FILED
United States Court of Appeals
Tenth Circuit
November 17, 2008
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
NATIVE AMERICAN
DISTRIBUTING, a division of Flat
Creek Cattle Co., Inc., a Missouri
corporation; JOHN DILLINER, an
individual,
Plaintiffs-Appellants,
v. No. 07-5104
SENECA-CAYUGA TOBACCO
COMPANY, an enterprise of the
Seneca-Cayuga Tribe of Oklahoma;
LEROY HOWARD, an individual;
FLOYD LOCKAMY, an individual;
RICHARD WOOD, and individual,
Defendants-Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF OKLAHOMA
(D.C. No. 05-CV-427-TCK-SAJ)
Jonathan C. Neff, Jonathan Neff, P.C., Tulsa, Oklahoma, for Plaintiffs-
Appellants.
Daniel D. Doyle, Spencer, Fane, Britt & Browne, St. Louis, Missouri, (James W.
Tilly, The Tilly Law Firm, Tulsa, Oklahoma, on the brief) for Defendant-
Appellee, Seneca-Cayuga Tobacco Company.
Scott B. Wood, Wood, Puhl & Wood, P.L.L.C., Tulsa, Oklahoma, for Defendants-
Appellees, Leroy Howard, Floyd Lockamy and Richard Wood.
Before BRISCOE and GORSUCH, Circuit Judges, and PARKER, District
Judge. *
BRISCOE, Circuit Judge.
Plaintiffs Native American Distributing and John Dilliner filed suit in
federal court against the Seneca-Cayuga Tobacco Company (“SCTC”), which is
an enterprise of the Seneca-Cayuga Indian Tribe, and three individuals who had
been officers of SCTC (the “Individual Defendants”). SCTC and the Individual
Defendants moved to dismiss pursuant to Rule 12(b)(1), Fed. R. Civ. P., arguing
that the doctrine of tribal sovereign immunity shielded them from suit. The
district court granted the defendants’ motions and dismissed all claims with
prejudice, and the plaintiffs now appeal. Our jurisdiction arises under 28 U.S.C.
§ 1291. We affirm the district court’s dismissal of plaintiffs’ claims.
I
The Seneca-Cayuga Tribe of Oklahoma is a federally-recognized Indian
tribe located primarily in and around northeastern Oklahoma. See Indian Entities
Recognized & Eligible To Receive Services From the United States Bureau of
Indian Affairs, 67 Fed. Reg. 46328, 46331 (July 12, 2002). Section 3 of the
Oklahoma Indian Welfare Act of 1936, 25 U.S.C. § 503, grants the membership
*
The Honorable James A. Parker, United States District Judge for the District of
New Mexico, sitting by designation.
2
of the Seneca-Cayuga Tribe the right to organize and act through two entities: a
governmental entity organized under a constitution and a corporate entity
organized under a corporate charter. Though not bound to do so, the membership
of the Seneca-Cayuga Tribe has exercised its powers under Section 3 and has
enacted both a constitution and a corporate charter.
The tribal constitution and bylaws were ratified on May 15, 1937, creating
an organized government for the membership of the Seneca-Cayuga Tribe.
Among other things, the tribal constitution created a “Business Committee” with
the “power to transact business or otherwise speak or act on behalf of the Seneca-
Cayuga Tribe in all matters on which the Tribe is empowered to act.” Tribal
Const. art. VI, ROA at 49. Shortly thereafter, on June 26, 1937, the Seneca-
Cayuga Tribe adopted its corporate charter. Under the charter, the “membership,
the officers, and the management of the incorporated Tribe”—including the
Business Committee—are identical to those set forth in the tribal constitution.
Corp. Charter § 2, ROA at 84. Noteworthy is section 3(b) of the Corporate
Charter, which contains a clause granting the corporate entity the power “[t]o sue
and be sued; to complain and defend in any court.” Id. § 3(b), ROA at 84.
On July 6, 1999, the Business Committee, purporting to exercise its powers
under Article VI of the tribal constitution, adopted a resolution “creat[ing] an
operating division of the [Seneca-Cayuga] Tribe, a Tribal enterprise to engage in
(a) the manufacture, sale, and distribution of tobacco products; and (b) any other
3
lawful commercial activity; and declar[ing] such Tribal enterprise and its
activities as essential governmental functions of the Seneca-Cayuga Tribe.”
Resolution # 03-070699, ROA at 55, 56. The tobacco company established by
this resolution became SCTC.
SCTC engaged Native American Distributing (“NAD”) to serve as a
distributor of its products in 2001. At the time NAD and SCTC entered into their
contract, John Dilliner, a member of the Seneca-Cayuga Tribe and a shareholder
and officer of NAD, reportedly asked SCTC officials whether it was necessary to
secure a waiver of tribal sovereign immunity. In response, SCTC officials told
him that no waiver was necessary because SCTC was subject to the “sue and be
sued” clause in the Corporate Charter. NAD served as an SCTC distributor for
about four years, until relations between the two companies soured.
NAD and Dilliner filed suit in United States District Court on July 27,
2005. The complaint named as defendants SCTC and Individual Defendants
Leroy Howard, a former Chief of the Seneca-Cayuga Tribe; Floyd Lockamy, the
General Manager of SCTC; and Richard Wood, the Plant Manager of SCTC. The
complaint alleged that SCTC, under the direction of the Individual Defendants,
repeatedly breached agreements between NAD and SCTC. The complaint further
alleged that the Individual Defendants engaged in market manipulation and other
illegal competitive practices while acting as officers of SCTC. As grounds for the
court’s jurisdiction over SCTC, the complaint cited the “sue and be sued” clause
4
in the Corporate Charter.
The defendants moved to dismiss, asserting that they were entitled to the
Seneca-Cayuga Tribe’s sovereign immunity from suit. They argued that the “sue
and be sued” clause did not operate as a waiver of immunity, and that even if it
did, this waiver applied only to the tribe’s corporate entity (the “Tribal
Corporation”) and not its governmental entity (the “Tribe”). While the plaintiffs
maintained that SCTC was a division of the Tribal Corporation, the defendants
contended that SCTC was an enterprise of the Tribe and was thus not subject to
the “sue and be sued” clause. The Individual Defendants further claimed that, as
officers of SCTC acting in their representative capacities, they were also entitled
to the Tribe’s immunity.
Voluminous briefing of these issues ensued. During the volley of briefs, a
number of exhibits were submitted to the court, including copies of the tribal
constitution, Corporate Charter, and other relevant tribal documents, as well as
sworn and unsworn affidavits from various parties to SCTC’s dealings. The
plaintiffs requested limited discovery on the jurisdictional issues, but given the
evidence already before it and the scope of the requested discovery, the district
court denied this request.
The district court then granted the defendants’ motions and dismissed all
claims with prejudice. In addressing SCTC’s entitlement to tribal immunity, the
court considered the “crucial question” to be “whether SCTC, in its dealings with
5
Plaintiffs, functioned as an enterprise of the Tribe or of the Tribal Corporation.”
Order, ROA at 385. It reasoned that “[i]f SCTC is an enterprise of the Tribe (as a
governmental entity), immunity has not been waived. If SCTC is an enterprise of
the Tribal Corporation, immunity has been waived by virtue of the Sue and Be
Sued Clause in the Corporate Charter.” Id. After examining the evidence before
it, the court found that SCTC was a division of the Tribe rather than the Tribal
Corporation. The court rejected the plaintiffs’ argument that because SCTC
officials told Dilliner that no waiver of immunity was necessary, the doctrine of
equitable estoppel barred the defendants from asserting tribal immunity, and also
rejected other arguments that the doctrine of tribal immunity should not be
applied because of the unique context of this case. Id. at 387-94.
The court further concluded that the Individual Defendants were also
protected by the Tribe’s immunity. It noted that “all allegations against the
Individual Defendants relate to decisions made and actions taken by them as the
‘principal managers’ of SCTC, an immune tribal enterprise,” and as such, the
Individual Defendants had a “‘colorable claim of authority’ from the Tribe” that
extended the Tribe’s immunity to them. Id. at 396. The court also rejected the
plaintiffs’ arguments “that the Individual Defendants acted outside the scope of
authority because the Complaint alleges wrongful actions,” id. at 395, and that
Lockamy and Wood were “not entitled to sovereign immunity because they were
merely employees of SCTC and were not ‘tribal officials,’” id. at 397.
6
II
Two issues are presented for our resolution on appeal: (1) whether the
district court correctly concluded that SCTC was entitled to tribal immunity; and
(2) whether the court correctly concluded that the Individual Defendants were
also entitled to the protection of tribal immunity. 1
SCTC’s Immunity from Suit
Indian tribes are “domestic dependent nations” with sovereignty over their
members and territories. E.F.W. v. St. Stephen’s Indian High Sch., 264 F.3d
1297, 1304 (10th Cir. 2001). As sovereign powers, federally-recognized Indian
tribes possess immunity from suit in federal court. Berrey v. Asarco Inc., 439
F.3d 636, 643 (10th Cir. 2006); see also 25 C.F.R. § 83.2 (describing effect of
federal recognition for tribes). Tribal immunity extends to subdivisions of a tribe,
1
The plaintiff-appellants also purport to challenge the district court’s denial of
limited jurisdictional discovery. However, the argument in their opening brief
contains no discussion of the discovery ruling apart from a few statements
suggesting dissatisfaction with it. See Aplt. Br. at 8 (“The Trial Court erred in
dismissing the case . . . without permitting any discovery as to the true nature and
identity of SCTC.”); id. at 16 (suggesting that the case could be remanded to the
district court for further factual development). Plaintiffs have therefore waived
this issue through their failure to adequately address it in their opening brief. Cf.
United States v. Beckstead, 500 F.3d 1154, 1164-65 (10th Cir. 2007) (holding
issue waived when discussion of it in the opening brief was limited to “two
section headings, a single sentence in the brief’s summary, and two phrases in
arguments otherwise challenging” a separate issue); Christian Heritage Acad. v.
Okla. Secondary Sch. Activities Ass’n, 483 F.3d 1025, 1031 (10th Cir. 2007)
(holding issue was waived when appellant identified issue in its opening brief, but
devoted less than one page of brief to it and provided “no other argument and no
citations”).
7
and even bars suits arising from a tribe’s commercial activities. See Kiowa Tribe
of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 759 (1998) (“Tribes enjoy immunity
from suits on contracts, whether those contracts involve governmental or
commercial activities and whether they were made on or off a reservation.”); see
also Allen v. Gold Country Casino, 454 F.3d 1044, 1047 (9th Cir. 2006) (holding
that a casino that “function[ed] as an arm of the Tribe” enjoyed tribal immunity),
cert. denied, 127 S. Ct. 1307 (2007); Ramey Constr. Co. v. Apache Tribe of the
Mescalero Reservation, 673 F.2d 315, 320 (10th Cir. 1982) (holding that an inn
which was “a sub-entity of the Tribe rather than a separate corporate entity”
enjoyed tribal immunity). While the Supreme Court has expressed misgivings
about recognizing tribal immunity in the commercial context, the Court has also
held that the doctrine “is settled law” and that it is not the judiciary’s place to
restrict its application. Kiowa Tribe, 523 U.S. at 756-59. To the extent the
plaintiffs have argued that we should abrogate the scope of the doctrine in the
present case due to SCTC’s commercial activities, we decline this request.
The Seneca-Cayuga Tribe’s immunity from suit may only be overcome in
one of two ways. First, Congress has the power to abrogate the tribe’s immunity.
Ute Distrib. Corp. v. Ute Indian Tribe, 149 F.3d 1260, 1263 (10th Cir. 1998).
Second, the tribe can waive its own immunity. St. Stephen’s, 264 F.3d at 1304.
In either event, “a waiver of sovereign immunity cannot be implied but must be
8
unequivocally expressed.” Ute Distrib., 149 F.3d at 1263 (quoting Santa Clara
Pueblo v. Martinez, 436 U.S. 49, 58 (1978)).
It is undisputed that Congress has not abrogated the immunity of either
SCTC or the Seneca-Cayuga Tribe. It is also undisputed that the Seneca-Cayuga
Tribe has unequivocally waived its own immunity via the “sue or be sued” clause
in the Corporate Charter—but only with respect to the actions of the Tribal
Corporation, and not the actions of the Tribe. 2 See id. at 1268 (holding that
waiver in a “sue and be sued” clause “is limited to actions involving the corporate
activities of the tribe and does not extend to actions of the tribe in its capacity as
a political governing body”). On appeal, the primary issue in dispute is factual:
whether SCTC is a division of the Tribal Corporation or of the Tribe. The
plaintiffs also argue that even if SCTC is a division of the Tribe, it should be
equitably estopped from asserting its immunity because its managers held it out to
be a division of the Tribal Corporation in their dealings with NAD and Dilliner.
2
Whether a “sue or be sued” clause in a tribal charter actually functions as a
waiver of immunity is arguable. See Felix S. Cohen’s Handbook of Federal
Indian Law § 7.05(1)(c) (2005 ed.) (“Most courts have reasoned that tribal
adoption of a charter with such a clause simply creates the power in the
corporation to waive immunity, and that adoption of the charter alone does not
independently waive tribal immunity.”). The defendants contested this issue
before the district court. See Order, ROA at 385 n.10. On appeal, the defendants
apparently concede that the “sue or be sued” clause at issue in this case
constitutes an unequivocal waiver of immunity, so we need not address the typical
effect of such clauses here.
9
Where, as here, subject-matter jurisdiction turns on a question of fact, we
review the district court’s factual findings for clear error and review its legal
conclusions de novo. Southway v. Cent. Bank of Nigeria, 328 F.3d 1267, 1272
(10th Cir. 2003). Our review of the record reveals no clear error in the district
court’s factual finding that SCTC was a division of the Tribe rather than the
Tribal Corporation. The primary evidence the district court relied upon was the
Business Committee resolution that created SCTC. For several reasons, this
resolution provides substantial support for the district court’s finding that SCTC
was a division of the Tribe.
First, the resolution specifically invokes the Business Committee’s powers
“to act in Behalf of the Tribe under Article VI of the Constitution and By-Laws.”
Resolution # 03-070699, ROA at 55. Article VI grants the Business Committee
the “power to transact business” on behalf of the Tribe. Tribal Const. art. VI,
ROA at 49. Under the Corporate Charter of the Tribal Corporation, the Business
Committee also has broad power to act for the Seneca-Cayuga Tribe’s economic
benefit. See generally Corp. Charter § 3, ROA at 84-86 (outlining corporate
powers). The Business Committee has previously invoked the powers of the
Tribal Corporation to justify its actions. See Resolution # 31-060306, ROA at
248 (citing section 3(q) of the Corporate Charter as grounds for suspending voting
rights of Tribal Councilperson). While the Business Committee could have
invoked its powers under the Corporate Charter to justify the creation of a
10
tobacco company, it instead invoked its constitutional powers to do so. This
lends support to the conclusion that SCTC was created by the Tribe acting in its
governmental, rather than corporate, capacity.
Second, the resolution expressly declares that the tobacco company will
function as “an economic development project to provide employment
opportunities and revenue for the Tribe,” and states that the company and its
activities are “essential governmental functions of the Seneca-Cayuga Tribe.”
Resolution # 03-070699, ROA at 55-56. The district court interpreted this
language as a declaration “that SCTC would function as an operating division of
the Tribe in its governmental capacity.” Order, ROA at 386. We agree with the
district court’s interpretation. We see no reason for the Business Committee to
use this language unless it intended to make clear that the tobacco company was a
division of the Tribe, and the plaintiffs have offered no alternative explanation.
Third, and finally, the resolution approved an agreement with Humble,
Riggs & Associates (“H&R”) for the management of the tobacco company, and
provided that the “Business Committee waives the Tribal immunity from suit only
to the limits set out in said management agreement and only to [H&R].”
Resolution # 03-070699, ROA at 56. By including an express waiver of immunity
in the resolution, one limited solely to suits brought by H&R, the Business
Committee clearly expressed its belief that SCTC was a division of the Tribe that
was entitled to its immunity from suit, and that in order for this immunity to be
11
waived, it would need to affirmatively express an intention to do so.
In addition to the Business Committee’s resolution, the district court relied
upon an affidavit by Paul Spicer, Chief of the Seneca-Cayuga Tribe and Project
Developer for SCTC’s creation. In his affidavit, Chief Spicer stated that SCTC
“was created as an operating division of the Tribe in its governmental capacity”
and that the Tribe “has never waived its sovereign immunity for the Seneca-
Cayuga Tobacco Company in any of its dealings with Native American
Distributing or John Dilliner.” Spicer Aff., ROA 46-47, ¶¶ 3, 7. The plaintiffs
attempt to undermine Spicer’s credibility, pointing out contradictory statements
made by Spicer in an unsworn declaration that the Tribal Corporation “has never
had any operations whatsoever” and “has existed only on the paper issued to the
tribe by the federal government.” Spicer Unsworn Dec., ROA at 301, ¶¶ 5, 7.
After review of this conflicting evidence, the district court relied upon statements
in Spicer’s sworn affidavit, it did not rely upon the statements in his unsworn
declaration. In fact, the district court specifically assumed that Spicer’s unsworn
declaration was mistaken, and that “the Tribal Corporation is an existing and
active entity.” Order, ROA at 387 n.1.
Even if we were to assume that the plaintiffs’ evidence so damaged
Spicer’s credibility that his affidavit was also untrustworthy, 3 the plaintiffs
presented no evidence to the district court that questions the validity or effect of
3
We note that the district court made no explicit credibility determinations.
12
the Business Committee’s resolution. Similarly, though plaintiffs’ counsel
suggested at oral argument that SCTC may have been created by the Tribe yet
operated by the Tribal Corporation, the plaintiffs presented no evidence
supporting such a conclusion. The only evidence even remotely suggesting SCTC
was created or operated as a division of the Tribal Corporation was the testimony
of Plaintiff John Dilliner, who said that he believed that SCTC was subject to the
terms of the Corporate Charter because he was told that it was. See Dilliner Aff.
1, ROA at 89-90; Dilliner Aff. 2, ROA at 244-46. However, Dilliner’s subjective
belief regarding SCTC’s governing documents does not equate to an express
waiver of immunity. Under these circumstances, we cannot conclude that the
district court clearly erred in finding that SCTC was an enterprise of the Tribe,
which has not waived its immunity.
We must also reject the contention that SCTC should be equitably estopped
from asserting its immunity because its managers told Dilliner that SCTC was a
division of the Tribal Corporation. We agree with the district court that the
misrepresentations of the Tribe’s officials or employees cannot affect its
immunity from suit. We have previously recognized that “officers of the United
States possess no power through their actions to waive an immunity of the United
States or to confer jurisdiction on a court” in the absence of an express waiver of
immunity. United States v. Murdock Mach. & Eng’g Co. of Utah, 81 F.3d 922,
931 (10th Cir. 1996) (quoting United States v. N.Y. Rayon Imp. Co., 329 U.S.
13
654, 660 (1947)) (quotations and alteration omitted). We see no reason to treat
tribal immunity any differently than federal sovereign immunity in this context.
See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 148 (1982) (employing
principles applicable to waiver of federal and state immunity to tribal immunity).
The Supreme Court has acknowledged that tribes could use their immunity
as a sword rather than a shield, as is alleged here, writing that “immunity can
harm those who are unaware that they are dealing with a tribe, who do not know
of tribal immunity, or who have no choice in the matter, as in the case of tort
victims.” Kiowa Tribe, 523 U.S. at 758. Despite these concerns with the
assertion of immunity, the Court has held fast to its position that such concerns
are not the province of the courts, but of Congress or of the tribe itself. Id. at
758-60; see also Ute Distrib., 149 F.3d at 1267 (holding that there can be no
“waiver of tribal immunity based on policy concerns, perceived inequities arising
from the assertion of immunity, or the unique context of a case”); Pan Am. Co. v.
Sycuan Band of Mission Indians, 884 F.2d 416, 419 (9th Cir. 1989) (“Indian
sovereignty, like that of other sovereigns, is not a discretionary principle subject
to the vagaries of the commercial bargaining process or the equities of a given
situation.”). This case does not present a materially different situation. Whether
a tribal entity has affirmatively led or passively permitted another party to believe
it is amenable to suit, in both cases the entity has concealed its immunity, to its
benefit and the other’s detriment.
14
The plaintiffs argue that this case is distinguishable because they are not
asking us to find a waiver where none is explicit, but to extend the reach of a
preexisting waiver (the “sue and be sued” clause). This is a distinction without a
difference. In either situation, the defendant has not clearly and unequivocally
waived its immunity from the suit at hand. The plaintiffs point to no prior case,
and we have found none, that has taken into account the specific facts before it
and extended a waiver of immunity to a suit that was not already within the
waiver’s scope. We are not inclined to do so here.
In sum, we conclude that the district court did not clearly err in
determining that SCTC was an enterprise of the Tribe that has not waived its
immunity. We also conclude that the district court correctly determined that
SCTC was not equitably estopped from asserting its immunity due to the
misrepresentations of its managers. The district court was correct to conclude
that it did not have subject-matter jurisdiction over the plaintiffs’ suit against
SCTC.
Individual Defendants’ Immunity from Suit
The plaintiffs also argue that the district court erred in concluding that
SCTC’s immunity extended to the Individual Defendants. To review, those
defendants are Leroy Howard, former Chief of the Seneca-Cayuga Tribe; Floyd
Lockamy, former General Manager of SCTC; and Richard Wood, former Plant
Manager of SCTC. As the district court noted, all of the allegations made against
15
the Individual Defendants “relate to decisions made and actions taken by them as
the ‘principal managers’ of SCTC.” Order, ROA at 396; see Compl., ROA at 11-
12 ¶¶ 12, 16-17; id. at 14-15 ¶¶ 32-33, 36, 38. Because all the allegations in the
complaint related to actions that the Individual Defendants took in their official
capacities, the district court concluded that the Individual Defendants “were
acting at all times with at least a colorable claim of authority from the Tribe.”
Order, ROA at 396 (quotation marks and citations omitted). As a result, the
district court concluded that the Tribe’s immunity extended to the Individual
Defendants as well. We believe that the district court erred in reaching this
conclusion.
It is clear that a plaintiff generally may not avoid the operation of tribal
immunity by suing tribal officials; “the interest in preserving the inherent right of
self-government in Indian tribes is equally strong when suit is brought against
individual officers of the tribal organization as when brought against the tribe
itself.” Nero v. Cherokee Nation of Okla., 892 F.2d 1457, 1462 (10th Cir. 1989)
(citation and quotation marks omitted). Accordingly, a tribe’s immunity
generally immunizes tribal officials from claims made against them in their
official capacities. 4 Fletcher v. United States, 116 F.3d 1315, 1324 (10th Cir.
1997). The general bar against official-capacity claims, however, does not mean
4
On appeal, the plaintiffs do not reassert their argument that the Individual
Defendants are not tribal officials, so we assume that they qualify as such.
16
that tribal officials are immunized from individual-capacity suits arising out of
actions they took in their official capacities, as the district court held. Cf. Russ v.
Uppah, 972 F.2d 300, 303 (10th Cir. 1992) (“[S]tate officials may . . . be sued in
their individual capacities for actions performed in the course of their official
duties and are personally liable for damages awarded.”). Rather, it means that
tribal officials are immunized from suits brought against them because of their
official capacities—that is, because the powers they possess in those capacities
enable them to grant the plaintiffs relief on behalf of the tribe.
We again find guidance in cases discussing federal and state sovereign
immunity. Where a suit is brought against the agent or official of a sovereign, to
determine whether sovereign immunity bars the suit, we ask whether the
sovereign “is the real, substantial party in interest.” Frazier v. Simmons, 254
F.3d 1247, 1253 (10th Cir. 2001) (quotation marks and citation omitted). This
“turns on the relief sought by the plaintiffs.” Id. (quotation marks and citation
omitted). “[T]he general rule is that relief sought nominally against an officer is
in fact against the sovereign if the decree would operate against the latter.”
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101 (1984) (quotation
marks and citation omitted). Where, however, the plaintiffs’ suit seeks money
damages from the officer “in his individual capacity for unconstitutional or
wrongful conduct fairly attributable to the officer himself,” sovereign immunity
does not bar the suit “so long as the relief is sought not from the [sovereign’s]
17
treasury but from the officer personally.” Alden v. Maine, 527 U.S. 706, 757
(1999).
We need not wade into this swamp, however, because a close reading of the
plaintiffs’ complaint makes clear that plaintiffs have failed to state a claim
against the Individual Defendants in their individual capacities. As a result, the
claims asserted against the Individual Defendants are subject to dismissal under
Rule 12(b)(6), Fed. R. Civ. P. We therefore affirm the district court’s dismissal
of the claims against the Individual Defendants, albeit on different grounds. See
Medina v. City & County of Denver, 960 F.2d 1493, 1495 n.1 (10th Cir. 1992)
(“We are free to affirm a district court decision on any grounds for which there is
a record sufficient to permit conclusions of law, even grounds not relied upon by
the district court.” (quotations and citations omitted)).
As stated above, the plaintiffs assert two claims in their complaint: breach
of contract and civil conspiracy. However, the breach of contract claim is
brought only against SCTC. Compl., ROA at 12. We have affirmed the district
court’s dismissal of SCTC based on sovereign immunity. Therefore, the breach
of contract claim is no longer at issue and only the civil conspiracy claim
remains.
The civil conspiracy claim is brought against SCTC and the Individual
Defendants. Plaintiffs argued to the district court that their civil conspiracy claim
arose under “the Sherman Act, 15 U.S.C. §§ 1, et seq.” See Plaintiffs’ Brief on
18
Jurisdiction, ROA at 67-68 (acknowledging that their complaint does not recite
the Sherman Act by statute number, but that their claim for civil conspiracy
should be read as alleging a claim for civil conspiracy under the Sherman Act).
Plaintiffs then, however, cite several statutes as supporting their “civil
conspiracy” claim. Plaintiffs mention 15 U.S.C. § 1, part of the Sherman Act,
which prohibits conspiracies in restraint of trade. Id. at 67-68. Plaintiffs also
mention 15 U.S.C. § 13a, part of the Robinson-Patman Act, which prohibits
discrimination in rebates, discounts or advertising service charges, and prohibits
underselling in particular localities. Id. at 68. Finally, plaintiffs briefly mention
15 U.S.C. § 13, a separate section of the Robinson-Patman Act, which prohibits
price discrimination in section 13(a). Id.
However, regardless which statutory section under which the plaintiffs
intend to proceed, their claim against the Individual Defendants would not survive
a motion to dismiss. Under § 1 of the Sherman Act, civil liability arises out of
contracts, combinations, or conspiracies in restraint of trade. 15 U.S.C. § 1. As a
result, liability under § 1 requires concerted action. See Gregory v. Fort Bridger
Rendezvous Assoc., 448 F.3d 1195, 1200 (10th Cir. 2006) (stating that “unilateral
activity, regardless of its anti-competitive effects, is not prohibited by § 1 of the
Sherman Act” (internal quotation omitted)). Plaintiffs’ complaint included
nothing upon which a court could conclude such an agreement existed––there are
no allegations that Howard (the former Chief of the Tribe) acted in concert with
19
Lockamy and Wood (former managers of SCTC); nor that Howard conspired with
SCTC and the remaining two Individual Defendants. To the contrary, as we
stated above, all the allegations made against the Individual Defendants “relate to
decisions made and actions taken by them as the ‘principal managers’ of SCTC,”
not as individuals. Order, ROA at 396; see Compl., ROA at 11-12 ¶¶ 12, 16-17;
id. at 14-15 ¶¶ 32-33, 36, 38. There is simply nothing more than conclusory
allegations that a civil conspiracy exists, and this is not enough to satisfy the
requirement of “concerted action.” See Bell Atl. Corp. v. Twombly, 127 S. Ct.
1955, 1965 (2007) (holding that a Sherman Act § 1 claim “requires a complaint
with enough factual matter (taken as true) to suggest that an agreement was
made”).
In addition, the operation of the “single-entity rule” leads us to further
conclude that the Individual Defendants, who were functioning as officers of a
single enterprise, here SCTC, are not separate economic actors who could, by
their agreement, give rise to antitrust violations. The “single-entity” rule
provides that:
coordinated activity within a corporation does not
represent a plurality of actors necessary to establish
concerted action. The Supreme Court has explained that
‘[t]he officers of a single firm are not separate economic
actors pursuing separate economic interests, so agreements
among them do not suddenly bring together economic
power that was previously pursuing divergent goals.’
Accordingly, ‘an internal ‘agreement’ to implement a
single, unitary firm’s policies does not raise the antitrust
20
dangers that § 1 was designed to police.’
Gregory, 448 F.3d at 1200 (quoting Copperweld Corp. v. Independence Tube
Corp., 467 U.S. 752 (1984)). There is an exception to the general rule, but the
plaintiffs have alleged no facts that would bring their claim within the exception.
See id. (describing a “limited exception to the general rule” where employees of a
corporate employer have an independent personal stake and “stand to benefit from
conspiring with the corporation to restrain trade”). Plaintiffs’ complaint fails to
state a claim under § 1.
Section 13a, which is a section of the Robinson-Patman Act, prohibits the
sale of goods “at unreasonably low prices for the purpose of destroying
competition or eliminating a competitor.” 15 U.S.C. § 13a. However, plaintiffs
may not bring a civil claim under § 13a because it is reserved for criminal
enforcement by the Department of Justice. See Safeway Stores v. Vance, 355
U.S. 389, 389-90 (1958) (holding that no civil action exists for sales at
unreasonably low prices under § 13a); Thomas V. Vakerics, Antitrust Basics §
8.10 (2008) (stating that 15 U.S.C. § 13a “is not considered to be a part of the
‘antitrust laws’ and a private party cannot sue for treble damages” and that
“[o]nly the Department of Justice has the authority to enforce” the section).
Finally, plaintiffs may not proceed under 15 U.S.C. § 13 under a theory of
price discrimination. Subsection (a) of § 13 prohibits discrimination in price:
It shall be unlawful for any person engaged in commerce,
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in the course of such commerce, either directly or
indirectly, to discriminate in price between different
purchasers of commodities of like grade and quality, where
either or any of the purchases involved in such
discrimination are in commerce, where such commodities
are sold for use, consumption, or resale within the United
States . . . , and where the effect of such discrimination
may be substantially to lessen competition or tend to
create a monopoly in any line of commerce, or to injure,
destroy, or prevent competition with any person who either
grants or knowingly receives the benefit of such
discrimination, or with customers of either of them . . . .
15 U.S.C. § 13(a). Plaintiffs’ complaint fails to allege facts that would satisfy the
elements of a § 13(a) price discrimination claim. For example, plaintiffs do not
allege any facts showing how any of the Individual Defendants’ behavior
substantially lessens or injures competition, but rather plaintiffs allege only injury
to themselves.
In fact, the plaintiffs’ complaint contains none of the allegations necessary
to establish a price discrimination claim under 15 U.S.C. § 13(a). Their
complaint’s “civil conspiracy” claim does not mention price, let alone that
different prices were charged to different SCTC customers––but focuses instead
on SCTC’s “avoiding state tobacco escrow payments and state taxes.” See
Complaint, ROA at 14-16; see also Cont’l Baking Co. v. Old Homestead Bread
Co., 476 F.2d 97, 103 (10th Cir. 1973) (defining “price discrimination” as “price
differentiation, or the charging of different prices to different customers for goods
of like grade and quality”).
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In addition, plaintiffs allege no facts regarding competition in their market
or among SCTC’s competitors. See Volvo Trucks N. Am. v. Reeder-Simco GMC,
Inc., 546 U.S. 164 (2006) (holding that for a plaintiff to establish secondary-line
competitive injury, resulting from price discrimination injuring competition
among the discriminating seller’s customers, the plaintiff must show actual
competition with that seller’s customers); Brooke Group Ltd. v. Brown &
Williamson Tobacco Corp., 509 U.S. 209, 222-24 (1993) (holding that for a
plaintiff to establish primary-line competitive injury, resulting from a rival’s low
prices, the plaintiff must show that the prices complained of are below the
appropriate measure of the rival’s costs and that the rival had a reasonable
prospect of recouping its investment in below-cost prices); see also Black Gold,
Ltd. v. Rockwool Indus., Inc., 729 F.2d 676, 681 (10th Cir. 1984) (requiring a
plaintiff bringing a claim under § 13(a) to show that the price differential had a
detrimental effect on competition).
Because the plaintiffs have failed to allege a viable civil conspiracy claim
against the Individual Defendants in their individual capacities, we affirm the
district court’s dismissal of the claims against the Individual Defendants, albeit
on different grounds than those stated by the district court.
III
We AFFIRM the district court’s order dismissing plaintiffs’ claims.
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