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McKesson Corp. v. Hembree

United States District Court, N.D. Oklahoma

January 9, 2018

MCKESSON CORPORATION; CARDINAL HEALTH, INC.; AMERISOURCEBERGEN DRUG CORPORATION; CVS HEALTH CORPORATION; WALGREENS BOOTS ALLIANCE, INC.; and WAL-MART STORES, INC.,, Plaintiffs,
v.
TODD HEMBREE, ATTORNEY GENERAL OF THE CHEROKEE NATION, in his official capacity; JUDGE CRYSTAL R. JACKSON, in her official capacity; DOE JUDICIAL OFFICERS 1-5; and JUDGE T. LUKE BARTEAUX,, Defendants.

          OPINION AND ORDER

          Terence Kern, United States District Judge

         Before the Court is Plaintiffs' Motion for Preliminary Injunction and Brief in Support (“Motion”) (Doc. 13).

         I. Introduction

         It is undisputed that this nation is in the midst of an opioid crisis. Drug overdose deaths and opioid-involved deaths continue to increase in the United States, and the President of the United States has declared the opioid epidemic a national public health emergency. The latest figures from the Centers for Disease Control and Prevention show that from 2000 to 2016, more than half a million people died from drug overdoses. The majority of these drug overdose deaths (more than six out of ten) involved an opioid and 40% of all U.S. opioid overdose deaths involve a prescription opioid. Ninety-one Americans die every day from an opioid overdose. Overdose deaths involving prescription opioids were five times higher in 2016 than in 1999, and sales of these prescription drugs have quadrupled. Misuse, abuse, and opioid use disorder (addiction) rates are also skyrocketing. In 2014, almost two million Americans abused or were dependent on prescription opioids. Every day, more than one thousand people are treated in emergency departments for misusing prescription opioids. These statistics suggest an escalating economic and public health burden with enormous consequences for our society.

         Oklahoma is among the states with the highest number of opioid prescriptions per one hundred people and has a high overdose death rate. Tribal communities have been tragically affected, as have other communities in Oklahoma. Numerous cities, counties and states throughout the country, including the state of Oklahoma, have filed lawsuits against various opioid manufactures, pharmaceutical distributors, and other businesses allegedly responsible for the proliferation of opioid drugs. This proceeding concerns a lawsuit by the Cherokee Nation against a number of opioid distributors and pharmacies. However, the question before the Court is not the merits of the Cherokee Nation's lawsuit but rather the boundaries of tribal court jurisdiction. The Attorney General of the Cherokee Nation has filed suit not in state court but in the tribal district court of the Cherokee Nation. Do the tribal courts of the Cherokee Nation have jurisdiction over this particular action? The Court finds they do not.

         II. Background

         In 2016, the Cherokee Nation legislatively enacted the Cherokee Nation Unfair and Deceptive Practices Act, Cherokee Nation Code Ann. tit. 12, §§ 21-28 (2016) (“CNUDPA”), which prohibits “deceptive acts or practices” in the conduct of trade or commerce in the Cherokee Nation. The CNUDPA is part of the Cherokee Nation's Comprehensive Access to Justice Act of 2016 (“CAJA”), which amended portions of the Civil Procedure section of the Cherokee Nation Code. See Id. at tit. 12, §§ 1 et seq. Among other things, the CAJA permits the Cherokee Nation to bring civil actions as parens patriae on behalf of tribal members for violations of CNUDPA and enables the Cherokee Nation to recover treble damages in such actions. See Id. at tit. 12, § 13. The CAJA also eliminates the statute of limitations when the Cherokee Nation is a party plaintiff. See Id. at tit. 12, § 11.

         On April 20, 2017, the Cherokee Nation filed suit in the District Court for the Cherokee Nation against six corporations, comprising three pharmacies -CVS, Walgreens, and Wal-Mart (the “Pharmacies”); and three pharmaceutical wholesale distributors-McKesson, Cardinal Health, and AmerisourceBergen (the “Distributors”).[1] In that proceeding, Cherokee Nation v. McKesson Corp., et al., Docket No. CV-2017-203 (the “Tribal Court Action”), the Cherokee Nation asserts claims under CNUDPA and common law claims for nuisance, negligence, unjust enrichment, and civil conspiracy against all six defendants. The petition in the Tribal Court Action (the “Tribal Court Petition”) alleges that the Pharmacies and Distributors knowingly or negligently distributed and dispensed prescription opioid drugs within the Cherokee Nation in a manner that foreseeably injured, and continues to injure, the Cherokee Nation and its citizens. All of the claims in the Tribal Court Petition are brought both “in [the Cherokee Nation's] proprietary capacity and under its parens patriae authority in the public interest, ” as provided in the CAJA. (Trib. Ct. First Am. Pet. ¶ 11.) The Tribal Court Petition seeks injunctive relief, imposition of civil penalties, compensatory and punitive damages, restitution, and disgorgement, among other relief.

         The Distributors and Pharmacies (collectively, “Plaintiffs”) filed this action against Defendants Todd Hembree (“Hembree”), Attorney General of the Cherokee Nation, in his official capacity; Judge Crystal R. Jackson (“Judge Jackson”), in her official capacity; Judge T. Luke Barteaux (“Judge Barteaux”), in his official capacity; and Doe Judicial Officers 1-4 (collectively, “Defendants”).[2] Plaintiffs' Complaint (Doc. 2) seek a declaratory judgment that Defendants lack jurisdiction to prosecute and hear the Tribal Court Action, among other relief. Plaintiffs' Motion seeks a preliminary injunction pursuant to Federal Rule of Civil Procedure 65 enjoining Defendants from taking any action in the Tribal Court Action.[3] Hembree filed a response in opposition to Plaintiffs' Motion (Doc. 86) in addition to several supplemental filings ordered or permitted by the Court. Judge Jackson and Judge Barteaux jointly filed a response opposing the Motion (Doc. 95).

         III. Standard for Preliminary Injunction

         The “primary goal of a preliminary injunction is to preserve the pre-trial status quo” before a trial on the merits. RoDa Drilling Co. v. Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009). To obtain a preliminary injunction, the movant has the burden to show that: (1) the movant is substantially likely to succeed on the merits; (2) the movant will suffer irreparable injury if the injunction is denied; (3) the movant's threatened injury outweighs the injury the opposing party will suffer under the injunction; and (4) the injunction would not be adverse to the public interest. New Mexico Dep't of Game & Fish v. United States Dep't of the Interior, 854 F.3d 1236, 1246 (10th Cir. 2017) (citing Fish v. Kobach, 840 F.3d 710, 723 (10th Cir. 2016)). “[B]ecause a preliminary injunction is an extraordinary remedy, the right to relief must be clear and unequivocal.” Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1261 (10th Cir. 2004) (internal quotation marks omitted).

         IV. Whether Plaintiffs Are Substantially Likely to Succeed on the Merits

         In this proceeding, Plaintiffs seek a declaration that the Cherokee Nation lacks jurisdiction in the Tribal Court Action. Therefore, Plaintiffs' likelihood of success hinges on their ability to show that the tribal court lacks jurisdiction. “It is well settled that ‘the scope of a tribal court's jurisdiction is a federal question over which federal district courts have jurisdiction.'” United Planners Fin. Servs. of Am., L.P. v. Sac and Fox Nation, No. CIV-14-1278-HE, 2015 WL 3756181, at *3 (W.D. Okla. June 16, 2015) (quoting Kerr-McGee Corp. v. Farley, 115 F.3d 1498, 1201 (10th Cir. 1997)) (internal citation omitted). Plaintiffs also must show that they should not be required to exhaust their remedies in the Tribal Court Action before challenging the tribal court's jurisdiction in federal court. See Crowe & Dunlevy, 640 F.3d at 1149 (“[A]bsent exceptional circumstances, federal courts typically ‘should abstain from hearing cases that challenge tribal court jurisdiction until tribal court remedies, including tribal appellate review, are exhausted.'”) (quoting Bank of Okla. v. Muskogee (Creek) Nation, 972 F.2d 1166, 1170 (10th Cir. 1992)).

         A. Tribal Court Jurisdiction Generally

         Courts recognize Indian tribes as “distinct, independent political communities, qualified to exercise many of the powers and prerogatives of self-government.” Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 327 (2008) (internal quotation omitted). However, “the sovereignty that the Indian tribes retain is of a unique and limited character[, ]” and “centers on the land held by the tribe and on tribal members within the reservation.” Id. (internal quotation omitted). “By virtue of their incorporation into the United States, [a] tribe's sovereign interests are now confined to managing tribal land, protecting tribal self-government, and controlling internal relations.” Id. at 334 (internal quotations and citations omitted).

         In Montana v. United States, 450 U.S. 544, 565 (1981), the Supreme Court held that “the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe.” Accordingly, “efforts by a tribe to regulate nonmembers, especially on non-Indian fee land, are presumptively invalid.” Plains Commerce Bank, 554 U.S. at 330 (quotation omitted) (citing Atkinson Trading Co. v. Shirley, 532 U.S. 656 (2001)). “[A]bsent express authorization by federal statute or treaty, tribal jurisdiction over the conduct of nonmembers exists only in limited circumstances.” Strate v. A-1 Contractors, 520 U.S. 436, 445 (1997).

         The Montana rule is subject to two exceptions. Norton v. Ute Indian Tribe of the Uintah and Ouray Reservation, 862 F.3d 1236, 1243 (10th Cir. 2017). 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 dealings, contracts, leases, or other arrangements.

Montana, 450 U.S. at 565 (internal citations omitted). Second,

[a] tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe.

Id. at 566 (internal citations omitted). The party seeking to assert tribal court jurisdiction bears the burden of showing that one of the Montana exceptions applies. Plains Commerce Bank, 554 U.S. at 330.

         The Montana exceptions are “limited . . . and cannot be construed in a manner that would swallow the rule or severely shrink it.” Id. at 330 (internal quotation and citations omitted). In particular, 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. Furthermore, a “tribe's adjudicative jurisdiction does not exceed its legislative jurisdiction, ” and tribal courts therefore are “not courts of general jurisdiction.” Crowe & Dunlevy, 640 F.3d at 1151 (internal quotation omitted).

         Despite the “presumption against tribal civil jurisdiction over non-Indians, ” id. at 1150, Defendants contend that Plaintiffs are required to exhaust their jurisdictional challenge in the tribal court before challenging the tribal court's jurisdiction in federal court. Under the exhaustion rule, “the federal policy supporting tribal self-government directs a federal court to stay its hand in order to give the tribal court a ‘full opportunity to determine its own jurisdiction.'” Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9, 16 (1987) (quoting Nat'l Farmers Union Ins. Co. v. Crow Tribe of Indians, 471 U.S. 845, 855-56 (1985)); see also Id. at 15-16 (“Promotion of tribal self-government and self-determination require[] that the Tribal Court have the first opportunity to evaluate the factual and legal bases for the challenge to its jurisdiction.”) (quotation omitted)).

         The exhaustion rule is not jurisdictional but is “a prudential rule based on comity.” Crowe & Dunlevy, 640 F.3d at 1150. The Tenth Circuit recognizes several exceptions that may excuse the failure to exhaust claims in tribal court:

(1) where an assertion of tribal jurisdiction is motivated by a desire to harass or is conducted in bad faith; (2) where the action is patently violative of express jurisdictional prohibitions; . . . (3) where exhaustion would be futile because of the lack of an adequate opportunity to challenge the court's jurisdiction; [and] (4) where it is clear that the tribal ...

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