaint. Even if this is the correct reading, the district court
nonetheless erred in dismissing EEOC’s suit. Because we had
held in Peabody II that joinder of the Nation was feasible
despite the unavailability of injunctive relief against it, the
proper response of the district court would have been simply
to deny EEOC’s request for injunctive relief. As we held in
Peabody II, joinder of the Nation is feasible, and dismissal
under Rule 19 is not required even though injunctive relief is
unavailable.

[6] The district court therefore erred in dismissing EEOC’s
complaint on the ground that it sought injunctive relief against
the Nation.

B. Joinder of the Secretary of the Interior under Rule 19

[7] On remand from Peabody II, Peabody and the newly
joined Nation argued under Rule 19 that the suit could not
proceed without joinder of the Secretary. Even though Pea-
body had been a defendant in the suit from the outset, this was
the first time it made this argument. Because the Nation had
just been joined, this was its first opportunity to make the
argument. We agree with Peabody and the Nation that the
Secretary is a person to be joined if feasible under Rule 19.
But we do not agree that the entirety of EEOC’s suit must be
dismissed.

[8] The central problem is that Peabody is caught in the
middle of a dispute not of its own making. EEOC contends
that the Navajo employment preference provision contained
in the leases violates Title VII. The Secretary required that
this provision be included in the leases. EEOC seeks damages
and an injunction against Peabody, which has complied with
the lease terms upon which the Secretary insisted.

If the district court were to hold that the Navajo employ-
ment preference provision violates Title VII and to award
damages against Peabody, it would be profoundly unfair if
 EEOC v. PEABODY WESTERN COAL 9217
Peabody could not seek indemnification from the Secretary.
It would be similarly unfair if the district court were to grant
an injunction requiring Peabody to disregard the preference
provision, but leaving the Secretary free, despite the court’s
holding, to insist that Peabody comply with it.

The same is true, though to a lesser extent, for the Nation.
As we held in Peabody II, EEOC can obtain neither damages
nor injunctive relief against the Nation. But if the district
court holds that the employment preference provision violates
Title VII, the Nation will be bound to that result by res judi-
cata. If the Secretary is not made a party to the suit, he may
ignore the court’s judgment and place conflicting demands
upon the Nation who will be required by res judicata to honor
the judgment.

1. The Secretary as a Required Party under Rule 19(a)

A person is required to be joined if feasible under Rule
19(a)(1)(A) if, “in that person’s absence, the court cannot
accord complete relief among the existing parties” or under
Rule 19(a)(1)(B) if “that person claims an interest relating to
the subject of the action and is so situated that disposing of
the action in the person’s absence may: (i) as a practical mat-
ter impair or impede the person’s ability to protect the inter-
est; or (ii) leave an existing party subject to a substantial risk
of incurring double, multiple, or otherwise inconsistent obli-
gations because of the interest.” “There is no precise formula
for determining whether a particular nonparty should be
joined under Rule 19(a). . . . The determination is heavily
influenced by the facts and circumstances of each case.” N.
Alaska Envtl. Ctr. v. Hodel, 803 F.2d 466, 468 (9th Cir. 1986)
(quoting Bakia v. County of Los Angeles, 687 F.2d 299, 301
(9th Cir. 1982) (per curiam)) (alterations in original). The
Secretary meets the standards of both Rule 19(a)(1)(A) and
Rule 19(a)(1)(B).

[9] First, under Rule 19(a)(1)(A), in the absence of the
Secretary, the district court cannot accord complete relief
9218 EEOC v. PEABODY WESTERN COAL
among the existing parties. The record makes clear that the
Secretary insisted that the disputed employment preference
provision be included in the leases between Peabody and the
Nation, and that the Secretary is ultimately responsible for its
continued inclusion in the leases. If EEOC prevails in its
interpretation of Title VII, it may recover damages from Pea-
body based on Peabody’s compliance with the employment
preference provision. In that event, Peabody will be obliged
to pay damages for having engaged in conduct that was man-
dated by the Secretary. If the Secretary is not made a party,
Peabody will not be able to seek indemnification from the
Secretary.

Further, if EEOC prevails it may obtain an injunction
ordering Peabody to disregard the employment preference
provision. The Secretary has the power, if the lease terms are
violated, to cancel the leases after a notice and cure period,
and Peabody is unable to modify the terms of the leases with-
out the approval of the Secretary. If the Secretary is not made
a party, Peabody may be obliged by the court to disregard the
preference provision, while the Secretary would remain free
to insist that Peabody honor it, upon pain of losing the leases.
See, e.g., Associated Dry Goods Corp. v. Towers Fin. Corp.,
920 F.2d 1121, 1124 (2d Cir. 1990) (holding that landlord
was required party in suit brought by tenant against subtenant,
as subtenant would not be able to obtain complete relief in
counterclaims against tenant for increased electrical capacity
without approval of landlord); Wymbs v. Republican State
Executive Comm., 719 F.2d 1072, 1080 (11th Cir. 1983)
(holding that national political party committee was required
party in suit on the constitutionality of a local political party’s
delegate selection rule when the local rule was derived from
the national rule and the national party still had the ability to
determine which delegates would be seated).

[10] Second, under Rule 19(a)(1)(B), the Secretary has an
interest in the subject matter of this action. Resolving this
action in the Secretary’s absence may both impair the Secre-
 EEOC v. PEABODY WESTERN COAL 9219
tary’s ability to protect that interest and leave Peabody and the
Nation subject to a substantial risk of incurring inconsistent
obligations. If the Secretary is not joined, he will be unable
to defend his interest in the legality of the lease provisions.
We have repeatedly held that “[n]o procedural principle is
more deeply imbedded in the common law than that, in an
action to set aside a lease or a contract, all parties who may
be affected by the determination of the action are indispens-
able.” Lomayaktewa v. Hathaway, 520 F.2d 1324, 1325 (9th
Cir. 1975); see also Dawavendewa II, 276 F.3d at 1156.

[11] Although Lomayaktewa and Dawavendewa II
involved parties who were signatories to a contract, which the
Secretary is not, the underlying principle applies here. The
Secretary mandated the provisions and continues to exercise
oversight over the leases. A public entity has an interest in a
lawsuit that could result in the invalidation or modification of
one of its ordinances, rules, regulations, or practices. See, e.g.,
Davis v. United States, 192 F.3d 951, 959 (10th Cir. 1999)
(holding that Seminole Nation of Oklahoma was necessary
party as a ruling on the merits would modify the Nation’s
ordinances); Ricci v. State Bd. of Law Exam’rs, 569 F.2d 782,
784 (3d Cir. 1978) (holding that Pennsylvania Supreme Court
was indispensable party to an action that would, if it suc-
ceeded, invalidate one of the Court’s rules of admission). The
Secretary thus has an interest in an action that would require
him to modify the terms of leases he approves for entities
conducting business on the Navajo reservation. The Secretary
therefore qualifies as a person to be joined under Rule
19(a)(1)(B)(i).

If the Secretary is not made a party and if EEOC prevails,
the Secretary may choose to cancel the leases or to modify
them to eliminate the Navajo employment preference. Alter-
natively, the Secretary may choose to continue the leases in
their current form, ignoring the judgment in the case to which
he has not been made a party. If the Secretary chooses to do
this, he will put both Peabody and the Nation “between the
9220 EEOC v. PEABODY WESTERN COAL
proverbial rock and a hard place,” Peabody II, 400 F.3d at
780 (quoting Dawavendewa II, 276 F.3d at 1156), forcing
them to choose between complying with the injunction or
risking cancellation of the leases for violating terms mandated
by the Secretary. The Secretary therefore qualifies as a person
to be joined under Rule 19(a)(1)(B)(ii).

EEOC argues that the Secretary is not a person required to
be joined under Rule 19(a), citing to the Navajo Nation line
of cases decided by the Supreme Court. In these cases, the
Court held that the DOI did not owe a fiduciary duty to the
Navajo Nation in managing, negotiating, or approving leases
under the statutes at issue in this litigation, and that the Nation
therefore could not state a cause of action against DOI for
breach of fiduciary duty. United States v. Navajo Nation
(“Navajo Nation II”), 129 S. Ct. 1547, 1558 (2009) (holding
that the Navajo-Hopi Rehabilitation Act of 1950 and Surface
Mining Control and Reclamation Act of 1977 do not provide
a cause of action to the Navajo Nation against the United
States for breach of trust in its approval of coal mining
leases); Navajo Nation I, 537 U.S. at 506 (holding the same
for the IMLA). These cases indicate the limits of DOI’s fidu-
ciary duty to the Nation with respect to the leases, but they
say nothing about whether DOI possesses a cognizable inter-
est in the outcome of litigation challenging lease terms man-
dated by the Secretary.

[12] We therefore hold that the Secretary is a person
required to be joined if feasible under Rule 19(a)(1)(A) and
Rule 19(a)(1)(B).

2. Feasibility of Joining the Secretary

Rule 19(a) contemplates that a required party be joined as
either a plaintiff or defendant. In the posture of this suit, the
Secretary would be joined as defendant rather than a plaintiff.
However, we conclude that EEOC cannot join the Secretary
as a defendant.
 EEOC v. PEABODY WESTERN COAL 9221
[13] EEOC is prevented by 42 U.S.C. § 2000e-5(f)(1) from
filing suit against the Secretary on its own authority. Section
2000e-5(f)(1) provides that if EEOC is not able to obtain a
conciliation agreement with a governmental agency, it cannot
itself bring suit against that agency. Instead, § 2000e-5(f)(1)
provides that if EEOC is unable to obtain an agreement, it
“shall take no further action and shall refer the case to the
Attorney General who may bring a civil action against such
respondent in the appropriate United States district court.” We
were told at oral argument by EEOC’s attorney that EEOC
has no expectation that the Attorney General will file suit
against the Secretary. While there is no evidence in the record
of a formal referral to and refusal by the Attorney General, we
assume for purposes of our decision that the Attorney General
either has refused or will refuse to file suit against the Secre-
tary.

3. Dismissal “In Equity and Good Conscience”

[14] If a required party under Rule 19(a) cannot be joined
as a plaintiff or defendant, we look to the factors provided in
Rule 19(b) to determine whether, “in equity and good con-
science, the action should proceed among the existing parties
or should be dismissed.” Fed. R. Civ. P. 19(b). Rule 19(b)
provides four factors that we must consider in making this
determination: (1) the extent to which a judgment rendered in
the person’s absence might prejudice that person or the exist-
ing parties; (2) the extent to which any prejudice could be
lessened or avoided by shaping the judgment or the relief; (3)
whether a judgment rendered in the person’s absence would
be adequate; and (4) whether the plaintiff would have an ade-
quate remedy if the action were dismissed. Id. The heart of
this inquiry is the question of “equity and good conscience.”
See Provident Tradesmens Bank & Trust Co. v. Patterson,
390 U.S. 102, 125 (1968); Dawavendewa II, 276 F.3d at
1161. “The inquiry is a practical one and fact specific . . . and
is designed to avoid the harsh results of rigid application.”
9222 EEOC v. PEABODY WESTERN COAL
Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir.
1990) (internal citations omitted).

For the reasons that follow, we conclude that EEOC’s
claim for damages against Peabody must be dismissed under
Rule 19(b), but that its claim for an injunction against Pea-
body should be permitted to proceed.

a. EEOC’s Claim for Damages

[15] If EEOC’s suit against Peabody were allowed to pro-
ceed, the district court would almost certainly award damages
against Peabody if it concludes that the Navajo employment
preference provision violates Title VII. In that event, Peabody
would quite reasonably look to the Secretary for indemnifica-
tion, given that the preference provision was included in the
leases at the insistence of the Secretary. Rule 14(a) would per-
mit Peabody to file a third-party complaint against the Secre-
tary for indemnification. But because Peabody’s
indemnification suit would seek damages, it would be barred
by the government’s sovereign immunity unless that immu-
nity is waived by statute. We can find no waiver of sovereign
immunity to such a suit.

[16] The Tucker Act, 28 U.S.C. § 1346(a)(2), waives the
government’s sovereign immunity in damage suits based on
contract, as well as for some claims arising under the Consti-
tution and statutes of the United States. Under the Tucker Act,
a party’s claims must either rest upon a contract, “seek the
return of money paid by them to the Government,” or estab-
lish an entitlement to money damages under a federal statute
that “ ‘can fairly be interpreted as mandating compensation by
the Federal Government for the damage sustained.’ ” United
States v. Testan, 424 U.S. 392, 400 (1976) (quoting Eastport
S.S. Corp. v. United States, 372 F.2d 1002, 1009 (Ct. Cl.
1967)); see also Lake Mohave Boat Owners Ass’n v. Nat’l
Park Serv., 78 F.3d 1360, 1365 (9th Cir. 1995). The Federal
Tort Claims Act, 28 U.S.C. § 1346(b), waives the sovereign
 EEOC v. PEABODY WESTERN COAL 9223
immunity of the United States for suits in tort. See FDIC v.
Meyer, 510 U.S. 471, 477 (1994). However, neither the
Tucker Act nor the Federal Tort Claims Act waives the gov-
ernment’s sovereign immunity in the circumstances of this
case.

[17] Title VII also waives the government’s sovereign
immunity to some extent. Based on that waiver, a federal
employee may sue the government for damages under Title
VII, provided that administrative remedies with EEOC have
been exhausted. 42 U.S.C. § 2000e-16(c); see Library of
Cong. v. Shaw, 478 U.S. 310, 319 (“Congress waived the
Government’s immunity under Title VII as a defendant,
affording federal employees a right of action against the Gov-
ernment for its discriminatory acts as an employer.”); cf. Fitz-
patrick v. Bitzer, 427 U.S. 445 (1976) (Title VII abrogates the
states’ sovereign immunity). But we can find nothing in Title
VII that waives the government’s sovereign immunity to a
damages suit brought by a private employer that has itself vio-
lated Title VII.

[18] Peabody’s only sin, if indeed it was a sin, was to com-
ply with an employment preference provision inserted in its
lease at the insistence of the Secretary. It would be profoundly
unfair for a court to award damages against Peabody while
allowing Peabody no redress against the government. We are
unable to see any way to mitigate this unfairness by, for
example, “protective provisions in the judgment; . . . shaping
relief; or . . . other measures.” Fed. R. Civ. P. 19(b)(2)(A-C).
We therefore conclude that “in equity and good conscience”
EEOC’s damages claim against Peabody must be dismissed
under Rule 19(b).

b. EEOC’s Claim for an Injunction

If EEOC’s suit is allowed to proceed and if the district
court were to hold that the Navajo employment preference
provision violates Title VII, the district court would almost
9224 EEOC v. PEABODY WESTERN COAL
certainly grant an injunction requiring Peabody to ignore the
provision in making its employment decisions. This injunc-
tion would not only require Peabody to take certain actions;
it would also operate as res judicata against the Nation. In the
event such an injunction were issued, Peabody and the Nation
would quite reasonably want to seek prospective relief pre-
venting the Secretary from enforcing the provision. Rule
14(a) would permit Peabody and the Nation to file a third-
party complaint seeking such relief against the Secretary.
Sovereign immunity does not bar prospective injunctive relief
against the Secretary. We conclude that the availability of
prospective relief through a third-party complaint under Rule
14(a) means that “in equity and good conscience” EEOC’s
suit against Peabody should be permitted to proceed.

i. Sovereign Immunity

[19] A claim to which sovereign immunity is not a defense
may be entertained even if another claim in the suit is dis-
missed because of sovereign immunity. See, e.g., United
States v. Georgia, 546 U.S. 151, 159 (2006) (finding sover-
eign immunity of state was not a bar to some of the plaintiffs’
claims and remanding to the district court to allow suit to pro-
ceed for any claims that were not shielded by sovereign
immunity). Therefore, the district court may entertain Pea-
body and the Nation’s third-party claim for prospective relief
if it is not barred by the United States’ sovereign immunity,
even if a Peabody claim for damages would have to be dis-
missed.

[20] Prospective relief requiring, or having the effect of
requiring, governmental officials to obey the law has long
been available. Sovereign immunity does not bar such relief.
The case often cited for this proposition is Ex parte Young,
209 U.S. 123 (1908), which permitted an injunction against
the Attorney General of Minnesota despite the Eleventh
Amendment. The Ex parte Young fiction remains the basis for
prospective relief against state officers. For example, in Veri-
 EEOC v. PEABODY WESTERN COAL 9225
zon Maryland, Inc. v. Public Service Commission, 535 U.S.
635 (2002), the Supreme Court allowed injunctive and declar-
atory relief against individual state officials despite the Elev-
enth Amendment.

For a number of years, prospective relief against federal
officials was available under the fiction of Ex parte Young.
For example, in Larson v. Domestic & Foreign Commerce
Corp., 337 U.S. 682 (1949), the Supreme Court allowed pro-
spective relief against a federal official despite an asserted
defense of sovereign immunity. The Court wrote:

There may be, of course, suits for specific relief
against officers of the sovereign which are not suits
against the sovereign. If the officer purports to act as
an individual and not as an official, a suit directed
against that action is not a suit against the sovereign.
. . . [W]here the officer’s powers are limited by stat-
ute, his actions beyond those limitations are consid-
ered individual and not sovereign actions. The
officer is not doing the business which the sovereign
has empowered him to do or he is doing it in a way
which the sovereign has forbidden. His actions are
ultra vires his authority and therefore may be made
the object of specific relief.

Id. at 689. We explicitly followed the “legal fiction”
described in Larson in Washington v. Udall, 417 F.2d 1310,
1314 (9th Cir. 1969), and did so again in Rockbridge v. Lin-
coln, 449 F.2d 567, 572-73 (9th Cir. 1971).

However, since 1976 federal courts have looked to § 702 of
the Administrative Procedure Act (“APA”), 5 U.S.C. § 702,
to serve the purposes of the Ex parte Young fiction in suits
against federal officers. In Presbyterian Church (U.S.A.) v.
United States, 870 F.2d 518 (9th Cir. 1989), we explained that
after § 702 was amended in 1976, it replaced the Ex parte
9226 EEOC v. PEABODY WESTERN COAL
Young fiction as the doctrinal basis for a claim for prospective
relief. We wrote:

It is particularly significant that [in enacting § 702
of the APA] Congress referred disapprovingly to the
Ex parte Young fiction, which permitted a plaintiff to
name a government official as the defendant in equi-
table actions to redress government misconduct, on
the pretense that the suit was not actually against the
government. By invoking the Young fiction plaintiffs
could, even before Congress amended § 702 in 1976,
maintain an action for equitable relief against uncon-
stitutional government conduct, whether or not such
conduct constituted “agency action” in the APA
sense. See, e.g., Larson v. Domestic & Foreign Com-
merce Corp. . . . Congress’ plain intent in amending
§ 702 was to waive sovereign immunity for all such
suits, thereby eliminating the need to invoke the
Young fiction.

Id. at 525-26 (citations omitted) (emphasis added).

In Presbyterian Church we wrote, “On its face, the 1976
amendment [to § 702] is an unqualified waiver of sovereign
immunity in actions seeking nonmonetary relief against legal
wrongs for which governmental agencies are accountable.”
870 F.2d at 525. We explained that the waiver is not limited
to judicial review in suits challenging “agency action” as
defined in the APA, but instead covers “all actions seeking
relief from official misconduct except for money damages.”
Id. In Gallo Cattle Co. v. United States Department of Agri-
culture, 159 F.3d 1194 (9th Cir. 1998), we stated that “the
APA’s waiver of sovereign immunity contains several limita-
tions,” including the “final agency action” requirement that
we had considered irrelevant in Presbyterian Church. Id. at
1198. We held that, because the plaintiffs failed to challenge
“final agency action,” the waiver of sovereign immunity did
not apply. Id. In Gros Ventre Tribe v. United States, 469 F.3d
 EEOC v. PEABODY WESTERN COAL 9227
801 (9th Cir. 2006), we discussed but declined to resolve the
tension between the two cases, observing that there is “no
way to distinguish The Presbyterian Church from Gallo Cat-
tle.” Id. at 809.

[21] We similarly need not resolve this tension here.
Unlike in Gallo Cattle, there is final agency action in this
case, because the Secretary has mandated the disputed lease
terms. “Agency action” under the APA is defined as “the
whole or a part of an agency rule, order, license, sanction,
relief, or the equivalent or denial thereof, or failure to act.” 5
U.S.C. § 551(13). “Persons” entitled to judicial review under
the APA include “an individual, partnership, corporation,
association, or public or private organization other than an
agency.” 5 U.S.C. § 701(b)(2) (providing that, for purposes of
provisions on judicial review, definition of “person” in 5
U.S.C. § 551 applies); id. § 551 (providing definition of “per-
son”). Both Peabody and the Navajo Nation come within this
definition of “person.” Peabody is a corporation, and the
Nation is a “public organization.” Id. Therefore, under § 702
of the APA, as would be the case under the Ex parte Young
fiction, either Peabody or the Nation may assert a claim
against the Secretary requesting injunctive or declaratory
relief. We therefore conclude that neither Peabody nor the
Nation is barred by sovereign immunity from bringing a third-
party complaint seeking prospective relief against the Secre-
tary under Rule 14(a).

ii. Third-party Complaints under Rule 14(a)

[22] If a required party under Rule 19(a) cannot be joined
as a plaintiff or defendant, the court must determine whether
under Rule 19(b) the action must be dismissed “in equity and
good conscience.” Among the factors to be considered in
making that determination is whether, under Rule
19(b)(2)(C), “measures” may be taken that would lessen or
avoid any prejudice. To the degree that Peabody and the
Nation may be prejudiced by the absence of the Secretary as
9228 EEOC v. PEABODY WESTERN COAL
a plaintiff or defendant, that prejudice may be eliminated by
a third-party complaint against the Secretary under Rule
14(a).

[23] The courts of appeals that have addressed the question
are unanimous in holding that if an absentee can be brought
into an action by impleader under Rule 14(a), a dismissal
under Rule 19(b) is inappropriate. In Pasco International
(London) Ltd. v. Stenograph Corp., 637 F.2d 496 (2d Cir.
1980), the Second Circuit repeatedly indicated that prejudice
to existing parties could be eliminated by impleader under
Rule 14(a). The court wrote, “Stenograph can always protect
itself from the possibility of inconsistent verdicts by implead-
ing Croxford under Rule 14[.] . . . [T]he existence of the Rule
14 provisions demonstrates that parties such as Croxford who
may be impleaded under Rule 14 are not indispensable parties
within Rule 19(b).” Id. at 503. It summarized, “[A]ll persons
subject to impleader by the defendant are not indispensable
parties. This is . . . merely an extension of the settled doctrine
that Rule 19(b) was not intended to require the joinder of per-
sons subject to impleader under Rule 14 such as potential
indemnitors.” Id. at 505 n.20. The other circuits that have
addressed the question have come to the same conclusion.
See, e.g., Boone v. General Motors Acceptance Corp., 682
F.2d 552, 553 (5th Cir. 1982) (defendants “could protect their
interests by joining the dealer as a third party should they care
to do so”); Challenge Homes, Inc. v. Greater Naples Care
Ctr., Inc., 669 F.2d 667, 671 (11th Cir. 1982) (defendant
“may protect itself against [prejudice] by impleading [the
absent person] under Rule 14”).

c. Summary

[24] We conclude that prospective relief in the form of an
injunction or declaratory judgment is available in a Rule 14(a)
impleader against the Secretary. Such prospective relief
against the Secretary is enough to protect Peabody and the
Nation, both with respect to EEOC’s request for injunctive
 EEOC v. PEABODY WESTERN COAL 9229
relief against Peabody and with respect to any res judicata
effect against the Nation. Such relief would also protect the
Secretary because, once brought in as a third-party defendant,
he will be able to defend his position on the legality of the
leases. We therefore conclude, “in equity and good con-
science,” that EEOC’s claim against Peabody for injunctive
relief should be allowed to proceed.

C. Remaining Issues

EEOC has appealed the district court’s various other rul-
ings, including its holding that the Navajo employment pref-
erence does not violate Title VII. We vacate all of these
rulings to allow reconsideration once the Secretary has been
brought into the suit as a third-party defendant. This will
allow the court to consider the arguments of the Secretary on
the legality of the employment preferences before issuing a
final ruling. We note, further, that the presentation of the Sec-
retary’s views in the district court, and the district court’s con-
sidered ruling taking those views into account, will be useful
to us in the event of a further appeal.

Conclusion

We again hold that joinder of the Navajo Nation under Rule
19 is feasible. We hold that the Secretary of the Interior is a
party required to be joined if feasible under Rule 19(a), but
that joinder of the Secretary as a defendant is not feasible. We
hold that EEOC’s damages claim against Peabody must be
dismissed under Rule 19(b). Finally, we hold that EEOC’s
injunctive claim against Peabody should be allowed to pro-
ceed. We vacate the other rulings of the district court and
remand for further proceedings consistent with this opinion.

REVERSED in part and VACATED in part. Each party
to bear its own costs.