Yesterday, the U.S. Supreme Court issued a decision, highly anticipated by Indian tribes and Indian law practitioners, in Michigan v. Bay Mills Indian Community, et al. In a 5-4 split, the Court reaffirmed the doctrine of tribal sovereign immunity in two respects—sovereign immunity bars suits by States against Indian tribes and sovereign immunity extends to suits arising out of commercial activity occurring outside of a tribe’s Indian country.

Bay Mills is a federally recognized Indian tribe with a Reservation in the Upper Peninsula of Michigan. In 2009, Bay Mills used funds from its share of a land claims settlement to purchase property in the Village of Vanderbilt, Michigan, located in Michigan’s Lower Peninsula. Bay Mills determined—though Michigan and others dispute it—based on the terms of the land settlement that the land purchased in Vanderbilt is Indian land for purposes of Indian Gaming Regulatory Act (“IGRA”), 25 U.S.C. §§ 2701-2721. On November 3, 2010, the Community opened a casino in the Village of Vanderbilt, Michigan (the “Vanderbilt Casino”).

Michigan sued Bay Mills, seeking, among other things, an injunction to close the Vanderbilt Casino. Michigan argued the casino was not on Indian lands, and therefore violated IGRA and the Michigan-Bay Mills Compact, both of which restrict gaming operations to Indian land. According to Michigan, the lawsuit could proceed notwithstanding Bay Mills’s sovereign immunity because IGRA abrogated it—specifically, Michigan relied on 25 U.S.C. § 2710(d)(7)(A)(ii), which allows states to bring claims in federal courts to enjoin Class III gaming activity “located on Indian lands” in violation of a compact. The problem with Michigan’s theory was that the alleged violation of the Compact was gaming on non-Indian land—but § 2710(d)(7)(A)(ii) only permits actions against Compact violations that occur on Indian land. If Michigan’s allegations were true, then § 2710(d)(7)(A)(ii) would not apply.

The district court ruled in favor of the State of Michigan, finding federal question jurisdiction, 28 U.S.C § 1331, alone to be a separate abrogation of sovereign immunity, and granting an injunction shutting down the Vanderbilt Casino. Bay Mills appealed to the Sixth Circuit Court of Appeals. The Sixth Circuit held that Bay Mills’ sovereign immunity was not abrogated—not by § 2710(d)(7)(A)(ii), which only applied to alleged compact violations on Indian land, nor by § 1331.

Michigan appealed to the Supreme Court and, in a 5-4 decision with Justice Kagan writing for the majority, Bay Mills prevailed. The Court held that 25 U.S.C. § 2710(d)(7)(A)(ii) does not waive tribal sovereign immunity for claimed compact violations not on Indian land, and confirmed that Indian tribes continue to enjoy sovereign immunity, even for off-reservation commercial conduct.

In reaching its decision, the Court first construed the provisions of IGRA’s abrogation of sovereign immunity mentioned above, 25 U.S.C. § 2710(d)(7)(A)(ii). Michigan argued that this provision abrogated the Bay Mills Community’s sovereign immunity in this case because it sought to enjoin the licensing, operation, and authorization for the Vanderbilt casino by Bay Mills, which occurred on Indian lands from the Bay Mills Reservation. The Court rejected this argument, holding that “gaming activity” in the statute referred only to the actual conduct of casino games, e.g. the rolling of craps dice, the spinning of a roulette wheel, etc., rather than the licensing or operation of a casino from a tribal authority. Michigan further argued that allowing suit to enjoin gaming activity on Indian lands, but not activity off Indian lands, was an anomalous result—surely not what Congress intended when it enacted IGRA. The Court gave no credence to the argument, explaining that only Congress could revise the text of IGRA. Federal legislation often creates anomalous results due to the nature of the legislative process, where a single issue is addressed without examining all other comparable issues. The Court also down-played the alleged “anomaly,” noting that not all gaming activity on Indian lands could be enjoined under IGRA but only Class III gaming conducted in violation of a state-tribal compact. The Court noted that if there was no gaming compact, enforcement would be exclusively the province of the Federal Government. In dictum, the Court also noted that alternative means could exist to enjoin gaming activity conducted by a tribe in a casino outside of a tribe’s Indian Country, including the possibility of civil suits against tribal officials or criminal proceedings against “anyone who maintains—or even frequents” such a casino.

The Court next addressed Michigan’s argument that Kiowa Tribe of Oklahoma v. Manufacturing Technologies, Inc., 523 U.S. 751 (1998), which held that a tribe’s sovereign immunity applies even to suits arising from off-reservation commercial activities, was wrongly decided and should be overruled. The Court held that stare decisis required it to follow Kiowa. Michigan’s arguments against Kiowa were not new; the Court considered and rejected them when it issued the Kiowa decision. And after Kiowa was decided, Congress considered—but decided against—abrogating Kiowa in legislation. The Court also found it significant that, since the Kiowa decision, Congress had preserved immunity in some specific contexts and abrogated it in others. This Congressional inaction and action in the face of Kiowa supported the Court’s decision to apply stare decisis.

In the primary dissent to the opinion, Justice Thomas, joined by Justices Scalia, Ginsburg, and Alito, cast sovereign immunity as a matter of “comity” between sovereigns. According to Justice Thomas, state sovereignty is offended by tribal sovereign immunity because states cannot regulate activity within their own territory. Perhaps ironically for a conservative leaning Justice, Justice Thomas expressed concern that sovereign immunity invited “de facto deregulation” of highly regulated activities, such as payday lending. Justice Thomas also criticized the majority’s reliance on unenacted legislation to divine legislative intent argued that Kiowa should be overruled notwithstanding the doctrine of stare decisis.

Justice Sotomayor wrote a separate concurring opinion addressing the primary dissent. Justice Sotomayor stated that “comity” concerns weighed in favor of the doctrine of sovereign immunity by preventing disparate treatment between States and tribes (States’ sovereign immunity bars suits by tribes under IGRA) and protecting tribal treasuries from state taxation. Justice Sotomayor criticized the dissent’s characterization of Indian tribes as “substantial and successful commercial actors”—the majority of federally-recognized tribes do not engage in gaming at all, and a relatively small number of tribes generate a majority of tribal gaming revenue. Moreover, Justice Sotomayor resisted the classification of gaming activity as commercial rather than governmental, noting that tribal commercial activity often funds tribes’ “core” governmental functions. In so doing, Justice Sotomayor noted the “devastating legacy” of allotment policies, which reduced the tax base of tribes.

In summary, contrary to the concerns of many observers, the Court did not abrogate tribal sovereign immunity but instead reaffirmed two of its fundamental attributes—sovereign immunity applies to suits brought by states and generally applies to off-reservation commercial conduct. Future litigation will likely address what exceptions, if any, apply to the doctrine.