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GENERAL MEMORANDUM 11-040

GENERAL MEMORANDUM 11-040
Nebraska Supreme Court holds that Tribal Officials Waived Tribe's Sovereign Immunity through Implied Rather than Actual Authority from the Tribal Council

On March 25, the Nebraska Supreme Court held that the Omaha Tribe of Nebraska can be sued by StoreVisions, Inc., an Omaha-based building contractor, over payment for work on its casinos and other facilities despite its assertion of tribal sovereign immunity. StoreVisions, Inc. v. Omaha Tribe of Nebraska, 281 Neb. 238 (2011). Specifically, the Court held that the Tribe had waived its immunity from suit when the Chairman and Vice-Chairman of the Tribe signed a waiver of sovereign immunity, despite the Tribe's claim that only a resolution of the Tribal Council could provide an effective waiver.

StoreVisions entered into eleven different contracts with the Tribe related to the Tribe's planned expansion of its casino between April and July 2008. Prior to the execution of the contracts StoreVisions asked for a waiver of sovereign immunity. The Tribe's Chairman and Vice-Chairman agreed, and signed a waiver of sovereign immunity at a meeting with both StoreVisions representatives and five of the seven members of the Tribe's Tribal Council present. In October 2009, StoreVisions sued the Tribe in state court, alleging that the Tribe breached several contracts entered into between the parties.

The Tribe argued that the Court did not have jurisdiction because there was no valid waiver of Tribal sovereign immunity. The District Court determined that the Chairman and Vice-Chairman had "apparent authority" to act on behalf of the Tribe and therefore the Tribe had waived its sovereign immunity. "Apparent authority" is a well-known doctrine in commercial law, but its application to Indian tribes is not clear. The case came before the Supreme Court of Nebraska, which began by affirming the basic principles of sovereign immunity, stating that there was no dispute that the Tribe is a separate sovereign and is generally entitled to sovereign immunity. Nor was there any dispute that the immunity exists unless limited by Congress or waived by the Tribe, nor with the rule that any waiver of sovereign immunity must be expressly made. However, the Court determined that there was such an express waiver made in this case, based not on words in the contract but implied from actions taken by tribal officers that were tacitly approved or condoned by the Tribal Council.

The Tribe had argued that its sovereign immunity could only be waived by a resolution of the Tribal Council, not by independent acts of the Chairman and Vice-Chairman, and that the Tribe's bylaws provided no authority to the officers of the Tribe except those delegated by the Tribal Council. The Court held that despite the fact that the Chairman and Vice-Chairman did not have the actual authority to waive the Tribe's sovereign immunity, they did have "apparent authority" to do so.

"Apparent authority" derives from the common law (court-made law) and stands for the rule that the principal is liable for the acts of his agent if someone acting for the principal reasonably appears to the outsider to have been given authority by the principal. That is, the principal is liable for the acts of anyone he allows to appear to have authority. Thus, for "apparent authority" to exist the principal (in this case the Tribe) must act in a way that induces a reasonable third person to believe that agents for the Tribe (in this case the Chairman and Vice-Chairman) have actual authority to act for the principal.

The Court determined that "apparent authority" existed in this case because it was reasonable for StoreVisions to rely on the words and actions of the Tribe when the Chairman and Vice-Chairman signed the waiver of sovereign immunity in the presence of five of the seven members of the Tribal Council at the Tribe's headquarters. Additionally, the Court noted that that Tribe's Chairman, Vice-Chairman, or both, executed all other contracts between the Tribe and StoreVisions and that the Tribal Council had acknowledged by resolution that it had entered into these previous contracts with StoreVisions. Lastly, the Court reasoned that because the Tribe's constitution and bylaws were silent as to the method of waiving sovereign immunity, it was reasonable for StoreVisions to rely upon the words and actions of the Tribe's Chairman and Vice Chairman.

The Tribe argued that principles of agency, such as "apparent authority," should not apply in the sovereign immunity context. However, the Court determined that this argument was lacking in authority and instead adopted the reasoning of Rush Creek Solutions, Inc. v. Ute Mountain Ute Tribe, a 2004 Colorado case which held that the Ute Mountain Ute Tribe's chief financial officer had apparent authority to sign a contract that included a waiver of the Ute Mountain Ute Tribe's sovereign immunity.

We are advised that the Tribe is seeking the court's reconsideration of the decision, and if it fails in that, it will consider asking the U.S. Supreme Court to review the case. The odds are very poor that the Supreme Court would take the case, but if it does, the Nebraska ruling described above could become applicable in all 50 states.

Please let us know if you would like more information regarding this decision.

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Inquiries may be directed to:
Charlie Hobbs (chobbs@hobbsstraus.com or 202-822-8282) or
Jessica Wiles (jwiles@hobbsstraus.com or 503-242-1745).

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