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Our firm defended a tribal absentee ballot law (denying absentee ballots to non-resident members) against constitutional attack in Jacobson v. Eastern Band of Cherokee Indians, No. CV-05-101 (Supreme Court of the Eastern Band of Cherokee Indians, Nov. 29, 2006).

General Memorandum 14-081

General Memorandum 14-081
Ninth Circuit Upholds Tribal Hiring Preference

The Ninth Circuit Court of Appeals has issued an important decision in EEOC v. Peabody Western Coal Co., 2014 WL 4783087 (9th Cir. 2014), the long-running dispute between the Equal Employment Opportunity Commission (EEOC) on one side and Peabody Coal, the Navajo Nation, and the Department of Interior (DOI) on the other as to whether it was legal for Peabody Coal to use a preference for Navajo tribal members in hiring at two mines on the Navajo Nation. The court's decision will bring clarity to a murky area of Indian law – whether an employer may comply with an Indian tribe's law or policy regarding tribal hiring self-preferences without violating Title VII prohibitions against national origin discrimination.

For over 50 years Peabody Coal applied employment preferences for Navajo tribal members at its mines due to the requirement inserted in the mine leases by the Department of Interior. The EEOC had asserted that tribal preference was national origin discrimination against non-Navajos, and thus impermissible under Title VII of the Civil Rights Act of 1964. The lower court had ruled that tribal preference was a political classification—not one of national origin—and when the EEOC appealed, the Ninth Circuit agreed with the lower court.

The case arose when three members of other tribes claimed that Peabody was discriminating against them by giving hiring preference to Navajo members. The EEOC pursued the case as employment discrimination, with the Navajo Nation and the Departments of Interior and Justice eventually joining Peabody to defend the preference. The EEOC's position was a concerning one to Indian Country, as it called into question the political classification basis of federal-tribal relations upheld by the Supreme Court in Morton v. Mancari, and threatened to take away an important tool for developing local tribal economies.

The Ninth Circuit's opinion is a wholehearted rejection of the EEOC's position, and holds that Title VII does not reach the tribal hiring preferences in the leases based in part on the court's reasoning that Congress did not understand Title VII to reach tribal affiliation because such affiliation is a political classification. The decision goes further than upholding the specific tribal preference in the DOI-drafted leases, and holds that Title VII of the Civil Rights Act does not reach questions of political classifications, thus preserving the right of tribes to give preference to their own members over members of other tribes. It also held that Congress did not intend to include tribal preferences in its prohibition of national origin discrimination because Congress understood Title VII would not disrupt the government's long-standing approval of preferences for a tribe's own members

The court wrote that this case was one where "federal law yields out of respect for treaty rights or the federal policy fostering tribal self-governance." The decision upheld the DOI's right to include tribal self-preferences as part of the overall goal of promoting tribal economic development and self-government, referring to the Indian Reorganization Act's (IRA) anti-assimilationist intentions and the Indian Mineral & Leasing Act's furtherance of the IRA's goals. The court also used Mancari to bolster its holding that the tribal self-preferences were designed to "preserve for the Nation and its members the fruits and resources found on the tribe's own land . . . to fulfill the federal government's trust obligations to the tribe." We believe the Ninth Circuit's Peabody decision underscores the current day relevance of the Supreme Court's holding in Mancari that tribal and Indian classifications are based on political relationships instead of race.

The Peabody case is a particularly important one, because the Ninth Circuit had previously held in Dawavendewa v. Salt River Project Agric. Improvement & Power Dist. (1998) that tribal affiliation could give rise to national origin discrimination claims. That case involved a power plant operating on the Navajo Nation complying with Navajo law regarding tribal preference. The case said that tribal preference could be considered national origin discrimination. However, the court later appeared to reverse course by saying that treaties, federal promotion of tribal self-governance, or other defenses could overcome the discrimination findings. The Peabody case seems to close the door on Dawavendewa, holding instead that Title VII does not apply to tribal self-preference. Although this case could conceivably be limited to situations where the federal government approves the preference— as DOI did here in drafting the leases—the court's language approving preferences as furtherance of federal trust obligations is wide ranging, and apparently will likely cover most tribal self-preferences.

The case is also important because it calls into question whether the EEOC should continue to oppose tribal hiring preferences, which it does under its official policy statement issued in 1988. As recently as last year, the EEOC's General Counsel told tribes that tribal self-preferences were forbidden. (See our General Memorandum 13-027 dated March 22, 2013).

While this case will only apply to tribal hiring practices in the Ninth Circuit covering the westernmost nine states, it had to analyze the issue so thoroughly that it may well prove persuasive for other courts across the nation yet to consider this question. The EEOC may request an en banc review of this decision from a full panel of Ninth Circuit Court of Appeals, but such requests are rarely granted. The EEOC may also ask the U.S. Supreme Court to review the Ninth Circuit's decision, though such review is also rare.

Please let us know if we may provide additional information regarding this case or tribal hiring practices in general.

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Inquiries may be directed to:
Charlie Hobbs (chobbs@hobbsstraus.com)
Adam Bailey (abailey@hobbsstraus.com)
Chris Stearns (cstearns@hobbsstraus.com)

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