FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PHILIP MORRIS USA, INC.,
Plaintiff-Appellant,
v. No. 06-36066
KING MOUNTAIN TOBACCO D.C. No.
CV-06-03073-RHW
COMPANY, INC.; MOUNTAIN
TOBACCO; DELBERT L. WHEELER, OPINION
SR.; RICHARD KIP RAMSEY,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of Washington
Robert H. Whaley, District Judge, Presiding
Argued and Submitted
May 10, 2007—Seattle, Washington
Filed January 20, 2009
Before: Melvin Brunetti, M. Margaret McKeown, and
William A. Fletcher, Circuit Judges.
Opinion by Judge McKeown;
Concurrence by Judge William A. Fletcher
719
722 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
COUNSEL
Daniel P. Collins, Munger, Tolles & Olson LLP, Los Angeles,
California, for the plaintiff-appellant.
J. Michael Keyes, Theresa L. Keyes, and Bart J. Freedman,
Kirkpatrick & Lockhart Preston Gates Ellis LLP, Spokane,
Washington, for the defendants-appellees.
OPINION
McKEOWN, Circuit Judge:
This case is yet another of the difficult Indian jurisdiction
cases considered by this court. The precise question presented
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 723
is whether there is colorable tribal court jurisdiction over a
nonmember’s federal trademark and related state law claims
against tribal defendants for alleged passing off of cigarettes
on the Internet, on the reservation of another tribe, and else-
where. Philip Morris USA, Inc. manufactures and markets
Marlboro cigarettes, one of the most recognized brands in the
United States. King Mountain Tobacco Company, Inc., a
tribal corporation on the Yakama Indian Reservation, along
with Delbert L. Wheeler, Sr. and Richard “Kip” Ramsey,
company founders and members of the tribe (collectively,
“King Mountain”), sell King Mountain cigarettes in packag-
ing that Philip Morris claims infringes and dilutes its trade-
marks and trade dress.
We are faced with dueling lawsuits. Philip Morris sued
King Mountain in federal court, alleging various federal and
state law claims and seeking, among other things, injunctive
relief against King Mountain’s continued sale of its products.
King Mountain followed with an action for declaratory relief
against Philip Morris in Yakama Tribal Court, which
prompted Philip Morris to seek an injunction in federal court
against the tribal proceedings. King Mountain asked the dis-
trict court to stay its proceedings pending the Tribal Court’s
determination of its jurisdiction.
The district court granted King Mountain’s requested stay,
concluding there was a colorable claim to tribal court jurisdic-
tion under the formulations found in Montana v. United
States, 450 U.S. 544 (1981), Strate v. A-1 Contractors, 520
U.S. 438 (1997), and Nevada v. Hicks, 533 U.S. 353 (2001).
We agree that these cases provide the foundation for our anal-
ysis, but we disagree that they point to a colorable claim of
jurisdiction. Rather, we conclude that the Tribal Court does
not have colorable jurisdiction over nonmember Philip Mor-
ris’s federal and state claims for trademark infringement on
the Internet and beyond the reservation.
724 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
FACTUAL BACKGROUND AND PRIOR PROCEEDINGS
Philip Morris, the maker of Marlboro-brand cigarettes,
claims that Marlboro is the most well-known and best-selling
brand of cigarettes. Philip Morris sells Marlboro cigarettes
throughout the United States and the world, including to
stores on the Yakama Reservation. Philip Morris contracts
directly with some of these stores, while others obtain its
products through distributors.
Delbert Wheeler and Richard “Kip” Ramsey are both
enrolled members of the Yakama Indian Nation. Together
they own Mountain Tobacco Company, d/b/a King Mountain
Tobacco Company, Inc., which is a corporation that was
formed and licensed under the laws of the Yakama Indian
Nation in 2004. King Mountain began selling cigarettes to
stores on the Yakama Reservation in early 2006, and shortly
thereafter to members of other Indian tribes, including the
Onodaga Nation and Seneca Tribe in New York, via phone
and mail orders. King Mountain cigarettes are also sold to the
general public via the Internet, through websites such as
www.cheap-cig.com and www.123smoke.com, but King
Mountain denies that it markets its cigarettes on the Internet
or sells directly to those that do. There is no contractual or
other relationship between King Mountain and Philip Morris.
Philip Morris’s Marlboro packaging bears a distinctive “red
roof” design, featuring two red triangles filling the top corners
of its otherwise white package such that there is a white peak
with red above it. King Mountain’s cigarette packages feature
an image of a snowcovered mountain against a red backdrop.
Several aspects of Philip Morris’s package design are regis-
tered with the United States Patent and Trademark Office
(“the USPTO”). Registration Nos. 938,510; 1,544,782; and
1,038,989.
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 725
Philip Morris claims that the appearance of King Moun-
tain’s packaging is a close copy or imitation of its Marlboro
packaging such that consumers are both actually and likely to
be confused, that Philip Morris’s Marlboro trademark is
infringed and diluted, and alleges that its reputation is tar-
nished. King Mountain, on the other hand, argues that its
packaging depicts Mt. Adams—known as “Pahto” in the
Yakama Nation—a mountain of spiritual and cultural signifi-
cance to the Yakama Tribe and that any resemblance to Philip
Morris’s packaging is inadvertent and incidental. King Moun-
tain applied to register its package design but the USPTO
refused registration, citing two of Philip Morris’s registra-
tions.
Philip Morris filed suit against King Mountain in federal
district court, alleging violations of the Lanham Act and
Washington state law. The amended complaint includes
claims for trademark infringement, trade dress infringement,
trademark dilution, and unfair competition.
726 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
King Mountain responded by filing an action for declara-
tory relief in the Yakama Tribal Court, claiming that Philip
Morris “[had] come upon the reservation to do business with-
out permission of the Yakama Indian Nation, [was] not
licensed thereby, and in so doing . . . submitted itself to the
jurisdiction of the Yakama Tribal Court.” King Mountain
sought a declaration that it was not infringing Philip Morris’s
trademark and trade dress and further alleged that Philip Mor-
ris’s actions violated the Yakama Treaty of 1855. Once it
received notice of this tribal court action, Philip Morris sought
an injunction in federal court against those proceedings.
In response to Philip Morris’s effort to enjoin King Moun-
tain’s continued use of its packaging, King Mountain argued
that Philip Morris had failed to exhaust tribal remedies, and
that it had not shown a likelihood of success on the merits of
the Lanham Act claims. The district court denied Philip Mor-
ris’s requested injunctions and granted King Mountain’s
motion to stay the federal case to allow the Tribal Court to
address its own jurisdiction. The district court reasoned, rely-
ing on Stock West Corp. v. Taylor, 964 F.2d 912, 919 (9th Cir.
1992) (en banc), that “abstention is appropriate where there
exists a ‘colorable question’ whether the tribal court has juris-
diction over the asserted claims.” The court framed the ques-
tion as whether “the Yakama Indian Nation could regulate the
activities at issue in this case” and concluded that “[i]t is not
clear that the tribe would not have regulatory authority over
trademarks . . . .” The court also concluded that it is not clear
“whether tribal courts have adjudicative authority to address
trademark claims against tribal members whose conduct
occurred on reservation lands.” In light of these uncertainties,
the district court held there was a colorable question of the
existence of tribal court jurisdiction over the case.
On appeal from this order, Philip Morris argues that the
court improperly denied its motions for injunctions and erred
in granting King Mountain’s motion to stay the district court
proceedings. We have jurisdiction under 28 U.S.C.
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 727
§ 1292(a)(1) to review the order denying these injunctions
and granting the motion to stay the proceedings. Agcaoili v.
Gustafson, 870 F.2d 462, 463 (9th Cir. 1989) (holding that
jurisdiction over appeal from grant of motion to stay is proper
under 28 U.S.C. § 1292(a)(1)).
ANALYSIS
Tribal jurisdiction cases are not easily encapsulated, nor do
they lend themselves to simplified analysis. The Supreme
Court itself observed that questions of jurisdiction over Indi-
ans and Indian country are a “complex patchwork of federal,
state, and tribal law.” Duro v. Reina, 495 U.S. 676, 680 n.1
(1990). And we have acknowledged that “[t]here is no simple
test for determining whether tribal court jurisdiction exists.”
Stock West, Inc. v. Confederated Tribes of the Colville Reser-
vation, 873 F.2d 1221, 1228 (9th Cir. 1989). Despite these
complications, the answer to the tribal jurisdiction question in
this case can be divined in a logical fashion from the teach-
ings of three Supreme Court cases: Montana, Strate, and
Hicks. These teachings are affirmed in important respects by
the Court’s most recent tribal jurisdiction decision in Plains
Commerce Bank v. Long Family Land & Cattle Co., 128
S. Ct. 2709 (2008).
These cases provide the foundation for the following guid-
ing principles. In considering tribal jurisdiction, we look first
to the member or nonmember status of the unconsenting
party, which is, in this case, Philip Morris, a nonmember.
Hicks, 533 U.S. at 382 (Souter, J., concurring) (“It is the
membership status of the unconsenting party, not the status of
real property, that counts as the primary jurisdictional fact.”).
“As to nonmembers . . . a tribe’s adjudicative jurisdiction
does not exceed its legislative jurisdiction.” Strate, 520 U.S.
at 453.
Apart from treaties, there are two potential sources of tribal
jurisdiction: a tribe’s inherent sovereignty and congressional
728 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
statutory grant. In general, “the inherent sovereign powers of
an Indian tribe do not extend to the activities of nonmembers
of the tribe.” Montana. 450 U.S. at 565. This restriction is
“subject to two exceptions: The first exception relates to non-
members who enter consensual relationships with the tribe or
its members; the second concerns activity that directly affects
the tribe’s political integrity, economic security, health, or
welfare.” Strate, 520 U.S. at 446.
If neither of the Montana exceptions is applicable, we con-
sider “whether such regulatory jurisdiction has been congres-
sionally conferred.” Hicks, 533 U.S. at 360. Tribal courts are
not, however, courts of general jurisdiction, and a mere failure
to affirmatively preclude tribal jurisdiction in a statute does
not amount to a congressional expansion of tribal jurisdiction.
Id. at 367 (“[The] historical and constitutional assumption of
concurrent state-court jurisdiction over federal-law cases is
completely missing with respect to tribal courts. . . . Tribal
courts, it should be clear, cannot be courts of general jurisdic-
tion in this sense. . . .”). Finally, tribal jurisdiction is, of
course, cabined by geography: The jurisdiction of tribal courts
does not extend beyond tribal boundaries. Atkinson Trading
Co. v. Shirley, 532 U.S. 645, 658 n.12 (2001).
Taking these principles together, we conclude that the
Yakama Tribal Court does not have colorable jurisdiction
over King Mountain’s tribal action for declaratory relief inso-
far as it implicates Philip Morris’s federal trademark infringe-
ment claims against King Mountain and its principals,
members of the Yakama Tribe. Thus, exhaustion would
“serve no purpose other than delay.” Strate, 520 U.S. at 460
n.14.1 To understand the basis for this conclusion beyond the
summary principles cited above, it is useful to begin with an
explication of the Supreme Court’s decision in Montana and
trace its application through Strate and Hicks.
1
We review de novo the question whether exhaustion of tribal court
remedies is required. Boozer v. Wilder, 381 F.3d 931, 934 (9th Cir. 2004).
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 729
I. THE MONTANA RULE AND ITS PROGENY
[1] In Montana, in considering a tribe’s authority to impose
hunting and fishing restrictions on nonmembers within the
reservation, the Supreme Court examined the scope of tribes’
legislative power stemming from their inherent sovereignty,
and found it narrowly limited with respect to nonmembers.
The “exercise of tribal power beyond what is necessary to
protect tribal self-government or to control internal relations
is inconsistent with the dependent status of the tribes, and so
cannot survive without express congressional delegation.”
Montana, 450 U.S. at 564. From this observation, the Court
deduced “the general proposition that the inherent sovereign
powers of an Indian tribe do not extend to the activities of
nonmembers of the tribe.” Id. at 565.
[2] “To be sure,” the Court noted, “Indian tribes retain
inherent sovereign power to exercise some forms of civil
jurisdiction over non-Indians on their reservations, even on
non-Indian fee lands.” Id. First, “[a] tribe may regulate,
through taxation, licensing, or other means, the activities of
nonmembers who enter consensual relationships with the tribe
or its members, through commercial dealing, contracts, leases,
or other arrangements.” Id. (citing Williams v. Lee, 358 U.S.
217 (1959), and other cases). Second, “[a] tribe may also
retain inherent power to exercise civil authority over the con-
duct of non-Indians on fee lands within its reservation when
that conduct threatens or has some direct effect on the politi-
cal integrity, the economic security, or the health or welfare
of the tribe.” Id. at 566 (again citing Williams, 358 U.S. 217,
and other cases). Outside of these two exceptions, as the
Court emphasized in Montana, the tribes’ inherent sover-
eignty does not give them jurisdiction to regulate the activities
of nonmembers. See Plains Commerce Bank, 128 S. Ct. at
2720 (“Given Montana’s general proposition that the inherent
sovereign powers of an Indian tribe do not extend to the activ-
ities of nonmembers of the tribe, efforts by a tribe to regulate
730 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
nonmembers, especially on non-Indian fee land, are presump-
tively invalid.”) (internal quotations and citations omitted).
While delineating the scope of tribes’ regulatory jurisdic-
tion over nonmembers, Montana did not directly address the
scope of tribes’ adjudicatory jurisdiction. The Supreme Court
turned to the question of tribal adjudicative jurisdiction six-
teen years later in Strate. Strate arose out of a traffic accident
between two nonmembers that occurred on a state highway
running through the reservation. In support of tribal court
jurisdiction, the plaintiff argued that Montana did not apply,
because it only addressed the regulatory jurisdiction of tribes,
not their adjudicatory jurisdiction. In rejecting this argument,
the Court noted that “[w]hile Montana immediately involved
regulatory authority, the Court broadly addressed the concept
of ‘inherent sovereignty.’ ” Strate, 520 U.S. at 453 (quoting
Montana, 450 U.S. at 563). “As to nonmembers,” it held that
“a tribe’s adjudicative jurisdiction does not exceed its legisla-
tive jurisdiction. Absent congressional direction enlarging
tribal-court jurisdiction, we adhere to that understanding. Sub-
ject to controlling provisions in treaties and statutes, and the
two exceptions identified in Montana, the civil authority of
Indian tribes and their courts with respect to non-Indian fee
lands generally ‘do[es] not extend to the activities of non-
members of the tribe.’ ” Id. (quoting Montana, 450 U.S. at
565) (alteration in original). While leaving open whether
tribes’ adjudicative jurisdiction over nonmembers is narrower
than the legislative jurisdiction delineated in Montana, the
Court made clear in Strate that it is, at least, no broader.
Finally, in Hicks, the Court confronted the issue of tribal
adjudicative jurisdiction over nonmembers stemming not
from the tribe’s inherent sovereignty, the focus of Montana,
but from a congressional grant. The plaintiff in Hicks was a
tribal member who sued nonmember state officials under a
federal statute, 42 U.S.C. § 1983. After concluding the tribal
court did not have jurisdiction arising from its inherent sover-
eignty under the Montana framework, the Court addressed the
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 731
argument that tribal courts are courts of general jurisdiction
and thus fully capable of adjudicating § 1983 claims. The
Court firmly rejected this position, reasoning that the “histori-
cal and constitutional assumption of concurrent state-court
jurisdiction over federal-law cases is completely missing with
respect to tribal courts.” Hicks, 533 U.S. at 367. It then turned
to whether the federal statute gave the tribe jurisdiction: “It is
true that some statutes proclaim tribal-court jurisdiction over
certain questions of federal law . . . . [But] no provision in
federal law provides for tribal-court jurisdiction over § 1983
actions.” Id. at 367-68. The Court went on to note that tribal
jurisdiction over § 1983 suits would be problematic, because
the federal removal statute did not provide for removal from
tribal court, which would deny those sued in tribal court the
right to a federal forum that they would otherwise enjoy. Id.
at 368.
[3] From these three foundational Supreme Court cases, we
can discern the ground rules governing tribal adjudicatory
jurisdiction over nonmembers. As a general rule, tribes do not
have jurisdiction, either legislative or adjudicative, over non-
members, and tribal courts are not courts of general jurisdic-
tion. Nevertheless, stemming from their inherent sovereignty,
tribes do have legislative jurisdiction within the two Montana
exceptions. The Montana framework is applicable to tribal
adjudicative jurisdiction, which extends no further than the
Montana exceptions. Beyond the jurisdiction they enjoy from
their inherent sovereignty, tribes may also be granted jurisdic-
tion via treaty or congressional statute.
II. APPLICATION OF TRIBAL JURISDICTION PRINCIPLES
A. THE MONTANA EXCEPTIONS
The evolution of the Supreme Court’s jurisprudence leaves
us with the firm conclusion that we should begin our analysis
under Montana. While it is unclear whether meeting the Mon-
tana exceptions is sufficient for tribal court jurisdiction—that
732 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
is, whether tribal adjudicative jurisdiction extends to the
boundary of tribal legislative jurisdiction—we have no doubt
that it is necessary.
King Mountain, however, argues that Montana is not appli-
cable to this case, either in its general rule or its exceptions.
Rather, King Mountain takes the position that Montana only
applies to suits involving the activities of nonmembers, i.e.,
suits with nonmember defendants, whereas King Mountain’s
tribal action for declaratory relief effectively involves a tribal
member defending the lawfulness of its activities against the
claims of a nonmember, de facto plaintiff. While it is true that
the Supreme Court has never applied Montana to a case
involving a tribal defendant, Montana itself, as well as subse-
quent Supreme Court and Ninth Circuit precedents, supports
our conclusion that the Montana framework is the starting
point for suits involving nonmembers generally, whether as
plaintiffs or defendants.
In Montana, the Court cited Williams, 358 U.S. 217, as
exemplifying each of the two exceptions to its general rule.
Importantly, Williams involved a suit by a nonmember against
a member of the Navajo tribe to collect for goods allegedly
purchased on credit from the plaintiff’s shop within the Nav-
ajo Reservation. In other words, Williams involved a member
defendant and the activities of that member defendant. If, as
King Mountain suggests, Montana does not apply to such
cases at all, it is inconceivable that the Court would have cho-
sen Williams to illustrate Montana’s exceptions. The sound-
ness of this reasoning was confirmed in Plans Commerce
Bank, where the Court said: “We cited four cases in explana-
tion of Montana’s first exception [including Williams]. Each
involved regulation of non-Indian activities on the reservation
that had a discernable effect on the tribe or its members.” 128
S. Ct. 2721. And, as noted earlier, in cases involving non-
members, the inquiry focuses primarily on whether a non-
member is being haled into tribal court against his will, not
whether the party is the plaintiff or defendant. See, e.g., Hicks,
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 733
533 U.S. at 382 (Souter, J., concurring) (“It is the membership
status of the unconsenting party . . . that counts as the primary
jurisdictional fact.”). This approach does not, however, mean
that party alignment is not an important factor in the appropri-
ate case.2
Although the Supreme Court has never had occasion to
consider the Montana exceptions vis-à-vis a tribal defendant,
that fact seems more indicative of the unusual procedural pos-
ture of this case than the scope of Montana’s rule. Questions
of exhaustion and tribal jurisdiction typically, although not
always, arise where a tribal member first sues a nonmember
in tribal court, the nonmember seeks a stay against the tribal
proceedings in federal court, and the federal court must then
decide whether to defer to the tribal court out of principles of
comity. This case does not follow this pattern. Rather, here it
was only after being sued in federal court by Philip Morris,
the nonmember plaintiff, that King Mountain, the member
defendant, filed suit in tribal court and invoked tribal court
jurisdiction. Tellingly, the only case the Supreme Court has
encountered with a similar procedural posture to this one was
Williams, the very case it cited as exemplifying Montana’s
exceptions.
2
Although Judge Fletcher insists that we seek to undermine Williams
and are unfaithful to Smith v. Salish Kootenai College, 434 F.3d 1127,
1131 (9th Cir. 2006) (en banc), his criticism is without justification. We
faithfully follow Smith, which applied Williams within the Montana
framework in concluding that tribal court jurisdiction existed over a non-
member’s suit concerning on-reservation conduct. See id. at 1137-40. In
Smith, the nonmember’s status as a plaintiff was crucial: “We hold that a
nonmember who knowingly enters tribal courts for the purpose of filing
suit against a tribal member has, by the act of filing his claims, entered
into a ‘consensual relationship’ with the tribe within the meaning of Mon-
tana.” Id. at 1140. By contrast, Philip Morris does not consent to tribal
court jurisdiction, regardless of its party alignment as defendant and de
facto plaintiff. Significantly, we do not conclude that party alignment is
“unimportant,” Fletcher Concurrence at 747; rather, because Philip Morris
is unconsenting, its nonmember status is the “primary jurisdictional fact,”
Hicks, 533 U.S. at 382 (Souter, J., concurring).
734 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
[4] Finally, it is significant that this court, sitting en banc,
recently invoked the Montana analysis in just such a case.
Smith v. Salish Kootenai College, 434 F.3d 1127, 1131 (9th
Cir. 2006) (en banc) (holding exhaustion required in light of
a colorable claim to tribal jurisdiction based on the first Mon-
tana exception). Smith concerned a tort claim by a student
against Salish Kootenai College arising out of a traffic acci-
dent on a federal highway within the Flathead Reservation, a
reservation controlled by the Confederated Salish and Koote-
nai Tribes. Id. at 1129. Smith, the putative plaintiff, was a
member of the Umatilla Tribe and thus was considered a non-
member for jurisdictional purposes. Id. at 1132-33. The col-
lege was a tribal entity, and thus was treated as a member for
jurisdictional purposes. Id. at 1135. Notwithstanding the pres-
ence of a member defendant and nonmember plaintiff, we
applied Montana. Id. at 1130. Thus, in this circuit, the Mon-
tana analysis is controlling in tribal jurisdiction cases, regard-
less of the alignment of the member and nonmember parties.
This is not to say that whether the nonmember is a plaintiff
or defendant is irrelevant to the analysis, but only that the
analysis must take place within the Montana framework, with
party alignment in the tribal court action as the most impor-
tant factor to be weighed in determining the application of
Montana’s rule and exceptions to the case at hand. See Smith,
434 F.3d at 1131 (“First, and most important, is the party sta-
tus of the nonmember; that is, whether the nonmember party
is a plaintiff or defendant . . . . The Court has repeatedly dem-
onstrated its concern that tribal courts not require [nonmem-
ber defendants] to defend themselves against ordinary claims
in an unfamiliar court.” (internal quotation marks and original
brackets omitted)).
[5] We turn, then, to the Montana exceptions themselves.
Any initial impression that this case falls within the first Mon-
tana exception fades quickly upon closer inspection. Under
that exception, “[a] tribe may regulate, through taxation,
licensing, or other means, the activities of nonmembers who
enter consensual relationships with the tribe or its members,
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 735
through commercial dealing, contracts, leases, or other
arrangements.” Montana, 450 U.S. at 565. Philip Morris
acknowledges that as part of its business, it has consensual
relationships with tribal members. Stores located on the reser-
vation and operated by tribal members sell Marlboro ciga-
rettes. Although the stores purchase from distributors rather
than from Philip Morris, they have marketing arrangements
with Philip Morris. The first question, however, is whether
there is a contract or consensual relationship between Philip
Morris and King Mountain, the tribal member. The answer is
undisputably no. Philip Morris has no consensual commercial
relationship with King Mountain; rather, they are market
competitors. Nor has Philip Morris otherwise consented to
tribal jurisdiction by voluntarily litigating its infringement
claims against King Mountain in tribal court. Cf. Smith, 434
F.3d at 1136 (holding Montana’s first exception was satisfied
because the nonmember consented to tribal jurisdiction by
choosing to file his claims against a tribal member in tribal
court). Philip Morris filed its claims in federal court and has
been haled into tribal court only as an unconsenting, de facto
plaintiff in King Mountain’s tribal action for declaratory
relief.
So, taking the question one step further, we ask whether
there is a nexus between Philip Morris’s commercial relation-
ship with various stores operated by tribal members and the
events that give rise to this suit for trademark infringement.
See Atkinson, 532 U.S. at 656 (holding that Montana requires
not only contacts, but contacts related to the events out of
which the suit arises). We hold there is not.
The mere fact that a nonmember has some consensual com-
mercial contacts with a tribe does not mean that the tribe has
jurisdiction over all suits involving that nonmember, or even
over all such suits that arise within the reservation; the suit
must also arise out of those consensual contacts. In Atkinson,
the Supreme Court clarified that “[a] nonmember’s consen-
sual relationship in one area . . . does not trigger tribal civil
736 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
authority in another—it is not ‘in for a penny, in for a Pound.”
Atkinson, 532 U.S. at 656 (citation omitted); see also Strate,
520 U.S. at 457 (holding Montana’s first exception inapplica-
ble despite consensual commercial relationship with the tribe,
because the claim was unrelated to that relationship). “Mon-
tana’s consensual relationship exception requires that the tax
or regulation imposed by the Indian tribe have a nexus to the
consensual relationship itself.” Atkinson, 532 U.S. at 656.
In Atkinson, the Navajo Tribe sought to collect a hotel tax
from all guests at hotels within the reservation boundaries.
Although the tax would be imposed directly on guests, hotel
owners and operators were charged with collecting it. Atkin-
son, a nonmember proprietor of a hotel located within the
boundaries of the reservation, brought suit to enjoin the tax.
The Supreme Court noted that Atkinson’s acquisition of a
license to transact business within the reservation put him in
a consensual commercial relationship with the tribe. Never-
theless, this relationship was not enough to support tribal
jurisdiction under the first Montana exception, because the
tribe did not seek to impose the tax on activities arising out
of that relationship. Id. at 656. Rather, the tribe sought to tax
the activities of the guests, namely staying overnight in a
hotel. Thus, the Court held, “it is clear that petitioner’s
‘Indian trader’ status by itself cannot support the imposition
of the hotel occupancy tax.” Id.
The Court reached a similar conclusion in Strate. There, the
plaintiff was involved in a traffic accident with a nonmember
subcontractor of a tribal corporation who “was on the reserva-
tion to perform landscaping work for the Three Affiliated
Tribes at the time of the accident . . . .” Atkinson, 532 U.S.
at 656. The plaintiff sued in tribal court, claiming jurisdiction
under the first Montana exception, but the Court determined
the tribal court was without jurisdiction. It held that
“[a]lthough [the subcontractor] was engaged in subcontract
work on the Fort Berthold Reservation, and therefore had a
consensual relationship with the Tribes, [the plaintiff] was not
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 737
a party to the subcontract, and the Tribes were strangers to the
accident.” Strate, 520 U.S. at 457 (internal quotations omit-
ted).
[6] Here we face a similar situation. King Mountain claims
tribal jurisdiction exists over this suit under the first Montana
exception, and it points to Philip Morris’s sales and contracts
with stores within the reservation for the requisite consensual
commercial relationship. The fatal flaw with this position is
the same as that in Atkinson and Strate: there is no nexus
between these contacts and the activity giving rise to this law-
suit. Atkinson teaches that under the first Montana exception,
a tribe has authority to tax a nonmember where the tax has a
nexus to the “consensual relationship.” In extending the Mon-
tana framework to the question of a tribal court’s adjudicative
jurisdiction, we hold that a tribal court has jurisdiction over
a nonmember only where the claim has a nexus to the consen-
sual relationship between the nonmember and the disputed
commercial contacts with the tribe.
[7] This suit is not about the marketing contracts between
Philip Morris and a handful of stores on the reservation.
Indeed, King Mountain is not a party to any of these con-
tracts, nor does it allege any sort of consensual relationship
with Philip Morris. Rather, the suit is about nationwide sales,
including on the Internet and on other reservations, of King
Mountain cigarettes. As in Strate, the tribal stores are “strang-
ers” to the trademark infringement claim.
[8] King Mountain’s argument that both Philip Morris’s
contacts with the tribe and the conduct complained of involve
the sale of cigarettes is not unlike the tribe’s argument in
Atkinson. There, the tribe took the view that it could force a
hotel owner to collect a tax, because he had a license to oper-
ate a hotel and the tax involved hotel guests. While the subject
matter was loosely the same, the required relationship
between the two scenarios was missing. The acts out of which
this Lanham Act suit arises are completely independent of
738 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
Philip Morris’s contacts with the tribe. Even if Philip Morris
had never entered into these relationships, its lawsuit would
be exactly the same. Unlike a breach of contract claim where
the unconsenting party was also a party to the contract, see
Williams, 358 U.S. at 217-18, or a misrepresentation and mal-
practice claim against a tribe’s legal representative, see Stock
West, 964 F.2d at 914-16, the acts complained of do not arise
out of the nonconsenting party’s contacts with the tribe. This
case, therefore, falls outside of Montana’s first exception.
Finally, it bears noting that this case is distinguishable from
other cases by virtue of the breadth of the challenged activity.
Virtually all of the cases that have held tribal exhaustion is
required have concerned a single incident occurring on or
near tribal land or a contract directly with a tribal member.
See e.g., Strate, 520 U.S. at 442 (car accident); Williams, 358
U.S. at 217-18 (unpaid bill). In contrast, this is a suit by the
holder of a federally-registered trademark for trademark
infringement, unfair competition, and passing off through
worldwide Internet sales and off-reservation sales to tribes in
New York. The focus of the complaint is the passing off,
which occurs beyond the reservation boundaries and, accord-
ing to Atkinson, beyond tribal jurisdiction. See also Plains
Commerce Bank, 128 S. Ct. at 2719-20 (emphasizing that
tribal sovereignty stems from the tribes’ rights to control their
land, and does not extend beyond reservation boundaries).
Even though King Mountain disclaims direct responsibility
for the sales, the complaint is against the presence of its ciga-
rettes in the nationwide market. That King Mountain may also
sell its cigarettes on the reservation does not alter the nation-
wide geographic scope of Philip Morris’s claims.
[9] As for the second exception, the claims in this case are
not of the type the Court had in mind when it carved out an
exception for tribal jurisdiction over “conduct [that] threatens
or has some direct effect on the political integrity, the eco-
nomic security, or the health or welfare of the tribe,” Mon-
tana, 450 U.S. at 566. The Yakama Tribe is not itself a party
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 739
to this case. To some extent, it can be argued that torts com-
mitted by or against Indians on Indian land always “threat-
en[ ] or ha[ve] some direct effect on the political integrity, the
economic security, or the health or welfare of the tribe.” Id.
But this generalized threat that torts by or against its members
pose for any society, is not what the second Montana excep-
tion is intended to capture. See Atkinson, 532 U.S. at 657 n.12
(“Montana’s second exception can be misperceived. The
exception is only triggered by nonmember conduct that threat-
ens the Indian tribe; it does not broadly permit the exercise of
civil authority wherever it might be considered necessary to
self-government.” (internal quotations omitted)). Rather, the
second exception envisions situations where the conduct of
the nonmember poses a direct threat to tribal sovereignty. Id.
Pursuit of federal and state trademark claims hardly poses a
threat of that nature.
It appears that in analyzing tribal sovereignty the district
court imported a general notion of tribal regulatory authority
unhinged from the Montana exceptions. The district court
predicated its holding on the possibility of general tribal
authority to regulate trademarks. But the question of tribal
regulatory authority over nonmembers is linked, under Mon-
tana, to the two specific exceptions, not to a broad notion of
regulatory authority.
[10] Whether the tribe may adopt its own trademark system
is not at issue here. But surely the district court is not suggest-
ing that the tribe would have regulatory authority over federal
trademark registration. Significantly, Philip Morris holds fed-
eral trademarks and trade dress registered under the Lanham
Act, trademarks whose validity King Mountain apparently
challenges. See 15 U.S.C. § 1119 (under federal law, the
courts and the Patent and Trademark Office have concurrent
jurisdiction over cancellation proceedings: “the court may
determine the right to registration, order the cancellation of
registrations . . . and otherwise rectify the register with respect
to the registrations of any party to the action”). The presence
740 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
of this federal regulatory scheme highlights a further compli-
cation and underscores why the inquiry must be tethered to
Montana.
B. HICKS AND THE LANHAM ACT
Although the Tribal Court has no jurisdiction over this case
arising from its inherent sovereignty, because it does not fall
within either of the Montana exceptions, Hicks leaves open a
second basis for tribal jurisdiction: a congressional statutory
grant.
[11] Hicks examined whether tribal courts have jurisdic-
tion to entertain federal claims under 42 U.S.C. § 1983. In
rejecting the claim that tribal courts are courts of general
jurisdiction and thus are an appropriate venue for federal civil
rights claims, the Court deemed that contention “quite wrong”
and reiterated that, unlike state courts of general jurisdiction,
“a tribe’s inherent adjudicative jurisdiction over nonmembers
is at most only as broad as its legislative jurisdiction.” Hicks,
533 U.S. at 367. The Court resolved that Congress did not
enlarge tribal-court jurisdiction vis-à-vis § 1983.
[12] Applying the same principles to the Lanham Act, we
conclude that the Lanham Act “is not such an enlargement.”
Id. at 366 n.7. Nothing in the Lanham Act suggests that it was
intended by Congress to expand tribal jurisdiction. In fact, the
Act makes no mention of tribes at all. Hicks noted with
respect to § 1983, “tribal-court jurisdiction would create seri-
ous anomalies” including the inability to exercise removal
options. Id. at 368. A further sovereignty anomaly would be
created under the Lanham Act because of the courts’ ability
to cancel a federally-granted trademark, see 15 U.S.C.§ 1119,
an historical and constitutional interplay between federal law
and state-court jurisdiction that “is completely missing with
respect to tribal courts.” Hicks, 533 U.S. at 367. Philip Morris
argues that tribes never have jurisdiction over federal statu-
tory claims, unless Congress explicitly grants it to them. King
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 741
Mountain argues that Tribal Courts always have jurisdiction
over such claims, unless Congress explicitly precludes it.
Both of these positions misread Hicks; Congress may, via
statute, expand or contract tribal jurisdiction, but where Con-
gress is silent—as in the Lanham Act—tribal jurisdiction rests
on inherent sovereignty, and its scope is prescribed by Mon-
tana. Hicks does not, as Philip Morris suggests, stand for a
rule that tribes have no jurisdiction over federal statutory
claims absent an explicit statutory grant. Hicks therefore pro-
vides no additional basis for or against tribal jurisdiction in
this case.
CONCLUSION
[13] For the above reasons, we hold that the Yakama Tribal
Court has no colorable claim to jurisdiction over this dispute.3
Given the circumstances, exhaustion of Philip Morris’s claims
would serve no purpose beyond delay, and is therefore inap-
propriate. Hicks, 533 U.S. at 369.
REVERSED AND REMANDED.
3
Philip Morris’s complaint does not allege claims based on King Moun-
tain’s sales of its cigarettes on the Yakama Reservation, although there are
passing references to such sales in later pleadings. To the extent that Philip
Morris challenges King Mountain’s sales activities to stores on the reser-
vation, tribal court exhaustion would be appropriate as to those claims, as
there would be a colorable claim that Philip Morris’s voluntary decision
to sell its cigarettes within the Reservation supplies the requisite voluntary
commercial relationship to meet Montana’s first exception with respect to
claims arising in that market. Cf. Smith, 434 F.3d at 1132 (“where the non-
members are the plaintiffs, and the claims arise out of commercial activi-
ties within the reservation, the tribal courts may exercise civil
jurisdiction”); see also Ford Motor Co. v. Todecheene, 488 F.3d 1215,
1217 (9th Cir. 2007) (“[a party] will be deemed to have exhausted its tribal
remedies once the [tribe’s highest court] either resolves the jurisdictional
issue or denies a petition of discretionary interlocutory review pursuant to
[tribal law.]”).
742 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
W. FLETCHER, Circuit Judge, concurring in judgment:
I concur in the judgment.
King Mountain Tobacco Company, Inc., and Yakama Tribe
members Delbert Wheeler and Richard “Kip” Ramsey (col-
lectively, “tribal member defendants” or “defendants”) alleg-
edly infringed federal and state trademark rights of Philip
Morris by selling cigarettes with packaging and designs that
resemble those of Philip Morris’s flagship Marlboro brand.
Philip Morris sued the defendants in federal district court for
trademark infringement. The defendants responded by suing
Philip Morris in tribal court, seeking a declaratory judgment
that their packaging, designs, and sales do not infringe. The
tribal member defendants are actual defendants in the district
court coercive suit and de facto defendants in the tribal court
declaratory judgment suit. See Skelly Oil v. Phillips Petroleum
Co., 339 U.S. 667 (1950).
The district court appears to have thought that sales both on
and off the Yakama Reservation are at issue in this case. The
district court noted in its order granting the stay that “Defen-
dants began selling King Mountain cigarettes to smoke shops
on the Yakama Reservation in January 2006” and later began
to make off-reservation sales. The district court concluded
that because Philip Morris’s federal court suit made “claims
against tribal members whose conduct occurred on reserva-
tion lands . . . there exists a colorable question of the exis-
tence of tribal court jurisdiction in this case over Philip
Morris.”
The panel majority makes clear, however, that sales by
defendants of King Mountain cigarettes on the Yakama Res-
ervation are not at issue. It writes, “Philip Morris’s complaint
does not allege claims based on King Mountain’s sales of its
cigarettes on the Yakama Reservation, although there are
passing references to such sales in later pleadings.” Maj. op.
at 741 n.3. Because the only sales at issue took place off the
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 743
Yakama Reservation, the question in this appeal is straightfor-
ward and quite narrow: Does the Yakama Tribal Court have
colorable jurisdiction to decide whether off-reservation sales
by tribal member defendants infringe the Marlboro trade-
mark? The panel majority answers, correctly, that it does not.
The panel majority could have written a simple opinion
relying on Montana v. United States, 450 U.S. 544 (1981).
There the Supreme Court wrote that
Indian tribes retain their inherent power to determine
tribal membership, to regulate domestic relations
among members, and to prescribe rules of inheri-
tance for members. But exercise of tribal power
beyond what is necessary to protect tribal self-
government or to control internal relations is incon-
sistent with the dependent status of the tribes, and so
cannot survive without express congressional dele-
gation.
450 U.S. at 564 (internal citation omitted). The Court then
noted two exceptions to the limitation on tribal power and
tribal court jurisdiction. First, even on reservation land owned
in fee simple by non-Indians a “tribe may regulate . . . the
activities of nonmembers who enter consensual relationships
with the tribe or its members, through commercial dealing,
contracts, leases, or other arrangements.” Id. at 565 (citations
omitted). Second, tribal jurisdiction extends to “conduct of
non-Indians on fee lands within its reservation when that con-
duct threatens or has some direct effect on the political integ-
rity, the economic security, or the health or welfare of the
tribe.” Id. at 566 (citations omitted).
Under Montana, the tribal court clearly lacks jurisdiction
over this suit, which arose out of off-reservation conduct by
tribal members that allegedly violated non-tribal law and
injured a non-tribal member. The first Montana exception
does not apply because the allegedly infringing conduct took
744 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
place off the reservation, and because Philip Morris is not in
a consensual relationship with the defendants. The second
exception does not apply because the conduct took place off
the reservation, and because Philip Morris’s legal claims do
not threaten the “political integrity, the economic security, or
the health or welfare of the tribe.”
Rather than deciding this case based simply on Montana,
the panel majority engages in extended dicta in an attempt to
undermine the longstanding presumption of Williams v. Lee,
358 U.S. 217 (1959). In Williams, a non-member store owner
brought suit against Navajo tribal members for goods bought
on credit at a store located on the Navajo Reservation. The
Court upheld tribal court jurisdiction. Williams has long stood
for the proposition that a tribal court has jurisdiction over a
civil suit arising out of on-reservation conduct brought by a
non-member plaintiff against a member defendant. See, e.g.,
Cohen’s Handbook of Federal Indian Law 608 (2005) (dis-
cussing Williams and stating that “[s]tate courts lack jurisdic-
tion to hear actions against Indians arising within Indian
country”).
In its dicta, the panel majority seeks to undercut the Wil-
liams presumption concerning party alignment — that a tribal
court has jurisdiction over suits between members and non-
members arising out of on-reservation conduct when the non-
member is a plaintiff and the member is a defendant, though
not when the member is a plaintiff and the nonmember is a
defendant. For example, the panel majority writes, “While it
is true that the Supreme Court has never applied Montana to
a case involving a tribal defendant, Montana itself, as well as
subsequent Supreme Court and Ninth Circuit precedents, sup-
ports our conclusion that the Montana framework is the start-
ing point for suits involving nonmembers generally, whether
as plaintiffs or defendants.” Maj. op. at 732 (emphasis added).
It writes further, “[I]n cases involving nonmembers, the
inquiry focuses on whether a nonmember is being haled into
tribal court against his will, not whether the party is the plain-
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 745
tiff or defendant.” Id. at 732. And it writes, “Although the
Supreme Court has never had occasion to consider the Mon-
tana exceptions vis-à-vis a tribal defendant, that fact seems
more indicative of the unusual procedural posture of this case
than the scope of Montana’s rule.” Id. at 733. Finally, it
writes, “Tellingly, the only case the Supreme Court has
encountered with a similar procedural posture to this one was
Williams, the very case it cited as exemplifying Montana’s
exceptions.” Id. at 733.
In minimizing the importance of party alignment, the panel
majority ignores our recent en banc analysis in Smith v. Salish
Kootenai College, 434 F.3d 1127 (9th Cir. 2006) (en banc).
The three-judge panel in Smith had held that the tribal court
did not have jurisdiction over a civil suit arising out of a roll-
over accident on the reservation in which the plaintiff was a
nonmember and the defendant was a member. The panel had
concluded that the Montana framework applies “whenever
there is a non-member party.” Smith v. Salish Kootenai Col-
lege, 378 F.3d 1048, 1052 (9th Cir. 2004). The panel wrote
that the “Supreme Court has not distinguished between non-
member plaintiffs and non-member defendants.” Id. at n.5.
Based on this analysis, the three-judge panel concluded that
the tribal court did not have jurisdiction.
Our en banc panel reversed. The en banc majority explicitly
disagreed with the three-judge panel’s conclusion that the
alignment of parties is irrelevant to the jurisdictional analysis:
The Court’s recent cases, and our own experience
with the Montana exceptions, demonstrate that there
are two facts courts look to when considering a tribal
court’s civil jurisdiction over a case in which a non-
member is a party. First, and most important, is the
party status of the nonmember; that is, whether the
nonmember party is a plaintiff or a defendant. . . .
The Court has repeatedly demonstrated its concern
that tribal courts not require “defendants who are not
746 PHILIP MORRIS v. KING MOUNTAIN TOBACCO
tribal members” to “defend [themselves against ordi-
nary claims] in an unfamiliar court.” Second, the
Court has placed some store in whether or not the
events giving rise to the cause of action occurred
within the reservation. Within the reservation, “[t]o
be sure, Indian tribes retain inherent sovereign power
to exercise some forms of civil jurisdiction over non-
Indians . . . even on non-Indian fee lands . . . . ”
The interaction of these factors — the status of the
parties and the connection between the cause of
action and Indian lands — is complex. Nevertheless,
the cases provide some guidance for our discussion,
and we can summarize them as follows. First, where
the nonmembers are the plaintiffs, and the claims
arise out of commercial activities within the reserva-
tion, the tribal courts may exercise civil jurisdiction.
Second, where the nonmembers are defendants, the
Court has thus far held that the tribes lack jurisdic-
tion, irrespective of whether the claims arose on
Indian lands.
434 F.3d at 1131-32 (first emphasis added; later emphases in
original; brackets in original; citations omitted).
Judge Gould, who had written the panel opinion in Smith,
dissented from the en banc opinion. He wrote:
The plain language of Montana indicates that its
framework applies to legal actions involving “non-
members” without limitation . . . . Moreover, in illus-
trating the application of the Montana framework,
the Court has used Williams to illustrate examples of
the Montana framework, indicating that nonmember
plaintiffs, as well as nonmember defendants, fall
within that doctrine.
Id. at 1141-42 (Gould, J., dissenting). The other two members
of the three-judge panel in Smith — who had joined Judge
PHILIP MORRIS v. KING MOUNTAIN TOBACCO 747
Gould in concluding that party alignment is unimportant in
determining tribal court jurisdiction — were Judges
McKeown and Brunetti. Judges McKeown and Brunetti, who
comprise the panel majority in the case now before us, were
not members of the en banc panel in Smith.
As in the three-judge panel decision in Smith, the panel
majority in this case minimizes the importance of party align-
ment. The panel majority justifies its conclusion that party
alignment is unimportant in two ways. First, it relies on two
string citations of Williams in Montana. Maj. op. at 732-33.
But those citations in no way suggested that Montana was
intended to undermine the Williams presumption in favor of
jurisdiction when a tribal member is a defendant. Moreover,
Montana was decided long before our en banc decision in
Smith; indeed, the meaning of Montana and Williams was
central to our analysis in that case. Thus, string citations of
Williams in Montana can hardly be used to escape our empha-
sis in Smith on the importance of party alignment.
Second, the panel majority relies on the Supreme Court’s
recent decision in Plains Commerce Bank v. Long Family
Land and Cattle Co., 128 S. Ct. 2709 (2008). Maj. op. at 732.
But in that case the Court held that a tribal court did not have
jurisdiction over a suit brought by member plaintiffs against
a nonmember defendant. Because a nonmember rather than a
member was the defendant, the Williams presumption in favor
of tribal court jurisdiction was not at issue. Moreover, the
Court cited Williams with approval, giving no hint that it
intended to cut back or otherwise limit the Williams presump-
tion. 128 S. Ct. at 2721.
Much of the panel majority’s discussion in this case is
dicta, and much of that dicta is contrary to Supreme Court
case law and to our en banc opinion in Smith. Therefore,
while I concur in the judgment, I respectfully decline to join
the panel majority’s opinion.