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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT, DIVISION FOUR

No. A144214

PEOPLE OF THE STATE OF CALIFORNIA, ex rel. KAMALA D. HARRIS, ATTORNEY GENERAL OF THE STATE OF CALIFORNIA, Plaintiff and Respondent,

v.

ARDITH HUBER, individually, dba HUBER ENTERPRISES, et al., Defendants and Appellants.

APPELLANTS’ REPLY BRIEF

DARIO NAVARRO (STATE BAR NO. 102575) LAW OFFICE OF DARIO NAVARRO 4308 West Point Loma Blvd., Suite O San Diego, CA 92107 Telephone: (415) 694-2854 Facsimile: (415) 684-7711 Email: navdar@gmail.com Attorney for Defendants and Appellants ARDITH HUBER, et al.

Superior Court of California Humboldt County No. DR110232 Hon. Dale A. Reinholtsen

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TABLE OF CONTENTS

Page

TABLE OF CONTENTS ........................................................................ ii

TABLE OF AUTHORITIES .................................................................. iii

ARGUMENT ......................................................................................... 6

I. RESPONDENT HAS MISINTERPRETED PUBLIC LAW 280 IN A MISTAKEN ATTEMPT TO RATIONALIZE ITS COERCIVE IMPOSITION OF A COMPREHENSIVE REGULATORY REGIME ON APPELLANT’S ON-RESERVATION, TRIBALLY AUTHORIZED CIGARETTE BUSINESS IN VIOLATION OF FEDERALLY PROTECTED RIGHT OF TRIBAL SELF-GOVERNMENT. ............................... 6

A. The tribally authorized operation of Appellant’s cigarette business in Indian commerce on the Table Bluff Reservation of the Wiyot Tribe inextricably implicates the fundamental right of tribal self-government under federal law. ......................................................................................... 6

B. Respondent has misconstrued Public Law 280 to permit the coercive imposition of a comprehensive regulatory regime on Appellant’s on-reservation, tribally authorized cigarette business in violation of federal law protecting tribal self-government. ............................................................ 13

CONCLUSION ...................................................................................... 30

CERTIFICATE OF COMPLIANCE ....................................................... 32

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TABLE OF AUTHORITIES

Page Cases

Bridgestone Corp. v. Superior Court (2002) 99 Cal.App.4th 767 ................................................................ 17

Bryan v. Itasca (1976) 426 U.S. 373 .......................................................................... 11

Dawson v. East Side Union High School Dist. (1994) 28 Cal.App.4th 998 ................................................................ 12

Dept. of Tax. and Finance v. Milhelm Attea & Bros., Inc. (1994) 512 U.S. 61 ................................................ 9, 11, 16, 18, 20, 27

IT Corp. v. County of Imperial (1983) 35 Cal.3d 63 ........................................................................... 12

Moe v. Confederated Salish and Kootenai Tribes of the Flathead Reservation (1976) 425 U.S. 463 ...................................................... 9, 11, 16, 18, 20

Nevada v. Hicks (2001) 533 U.S. 353 .............................................................. 21, 22, 24

Okla. Tax Com. v. Chicasaw Nation (1995) 515 U.S. 450 .......................................................................... 11

Okla. Tax Com. v. Potawatomi Tribe (1991) 498 U.S. 505 .......................................................................... 30

People ex. reI. Department of Transportation v. Naegele Outdoor Advertising Company (1985) 38 Cal.3d 509 .............................................................. 18, 19, 20

People ex rel. Harris v. Black Hawk Tobacco, Inc. (2011) 197 Cal.App.4th 1561 ............................................................ 7

Rice v. Rehner (1983) 463 U.S. 713 .......................................................................... 23

Santa Clara Pueblo v. Martinez (1978) 436 U.S. 49 ............................................................................ 30

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Shapiro v. San Diego City Council (2002) 96 Cal.App.4th 904 ..................................................................... 12

Warren Trading Post Co. v. Arizona Tax Com. (1965) 380 U.S. 685 ................................................................................ 27

Washington v. Confederated Tribes of Colville Indian Reservation (1980) 447 U.S. 134 ........................................... 9, 11, 16, 18, 20, 22, 24

White Mountain Apache Tribe v. Bracker (1980) 448 U.S. 136 ........................................................................ 16, 21

Williams v. Lee (1959) 358 U.S. 217 ........................................................................ 25, 26

Worcester v. Georgia (1832) 6 Pet. 515 ..................................................................................... 21

Statutes and Constitutional Proivisions

U.S. Const., Article I, § 8, cl. 3 .......................................................... 12, 28

18 U.S.C. § 1151..................................................................................... 11

18 U.S.C. § 1162..................................................................................... 9

23 U.S.C. § 131 ...................................................................................... 18

25 U.S.C. §§ 1321–1326 ......................................................................... 9

28 U.S.C. § 1360..................................................................................... 9

Bus. & Prof. Code, §§ 5200 et seq. ......................................................... 18

Bus. & Prof. Code, §§ 17200 et seq. (“UCL”) .............................. 8, 24, 25

Code Civ. Proc. § 410 ............................................................................. 17

Health & Saf. Code, §§ 14950-14960 (“Fire Safety Act”) ..................... 8, 25

Public Law 280 (Pub.L. 83–280) .. 6, 9, 10, 11, 12, 13, 19, 24, 25, 28, 30, 31

Rev. & Tax Code, § 30165.1 (“Tobacco Directory Law”) ..................... 8, 25

Wiyot Tribal Tobacco Licensing Ordinance .......................................... 6, 26

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Other Authorities

Carter, American Indians and Law Libraries: Acknowledging the Third Sovereign (2002) ) 94 L. Libr. J. 7 ............................................... 22

Dreveskracht, Forfeting Federalism: The Faustian Pact with Big Tobacco (2015) 17 Rich. J. L. & Pub. Int. 291 .............................. 14, 15

Fairclough & O’Connell, Co-Dependents: Once Tobacco Foes, States Are Hooked on Settlement Cash — Philip Morris Verdict Sparks Scramble to Shield Firm (April 2, 2003) Wall St. J. A1 .......... 15

Haile & Krueger-Andes, Landmark Settlements and Unintended Consequences (2012) 44 U. Tol. L.Rev. 145 ........................................ 15

MSA, Article XVIII(ff)............................ 14, 15, 16, 17, 20, 21, 23, 24, 26, 29

O’Connor, Lessons from the Third Sovereign: Indian Tribal Courts (1997) 33 Tulsa L.J. 1 ............................................................................. 22

Tebben, An American Trifederalism Based upon the Constitutional Status of Tribal Nations (2003) 5 U. Pa. J. Const. L. 318 .................... 22

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ARGUMENT

I. RESPONDENT HAS MISINTERPRETED PUBLIC LAW 280 IN A MISTAKEN ATTEMPT TO RATIONALIZE ITS COERCIVE IMPOSITION OF A COMPREHENSIVE REGULATORY REGIME ON APPELLANT’S ON-RESERVATION, TRIBALLY AUTHORIZED CIGARETTE BUSINESS IN VIOLATION OF FEDERALLY PROTECTED RIGHT OF TRIBAL SELF-GOVERNMENT.

A. The tribally authorized operation of Appellant’s cigarette business in Indian commerce on the Table Bluff Reservation of the Wiyot Tribe inextricably implicates the fundamental right of tribal self-government under federal law.

Appellant Ardith Huber operated a small family business, Huber

Enterprises, that sold cigarettes from her home on the Table Bluff

Reservation of the Wiyot Tribe as expressly authorized by the Wiyot Tribal

Tobacco Licensing Ordinance. (Clerk’s Transcript (“CT”), pages 001133,

¶¶ 2-4.) Appellant also owned on the Table Bluff Reservation of the Wiyot

Tribe a two-vehicle tribally licensed trucking business that was used to

deliver orders of cigarettes. (CT, pages 001133, lines 15-17; 001138).

The unavoidable legal and practical effect of the Trial Court’s

coercive imposition of California’s comprehensive regulatory regime on

Appellant’s on-reservation, tribally authorized business is the overt

nullification of tribal law by operation of state law. In other words, the

license granted by the Wiyot Tribe in exercise of its sovereign right of self-

government was rendered completely nugatory and void by California state

law as misinterpreted by Respondent and the Trial Court. A “license” is, of

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course, a form of official governmental “permission . . . to commit some act

that would otherwise be unlawful.” (See Black’s Law Dict. (9th ed. 2009)

p. 1002, col. 2.) By imposing a comprehensive regulatory regime on

Appellant’s cigarette business under the mistaken theory that it is a

permissible de minimus burden on the exercise of the right of tribal self-

government and a trivial onus on the Indian business owner, the Trial Court

effectively invalidated Wiyot Tribal law and the tribal authorization to

conduct Appellant’s business on the reservation pursuant to such law. In

this case, in contrast to such unhelpful precedent as Black Hawk on which

Respondent mistakenly relies, there is an undeniable conflict between

California state law and Wiyot tribal law such that if Respondent prevails

and the erroneously issued permanent injunction is upheld, Wiyot Tribal

law will be rendered a nullity along with the internal democratic tribal

political process that produced that law. (People ex rel. Harris v. Black

Hawk Tobacco, Inc. (2011) 197 Cal.App.4th 1561, 1565 (“Black Hawk”).)

The enormity and severity of the regulatory scheme that Respondent

so mistakenly seeks to ram through the narrow legal lacuna in the general

federal prohibition against overt state civil regulation of Indian commerce

beggar belief. That narrow legal lacuna permits only the imposition of

incidental burdens on tribal self-government, such as the collection of taxes

owed from non-tribal purchasers by Indian business owners or legally

equivalent administrative tasks of a de minimus nature. In this case, what is

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this comprehensive regulatory regime Respondent seeks to impose on

Appellant’s on-reservation sole proprietorship under the theory that such a

regime only requires the discharge of trivial administrative tasks legally

equivalent to the mere collection of taxes? Respondent seeks not only to

impose the full weight and complexity of the Tobacco Directory Law1, Fire

Safety Act2 and state excise tax laws, but also the full sweep of California’s

Unfair Competition Law (“UCL”)3 and all of its concomitant enforcement

mechanisms, such as the very permanent injunction at issue in this appeal,

which have already collectively exposed Appellant to continuous judicial

oversight and risk of arrest and imprisonment under the court’s contempt

powers for simply conducting a tribally authorized business on her own

reservation. A more invasive and coercive regulatory regime would be

difficult to imagine short of military occupation of the reservation, yet it is

this astounding invasion of tribal sovereignty that Respondent so cavalierly

suggests to this Court is, after all, essentially just the legal equivalent of

requiring Indian sellers to collect sales taxes from non-tribal buyers.

(Respondent’s Brief (“RB”) at pp. 9-10, 24-25.) The overbreadth of such a

claim clearly exceeds the aperture of the lacuna of permissible incidental

1 Rev. & Tax Code, § 30165.1 (“Tobacco Directory Law”). 2 Health & Saf. Code, §§ 14950-14960 (“Fire Safety Act”). 3 Bus. & Prof. Code, §§ 17200 et seq. (“UCL”)

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state regulation under Public Law 2804 or otherwise and is the central issue

to be resolved in this appeal. (See Dept. of Tax. and Finance v. Milhelm

Attea & Bros., Inc. (1994) 512 U.S. 61, 73 (“Milhelm”); Washington v.

Confederated Tribes of Colville Indian Reservation (1980) 447 U.S. 134,

155-161 (“Colville”); Moe v. Confederated Salish and Kootenai Tribes of

the Flathead Reservation (1976) 425 U.S. 463, 481-483 (“Moe”).

As incredible as it may seem, completely absent from the

Respondent’s objectives in its pursuit of complete regulatory control of

Appellant’s independent Indian tobacco business is any purpose relating to

the collection of back taxes or the imposition of any requirement on

Appellant to collect taxes as an incidental responsibility of Indian business

ownership. As Respondent has made clear, “The People do not assert any

claims to collect unpaid taxes." (CT, 000052, lines 17-18; Appellant’s

Opening Brief (“AOB”), p. 42.) That Respondent means what it has

previously said and has not wavered from this astonishing position in this

appeal is confirmed by Respondent in its latest filing with the concession

that Appellant “correctly points out that the People do not assert any claim

to collect unpaid taxes . . . .” (RB, p. 45) In other words, completely

absent from Respondent’s objectives is the enforcement of the one

regulatory obligation that has been recognized in U.S. Supreme Court

4 Public Law 280 (Pub.L. 83–280, August 15, 1953) is codified as 18 U.S.C. § 1162, 28 U.S.C. § 1360, and 25 U.S.C. §§ 1321–1326.

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jurisprudence concerning Public Law 280 as being permissible to impose

on an Indian tobacco merchant provided it presents no judicially cognizable

burden to or interference with the exercise of tribal self-government: the

pre-collection of taxes and the collection of back taxes due.

Instead, Respondent seeks to impose a wide-ranging, invasive and

prohibitively burdensome regulatory regime that it incredibly claims is

legally equivalent to the de minimus transactional burden of pre-collecting

taxes owed by the purchaser at the point of sale, yet it is this very same

comprehensive regulatory regime, enforced in part through the permanent

injunction challenged in this appeal, that has driven Appellant precipitously

out of business and forced Appellant to close its reservation-based

operations, thereby causing irreparable harm to Appellant, the

impoverished Wiyot Tribe and its future economic development as well as

its right of self-government as reflected in the preemptive nullification of

Wiyot tribal law by the coercive intervention of the State of California into

the political and economic affairs of a sovereign Indian nation.

Clearly, Respondent is not simply seeking to impose an incidental

administrative task within the permissible ambit of Public Law 280, such as

the pre-collection of a tax owed by the purchaser, but is instead attempting

to intervene coercively and pervasively in the operation, management and

tribal licensing of Appellant’s on-reservation tobacco business and that of

other independent Indian tobacco businesses throughout California Indian

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country5 for the purpose of inflicting such a harsh regulatory regime that

these fledgling Indian enterprises are compelled to either (1) somehow find

the means and resources to comply with a regulatory deluge that would

drown all but the largest, most astute and prosperous tobacco enterprise or

(2) literally cease to exist. Under the pretext of imposing supposedly

innocuous administrative burdens legally equivalent to the pre-collection of

taxes, Respondent seeks to inflict upon Appellant a comprehensive civil

regulatory regime that egregiously violates the letter and spirit of Public

Law 280 as so narrowly construed by the U.S. Supreme Court in its seminal

decision in Bryan v. Itasca, which clearly eschewed any invocation of

Public Law 280 or any other authority that would result in the imposition of

the very kind of comprehensive regulatory regime Respondent would like

this Court to believe is acceptable under the incidental administrative

burden standard articulated in Milhelm, Colville and Moe. (Bryan v. Itasca

(1976) 426 U.S. 373, 383 (“Bryan”) [limiting the civil jurisdictional

provisions of Public Law 280 to allow state courts to adjudicate “private

legal disputes between reservations Indians, and between Indians and other

private citizens . . . .”]; Milhelm, supra, 512 U.S. at 73; Colville, supra,

447 U.S. at 155-161; Moe, supra, 425 U.S. at 481-483.)

5 The term “Indian country” refers to “formal and informal reservations, dependent Indian communities, and Indian allotments, whether restricted or held in trust by the United States.” (18 U.S.C. § 1151; Okla. Tax Com. v. Chicasaw Nation (1995) 515 U.S. 450, 453, fn. 2.)

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The Trial Court’s embrace of Respondent’s misleading and mistaken

trivialization of the enormity and severity of the regulatory burden the State

seeks to impose on Appellant renders the issuance of the challenged

permanent injunction a “clear abuse of discretion” that can be fairly

characterized as so arbitrary, capricious and even patently absurd as to

require reversal by this Court. (See Shapiro v. San Diego City Council

(2002) 96 Cal.App.4th 904, 912 (“Shapiro”); IT Corp. v. County of

Imperial (1983) 35 Cal.3d 63, 69.) Without any controlling facts in

substantial dispute, this appeal of the order of a permanent injunction raises

only questions of law and is subject to de novo review by the Court.

(Dawson v. East Side Union High School Dist. (1994) 28 Cal.App.4th 998,

1041.) Consequently, if this Court were to determine as a matter of law

that the comprehensive regulatory scheme that the Trial Court has inflicted

on Appellant substantially impairs the right of tribal self-government as

protected by Public Law 280, or is otherwise preempted by federal statutes

or policies that protect tribal self-government and economic development

or by the Indian Commerce Clause (U.S. Const., art. I, § 8, cl. 3.), the Trial

Court’s order permanently enjoining Appellant’s business must be vacated

and declared to be exactly what it is: an arbitrary and capricious abuse of

discretion.

///

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B. Respondent has misconstrued Public Law 280 to permit the coercive imposition of a comprehensive regulatory regime on Appellant’s on-reservation, tribally authorized cigarette business in violation of federal law protecting tribal self-government.

Respondent’s attempted rationalization of the comprehensive

regulatory regime it exhorts the Court to adopt is its own reductio ad

absurdum since the only type of on-reservation tobacco business that would

be permissible under the state’s restrictive regulatory policies is one that

could never, as a practical matter, exist as a going concern, as the following

analogy suggests.

Taken seriously, the only type of on-reservation Indian-owned

cigarette enterprise that Respondent might concede would be immune from

the strictures of California’s tobacco regulations is one in which the

cigarette business (1) is located on a federally recognized reservation, (2) is

owned by an individual tribal member from that reservation or the relevant

tribe itself, (3) sells only to tribal members at a point of sale within the

physical boundaries of the reservation, (4) sells no cigarettes to non-tribal

members or any purchaser, tribal or otherwise, physically located outside

the reservation boundaries, (5) sells only cigarettes manufactured on the

same reservation where they are sold, and (6) uses no instrumentalities of

communication whatsoever that have off-reservation effects, linkages or

contacts beyond the physical boundaries of the reservation, such as a

landline telephone, wireless telephone, Internet-based messaging, public or

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private mail, billboards or other physical advertising visible outside the

reservation. Yet even then Respondent would likely assert that there could

exist overriding state interests that would justify regulation of such a

completely self-contained on-reservation cigarette business, such as the

health and safety of the tribal members or the fiscal solvency of the State of

California given its need of settlement revenues from the Tobacco Master

Settlement Agreement (“MSA”).6 (See Dreveskracht, Forfeting

6 The Tobacco Master Settlement Agreement (“MSA”) is a November 23, 1998 contract originally signed by the four largest United States tobacco companies, (1) Philip Morris Inc., (2) R. J. Reynolds, (3) Brown & Williamson, and (4) Lorillard Inc., and the attorneys general of 46 states, including California. The four tobacco companies that initially signed the MSA are often referred to as the “original participating manufacturers.” They and their frequently recombined and restructured progeny are often collectively referred to as the “Majors” or more simply as “Big Tobacco.” The MSA is the largest civil settlement in the history of the United States. The MSA resulted from approximately 40 lawsuits filed by various states to recover costs of medical services for smoking-related diseases. Under the MSA, the major tobacco companies have promised to pay the settling states about $246 billion over a 25-year period, contingent upon the states’ compliance with the MSA, including MSA Section XVIII(ff) which provides as follows:

Actions Within Geographic Boundaries of Settling States. To the extent that any provision of this Agreement expressly prohibits, restricts, or requires any action to be taken “within” any Settling State or the Settling States, the relevant prohibition, restriction, or requirement applies within the geographic boundaries of the applicable Settling State or Settling States, including, but not limited to, Indian country or Indian trust land within such geographic boundaries.

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Federalism: The Faustian Pact with Big Tobacco (2015) 17 Rich. J. L. &

Pub. Int. 291, 293-296; Haile & Krueger-Andes, Landmark Settlements

and Unintended Consequences (2012) 44 U. Tol. L.Rev. 145; Fairclough

& O’Connell, Co-Dependents: Once Tobacco Foes, States Are Hooked on

Settlement Cash — Philip Morris Verdict Sparks Scramble to Shield Firm

(April 2, 2003) Wall St. J., at A1.)

While such a self-contained on-reservation Indian-owned cigarette

enterprise might be able lawfully to avoid the harshest and most invasive

strictures of California’s MSA-induced comprehensive regulatory regime, it

would not likely be economically viable. Such an Indian-owned tobacco

enterprise can be usefully depicted in analogical form in the following

chart:

Figure 1. Hypothetical On-Reservation Cigarette Business

MSA, art. XVIII (ff), at pp. 76-77.

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In the diagram above, the Indian business owner would likely be immune

from California’s MSA-induced comprehensive regulatory regime since

there are no sales to non-tribal members located off the reservation. As the

Supreme Court in Bracker observed, “[w]hen on-reservation conduct

involving only Indians is at issue, state law is generally inapplicable, for the

State’s regulatory interest is likely to be minimal and the federal interest in

encouraging tribal self-government is at its strongest.” (White Mountain

Apache Tribe v. Bracker (1980) 448 U.S. 136, 144; Moe, supra, 425 U.S.

at 480-481.)

The State’s interest in regulating on-reservation cigarette sale

increases significantly when sales are made to non-Indian, non-tribal buyers

located off the reservation. The key fact bearing on the validity of the state

regulation is the identity of the buyer, not the instrumentality employed to

communicate with the buyer or the instrumentality used to ship or deliver

product to the buyer. This is the essential message of Milhelm, Colville and

Moe. (Milhelm, supra, 512 U.S. at 73; Colville, supra, 447 U.S. at 155-

161; Moe, supra, 425 U.S. at 481-483.) The Trial Court, however,

erroneously focused on Appellant’s “contacts,” not the identity of the buyer

in sales transactions, as if the Trial Court were evaluating the “minimum

contacts” necessary to assert long-arm jurisdiction under state law, an

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entirely different factual inquiry.7 (CT, page 001370-71, ¶ 25.)

Respondent, however, tries to assure this Court that the inappropriate and

erroneous use of the term “contacts” by the Trial Court really refers

“Appellant’s sales activities” and then discusses various instrumentalities

Appellant used that have off-reservation effects, including state roads, the

Internet and a toll-free telephone number. (RB, p. 19-20) Respondent’s

argument suggests that any Indian-owned on-reservation enterprise that

uses a telephone or maintains a website, however insignificant those

instrumentalities may be in generating sales, exposes itself to the full

weight of California’s MSA-induced comprehensive regulatory regime

because they, in effect, create outside “contacts” that could or do lead to

some sales. A moment’s reflection reveals the error of such an approach in

any coherent evaluation of the Respondent’s attempt to impose a

comprehensive system of civil regulation over on-reservation tobacco sales.

In order to see the fundamental flaw in Respondent’s regulatory

approach, consider an Indian-owned cigarette business located on a

reservation adjacent to a state road. Imagine that this Indian business

maintains a billboard visible from the state road, but in every other respect

has no outside contacts or sales to non-tribal members. Would the state

have an interest by virtue of the off-reservation effect of the instrumentality

7 Code Civ. Proc. § 410; Bridgestone Corp. v. Superior Court (2002) 99 Cal.App.4th 767, 773-774.

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of the billboard advertisement sufficient to regulate such an enterprise?

Would such an instrumentality that has undeniable off-reservation effects

be sufficient to allow California to impose its comprehensive regulatory

regime? The answer suggested by Milhelm, Colville and Moe is clearly not.

(Milhelm, supra, 512 U.S. at 73; Colville, supra, 447 U.S. at 155-161;

Moe, supra, 425 U.S. at 481-483.) The non-Indian, non-tribal nature of the

buyer is the controlling factor in determining whether the state may engage

in minimal, unobtrusive regulation, not the existence of an instrumentality

with off-reservation effects, as suggested by the analogical diagram below.

Figure 2. Hypothetical Billboard Ad Visible from State Road

In fact, California once sought to regulate billboard advertising on an

Indian reservation pursuant to California’s Outdoor Advertising Act8 with

the putative aid of allegedly delegated authority under the federal Highway

Beautification Act (“HBA”)9, only to lose when the Naegele court held that

8 Bus. & Prof. Code, §§ 5200 et seq. 9 23 U.S.C. § 131.

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the HBA phrase “public lands or reservations of the United States” was not

intended to include Indian reservations and “state enforcement of the

Outdoor Advertising Act on Indian reservations is not authorized by Public

Law 280.” (People ex. reI. Department of Transportation v. Naegele

Outdoor Advertising Company (1985) 38 Cal.3d 509, 513-14, 521

(“Naegele”) [California may not regulate outdoor advertising activities on

Indian land].) Apparently, off-reservation safety and aesthetic effects were

insufficient to justify state regulation in Naegele even as a manifestation of

the power of “a state” to “validly assert authority over on reservation

activities even in the absence of a congressional mandate to do so.”

(Naegele, supra, 38 Cal. 3d at 521.) The sensitivity of the Naegele court to

tribal sovereignty and its laudable circumspection in preventing the State of

California from riding roughshod over the prior decisions and contractual

arrangements made by the tribal council are important guideposts for this

Court in the case at hand.

///

///

///

///

///

///

///

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Figure 3. Off-Reservation Effects of Various Instrumentalities

In deciding whether the MSA-induced comprehensive regulatory

regime may apply to Appellant’s on-reservation business and sustain the

challenged permanent injunction, the off-reservation effects or “contacts”

through instrumentalities of communication and transportation used by

Appellant while operating her business in Indian commerce are not decisive

in this case any more than they were in Naegele. What matters is who the

actual buyers are, what impact California’s MSA-induced comprehensive

regulatory regime has on the federally protected right of self-government

and what state interest, if any, is served by imposing such sweeping

regulatory strictures on Indian-to-Indian tribal tobacco sales. (Milhelm,

supra, 512 U.S. at 73; Colville, supra, 447 U.S. at 155-161; Moe, supra,

425 U.S. at 481-483.) Both respondent and the Trial Court have essentially

21

suggested to this Court that the relevant inquiry should be something akin

to determining whether a state long-arm statute applies to an out-of-state

actor by evaluating whether there is some minimum significant quantum of

“contacts” or receipt of merchandise outside the boundary of reservation

where the point of sale is located. Respondent suggests a kind of litmus

test that, once satisfied, brings the full weight and complexity of the MSA-

induced comprehensive regulatory regime crashing down on the putatively

offending Indian business. No such litmus test is, however, to be found in

the subtle and often ambiguous holdings in controlling Indian law

precedent of the United States Supreme Court. Instead, this precedent, as

well summarized in the recent decision in Nevada v. Hicks, makes clear that

“the Indians’ right to make their own laws and be governed by them does

not exclude all state regulatory authority on the reservation. State

sovereignty does not end at a reservation’s border. Though tribes are often

referred to as ‘sovereign’ entities, it was ‘long ago’ that ‘the Court departed

from Chief Justice Marshall’s view that ‘the laws of [a State] can have no

force’ within reservation boundaries. (Nevada v. Hicks (2001) 533 U.S.

353, 361 (“Hicks”) quoting Worcester v. Georgia (1832) 6 Pet. 515, 561

and White Mountain Apache Tribe v. Bracker (1980) 448 U. S. 136, 141).

Although Appellant freely acknowledges a limited scope for

unobtrusive state regulation in Indian country in certain narrow contexts,

Hicks also powerfully reminds us that “States” may not “exert the same

22

degree of regulatory authority within a reservation as they do without. To

the contrary, the principle that Indians have the right to make their own

laws and be governed by them requires ‘an accommodation between the

interests of the Tribes and the Federal Government, on the one hand, and

those of the State, on the other.’ (Hicks, supra, 533 U.S. at 362, quoting

Colville, supra, 447 U. S. at 156.) This constitutionally mandatory

“accommodation” has given rise in the modern era to “a new conception of

federalism that includes a very active third sovereign.” (Carter, American

Indians and Law Libraries: Acknowledging the Third Sovereign (2002) 94

L. Libr. J. 7, 13.) As Justice Sandra Day O’Connor has explained, “Today

in the United States, we have three types of sovereign entities — the

Federal government, the States, and the Indian tribes. Each of the three

sovereigns has its own judicial system, and each plays an important role in

the administration of justice in this country.” (O’Connor, Lessons from the

Third Sovereign: Indian Tribal Courts (1997) 33 Tulsa L.J. 1, 1.)

Consequently, neither Respondent nor the Trial Court may ignore that

“governmental decision-making authority in the United States involves not

only the national and state governments, but also the tribal nations.”

(Tebben, An American Trifederalism Based upon the Constitutional Status

of Tribal Nations (2003) 5 U. Pa. J. Const. L. 318, 318.)

Yet ignore them they have, as evident in the total absence in the

challenged order or voluminous submissions of Respondent below of any

23

serious discussion whatsoever of the coercive, disruptive and preemptive

effect that the MSA-induced comprehensive regulatory regime would have

and has had on Wiyot tribal law and the Wiyot tribal democratic processes

responsible for Wiyot Tribal Council passage of that law. Aside from a few

passing, abstract and perfunctory references to the tribal right of self-

government, the Wiyot Tribe, its legal institutions, its political processes

and the individual Indian human beings who comprise this long-suffering

Tribe exist only as vague and inconsequential apparitions in the pleadings

of Respondent and the opinions of the Trial Court and any serious

discussion of the federal protection to which they are entitled has been

conspicuously absent from opinions of the lower court. In the headlong

rush to bring the full coercive power of the State to bear upon a single

successful Wiyot entrepreneur so as to preserve compliance with the MSA

and assure settlement revenues continue to flow undisturbed into state

coffers, the serious issue of Wiyot tribal sovereignty has been consistently

treated only as an unwanted phantasm whose occasional spectral

appearance is viewed with obvious disdain and then quickly banished from

consideration. Indeed, Appellant’s very assertion of federally protected

Indian rights is treated derisively and condescendingly by Respondent as an

attempt to become a “super citizen.” (RB, pp. 20, 22, quoting Rice v.

Rehner (1983) 463 U.S. 713, 734.)

24

Where in the enormous corpus of United States Supreme Court

opinions concerning federal Indian law is there a single decision under

Public Law 280 that upholds the kind of sweeping regulatory invasion of

tribal sovereignty that California has launched against the Wiyot Tribe and

Appellant? It does not exist. Instead, we have only a few high court

precedents that allow the states to compel Indian businesses to pre-collect

taxes owed by cigarette purchasers, as Hicks elaborates: “When . . . state

interests outside the reservation are implicated, States may regulate the

activities even of tribe members on tribal land, as exemplified by our

decision in [Colville]. In that case, Indians were selling cigarettes on their

reservation to nonmembers from off reservation, without collecting the

state cigarette tax. We held that the State could require the Tribes to collect

the tax from nonmembers, and could ‘impose at least ‘minimal’ burdens on

the Indian retailer to aid in enforcing and collecting the tax,’ . . . .” (Hicks,

supra, 533 U.S. at 362 quoting Colville, supra, 447 U. S. at 151.) This

unobtrusive, de minimus burden is hardly comparable to the MSA-induced

comprehensive regulatory regime California has inflicted on Appellant that

includes the very permanent injunction under the UCL challenged in this

appeal.

There is a vast difference between simply ordering an Indian

business to pre-collect taxes and subjecting a putatively noncompliant

Indian entrepreneur to the full force and fury of all the State’s remedies

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under the UCL and all the related enforcement mechanisms of Tobacco

Directory Law10, the Fire Safety Act11 and state excise tax laws. It does not

follow either logically or by command of any controlling precedent that

because an Indian business owner may be compelled under certain

circumstances to pre-collect a tax owed by a cigarette purchaser or

discharge some other legally equivalent minimal regulatory duty that the

state is, therefore, free and affirmatively empowered under Public Law 280

to impose every available state statutory remedy to compel compliance by

the Indian entrepreneur whose business premises are located on a

reservation subject to tribal law and internal tribal legal processes. How the

state seeks to enforce a regulatory requirement raises a separate question

apart from whether the original requirement may be lawfully imposed.

If the Trial Court’s enforcement mechanism is so disruptive,

coercive and invasive that it substantially impairs the right of tribal self-

government, it is impermissible as a matter of federal law. For example, in

Williams v. Lee, where a creditor sought to collect a debt owed by a Navajo

Indian and his wife who lived on a reservation, the mere ouster of tribal

court jurisdiction by the assertion of concurrent state court jurisdiction was

sufficient to invalidate the chosen enforcement mechanism as a violation of

tribal self-government: “There can be no doubt that to allow the exercise of

10 Rev. & Tax Code, § 30165.1. 11 Health & Saf. Code, §§ 14950-14960.

26

state jurisdiction here would undermine the authority of the tribal courts

over Reservation affairs, and hence would infringe on the right of the

Indians to govern themselves.” (Williams v. Lee (1959) 358 U.S. 217, 223.)

If the mere ouster of tribal court jurisdiction was held to be an

impermissible impairment of tribal self-government, then a fortiori the

blatant nullification of the Wiyot Tribal Tobacco Licensing Ordinance and

the devastating subjection of Appellant to protracted state court litigation

under the MSA-induced comprehensive regulatory regime in this case must

certainly be deemed to constitute an even more egregious violation of the

right of tribal self-governance. Appellant Ardith Huber, a Wiyot tribal

member, has been subjected to years of expensive, vexatious litigation

defending her operation of a reservation-based cigarette business that she

began and operated in the good faith belief that the licensing laws of the

Wiyot Tribe permitted and protected from the coercive jurisdiction of the

State of California, only to discover that neither the Respondent nor the

Trial Court would attach the slightest significance to the such legitimate

expectations and the internal tribal political processes that inspired them.

By issuing the permanent injunction in this case, the Trial Court effectively

declared Wiyot Tribal law and Wiyot tribal political processes a nullity and

the participation of Wiyot tribal members in tribal democratic processes

meaningless.

27

Respondent tries to make much of the fact that Appellant sold

cigarettes to buyers outside the Table Bluff Reservation of the Wiyot Tribe,

but without ever identifying who those purchasers were. (RB, pp. 1-2, 14,

fn.15, 17, 19-20, 27, 30, 33 and 41.) The Trial Court oddly refers to these

off-reservation sales, as Respondent interprets the Trial Court’s usage, as

“contacts.” (RB, pp. 19-20) Yet neither the Trial Court nor Respondent

has discussed the actual identity of these off-reservation buyers or the legal

significance of their identity. As Appellant explained in the Opening Brief,

“to the extent that the Huber’s ‘off-reservation contacts’ may be relevant,

the record establishes that her only ‘off-reservation contacts’ are contacts

with other Indians and Indian tribes. Consequently, those contacts relate to

intertribal trade that is also beyond California’s regulatory authority and is

not subject to the type of state law restrictions the Attorney General seeks

to impose here. (See Warren Trading Post Co. v. Arizona Tax Com. (1965)

380 U.S. 685, 690-691; Milhelm, supra, 512 U.S. at 74.)” (AOB, p. 21, fn.

4.)

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Figure 4. Wholesale Transactions within Indian Commerce

As the diagram above analogically illustrates, in this case, Appellant

Huber, a Wiyot tribal member, operated a sole proprietorship licensed

under Wiyot tribal law, owned a small tribally licensed trucking business

for deliveries and sold cigarettes to other Indian and tribally owned

cigarette businesses in the ancestral lands of the indigenous tribes of what is

now northern California continuing a tradition of intertribal commerce that

dates back centuries. Of course, the Indian Commerce Clause reserves to

the federal government the exclusive and preemptive right to “regulate

Commerce with foreign Nations, and among the several States, and with

the Indian Tribes.” (U.S. Const., art. I, § 8, cl. 3.) Thus, the State of

California may not impose a comprehensive civil regulatory system

governing the intertribal and Indian-to-Indian sale of tobacco under Public

Law 280. California is inserting itself between tribes and between Indian

buyers engaged in protected Indian commerce to an extent that no fair

reading of Public Law 280 or other relevant authority would allow as the

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type of limited, unobtrusive, de minimus administrative regulation

permitted under the exception to the general prohibition against civil

regulation in Indian country.

Finally, no countervailing state interest justifies the egregious

violation of the right of tribal self-government in this case. Respondent

claims that it is motivated by public health and safety concerns when it

seeks to impose the MSA-induced comprehensive regulatory regime on

Appellant. (RB, p. 21.) First, such health and safety concerns do not

justify the subversion of the federally protected right of tribal self-

government. No exception yet exists in the jurisprudence of the United

States Supreme Court that allows a state to override tribal law and subvert

tribal democracy on the basis of a bare allegation that its efforts to impose a

comprehensive regulatory regime in Indian commerce are motivated by

public health and safety concerns. Second, the expression of concern about

public health and safety issues is hardly credible since the total volume of

cigarette sales is likely to remain essentially unchanged given that

Respondent has selectively targeted only individually Indian-owned

cigarette businesses, while leaving tribally owned cigarette businesses

unmolested by civil enforcement actions, with the predictable result that the

volume of cigarettes sold by the individually owned businesses driven out

of business by Respondent’s enforcement action will simply be

redistributed through tribally owned cigarette businesses that enjoy

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derivative sovereign immunity from suit. (See Okla. Tax Com. v.

Potawatomi Tribe (1991) 498 U.S. 505, 510; Santa Clara Pueblo v.

Martinez (1978) 436 U.S. 49, 59.)

CONCLUSION

The State of California seeks to impose on Appellant a vast and far-

reaching regulatory regime governing the Appellant’s individually owned

cigarette business in violation of the federally protected tribal right of self-

government. The unavoidable legal and practical effect of the Trial Court’s

coercive imposition of this comprehensive regulatory regime on

Appellant’s on-reservation, tribally authorized business is the overt

nullification of tribal law by operation of state law. Where in the

enormous corpus of United States Supreme Court opinions concerning

federal Indian law is there a single decision under Public Law 280 that

upholds the kind of sweeping regulatory invasion of tribal sovereignty that

California has launched against the Wiyot Tribe and Appellant? It does not

exist. Even assuming Appellant’s sales from within the Table Bluff

Reservation of the Wiyot Tribe to Indian and tribal purchasers located

outside the reservation would allow the State to impose some minimally

burdensome administrative regulation under Public Law 280, it does not

follow that the comprehensive regulatory regime that the State of California

has imposed on Appellant through the agency of its legal counsel by order

of a judge in its own court system is legally permissible. That some de

31

minimus regulation might be permissible under the facts of this case does

not logically or legally imply that the overly broad and coercive regulatory

regime actually imposed is valid under Public Law 280. Since this

comprehensive regulatory regime effectively nullifies Wiyot tribal law and

undermines Wiyot tribal democracy, it violates the federally protected right

of tribal self-government. The permanent injunction issued by the trial

court must be vacated and declared to be the result of an abuse of discretion

in violation of federal law.

Dated: October 29, 2015

Respectfully submitted,

Dario Navarro Attorney for Appellants

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CERTIFICATE OF COMPLIANCE

I certify that the attached brief uses a 13 point Times New Roman

font and, according to the computer program used to prepare the foregoing

brief, it contains 5,527 words, including footnotes.

Dated: October 29, 2015

By: Dario Navarro Attorney for Appellants