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Kodiak Oil & Gas (USA) Inc. v. Burr

United States District Court, D. North Dakota

March 22, 2018

Kodiak Oil & Gas (USA) Inc., now known as Whiting Resources Corporation and HRC Operating, LLC, Plaintiffs,
v.
Jolene Burr, Ted Lone Fight, Georgianna Danks, Edward S. Danks, and Mary Seaworth, in her capacity as Acting Chief Judge of the Fort Berthold District Court, Defendants. EOG Resources, Inc., Plaintiff,
v.
Mary Seaworth, in Her Capacity as Acting Chief Judge of the Three Affiliated Tribes District Court of the Forth Berthold Indian Reservation, Yvette Falcon, in her capacity As Court Clerk/Consultant of the Three Affiliated Tribes District Court of the Fort Berthold Indian Reservation, Jolene Burr, Ted Lone Fight, Georgianna Danks, and Edward S. Danks, Defendants.

          ORDER GRANTING PLAINTIFFS' MOTIONS FOR PRELIMINARY INJUNCTION AND DENYING DEFENDANTS' MOTIONS TO DISMISS

          DANIEL L. HOVLAND, DISTRICT JUDGE

         Before the Court are three separate motions for preliminary injunctive relief filed by Kodiak Oil & Gas (USA), Inc., now known as Whiting Resources Corporation, HRC Operating, LLC, and EOG Resources, Inc. See Docket Nos. 29, 58, (No. 4:14-cv-085) and 26 (Case No. 4:14-cv-087).[1] The motions have been fully briefed by the parties and a hearing on the motions was held on March 13, 2018, in Bismarck, North Dakota. See Docket No. 67. Also before the Court are several motions to dismiss the complaints of Kodiak Oil, HRC Operating, and EOG Resources (“Plaintiffs”). See Docket Nos. 44, 52 (No. 4:14-cv-085) and 31 (No. 4:14-cv-087). For the reasons set forth below, the Plaintiffs' motions for preliminary injunction (Docket Nos. 29 & 58 (No. 4:14-cv-085) and 26 (No. 4:14-cv-087)) are granted and the motions to dismiss the Plaintiffs' complaints (Docket Nos. 44, 52 (No. 4:14-cv-085) and 31 (No. 4:14-cv-087)) are denied.

         I. BACKGROUND

         On July 29, 2014, Kodiak Oil & Gas (USA), Inc., now known as Whiting Resources Corporation (“Kodiak Oil”), filed a complaint against Defendants Jolene Burr, Ted Lone Fight, Georgianna Danks, Edward S. Danks, and Judge Diane Johnson, in her capacity as the Chief Judge of the Fort Berthold District Court, seeking a declaration that the Fort Berthold Tribal Court (“Tribal Court”) lacks jurisdiction over a suit filed by Defendants Jolene Burr, Ted Lone Fight, as well as Georgianna Danks and Edward S. Danks[2] in Tribal Court against Kodiak Oil and others.[3]In the underlying Tribal Court action, the Tribal Court Plaintiffs seek to recover royalties pursuant to an Oil & Gas Mining Lease for Kodiak and others' improper flaring of natural gas associated with oil wells. Specifically, the Tribal Court Plaintiffs allege they are enrolled members of the Three Affiliated Tribe, owning mineral interests “within the exterior boundaries” of the Fort Berthold Indian Reservation. See Docket No. 27-1 (No. 4:14-cv-087). In their second amended complaint, the Tribal Court Plaintiffs allege they entered into a mineral lease - “OIL AND GAS MINING LEASE - ALLOTTED INDIAN LANDS” - with Kodiak Oil and others, and Kodiak and other oil and gas producers breached paragraph 3(f) of the mineral lease. See Id. On May 4, 2015, Magistrate Judge Charles S. Miller, Jr. ordered the federal court action brought by Kodiak Oil stayed upon agreement of the parties, “pending further action by the tribal court.” See Docket No. 25.

         EOG Resources, Inc. (“EOG Resources”) also filed a complaint in this Court against Jolene Burr, Ted Lone Fight, Georgianna Danks, Edward S. Danks, and Judge Diane Johnson, in her capacity as the Chief Judge of the Fort Berthold District Court, as well as Yvette Falcon, [4] in her capacity as the Court Clerk/Consultant of the Three Affiliated Tribes District Court of the Fort Berthold Indian Reservation, on August 29, 2014. See Docket No. 6 (No. 4:14-cv-087). As a named defendant in the same tribal court action brought against Kodiak Oil, EOG Resources similarly seeks a declaration the Tribal Court lacks jurisdiction over the suit filed by the Tribal Court Plaintiffs in Tribal Court. On May 1, 2015, EOG Resources requested a stay of the federal court action due to its pending motion to dismiss for lack of jurisdiction in the tribal court matter. See Docket No. 18. Consequently, this Court ordered the federal action stayed “pending a ruling from the Three Affiliated Tribes District Court and a possible appeal from the tribal court decision.” See Docket No. 19.

         While both federal court actions were stayed, the matter proceeded in the Tribal Court, with Kodiak Oil and others filing motions to dismiss the tribal court action for lack of jurisdiction. See Docket No. 17-3. A hearing on the motions to dismiss was held in Tribal Court on November 18, 2015. See Docket No. 29-1, p. 2. On May 12, 2016, the Tribal Court issued a “Memorandum Opinion” in which the Tribal Court denied the motions to dismiss, concluding the Tribal Court has jurisdiction over the “straight-forward contract action.” See Docket No. 27-2, p. 17 (No. 4:14-cv-087). Kodiak Oil and others then appealed the decision of the Fort Berthold District Court to the MHA Nation Supreme Court. See Docket No. 27-3(No. 4:14-cr-087).

         On appeal, the MHA Nation Supreme Court affirmed in part and reversed in part the order of the Fort Berthold District Court. See Docket No. 27-3 (No. 4:14-cv-087). The MHA Nation Supreme Court ultimately determined Kodiak Oil, EOG Resources, HRC Operating and other defendants are subject to MHA Nation's “legislative, executive and judicial jurisdiction” because they operate businesses and conduct business activities within the Fort Berthold Reservation. See Docket No. 27-3, p. 2 (No. 4:14-cv-087). The MHA Nation Supreme Court first decided “Montana's rule and exceptions do not apply here, where the challenged non-Indian Petitioner's activities were all taken on Indian allotments held in trust.” Id. at 5. Essentially, the MHA Nation Supreme Court construed Montana v. United States, 450 U.S. 544 (1981) narrowly to apply to lands within a reservation not owned by the Tribe or its members. Id. at 3-5. However, the MHA Nation Supreme Court continued, and determined if Montana applies, the Tribal Court has jurisdiction over the matter based upon the ‘consensual relationship' exception to the Montana rule, evinced “by the oil and gas leases executed by and between oil and gas companies and the individual Indian allotees.” See Docket No. 27-3, p. 6. The MHA Nation Supreme Court also concluded the federal regulatory scheme of oil and gas leases for allotted lands does not preclude the Fort Berthold District Court from exercising its jurisdiction over the matter. Nonetheless, the MHA National Supreme Court ultimately determined “judicial review is premature at this juncture because [the Tribal Court Plaintiffs] have not exhausted their administrative remedies.” Id. at 20. After the MHA Nation Supreme Court issued its order, the Tribal Court Plaintiffs filed a motion for class certification. See Docket No. 29-10 (No. 4:14-cv-085).

         Shortly after the MHA Nation Supreme Court issued its order finding the Fort Berthold District Court has jurisdiction over the matter, Kodiak and EOG Resources filed motions for a preliminary injunction with this Court. In their motions, Kodiak and EOG request the Court issue a preliminary injunction preventing the Defendants from proceeding further with the underlying Tribal Court action. Defendants Mary Seaworth, in her capacity as Acting Chief Judge of the Fort Berthold District Court, and Yvette Falcon, in her capacity as Court Clerk/Consultant of the Three Affiliated Tribes District Court of the Fort Berthold Indian Reservation (“Tribal Court Defendants”), then filed motions to dismiss Kodiak Oil and EOG Resources' complaints.[5] See Docket Nos. 44 (No. 4:14-cv-085) and 31 (No. 4:14-cv-087). In their motions to dismiss, the Tribal Court Defendant contend the actions filed in this Court should be dismissed because the Court lacks jurisdiction over them.

         During the time period to brief the motions for preliminary injunction and motions to dismiss, HRC Operating, LLC (“HRC Operating”) filed a motion to intervene in the matter because of its status as a defendant in the Tribal Court action. See Docket No. 36 (No. 4:14- cv-085). On February 26, 2018, the Court granted HRC Operating's motion to intervene. See Docket No. 56. That same day, HRC Operating filed its complaint against Defendants Jolene Burr, Ted Lone Fight, Georgianna Danks, Edward S. Danks, and Judge Mary Seaworth, in her capacity as Acting Chief Judge of the Fort Berthold District Court, as well as a motion for preliminary injunctive relief. See Docket Nos. 57 and 58. On February 27, 2018, the Court consolidated Kodiak Oil & Gas (USA), Inc., et al. v. Burr, et al., No. 4:14-cv-085, with EOG Resources Inc. v. Seaworth, et al., No. 4:14-cv-087. See Docket No. 60.

         III. LEGAL DISCUSSION

         Before the Court may grant a preliminary injunction, the Court must be satisfied it has jurisdiction over the matter. Consequently, the Court first addresses the jurisdictional concerns raised by the Tribal Court Defendants in their motions to dismiss.

         A. FEDERAL COURT JURISDICTION

         The substantive claims of the Plaintiffs rest upon the determination of whether the Tribal Court has jurisdiction over the underlying tribal court action. It is well recognized that the question of “[w]hether a tribal court has adjudicative authority over nonmembers is a federal question.” Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 324 (2008). Consequently, pursuant to 28 U.S.C. § 1331, this Court has original jurisdiction. See 28 U.S.C. § 1331. Nonetheless, in their motions to dismiss and responses to the motions for preliminary injunction, the Tribal Court Defendants assert this Court lacks jurisdiction because: (1) Judge Seaworth and Falcon are immune from suit and (2) the Plaintiffs failed to exhaust tribal remedies before bringing this federal action.

         1. SOVEREIGN IMMUNITY OF JUDGE SEAWORTH AND FALCON

         In the Eighth Circuit, sovereign immunity presents a jurisdictional question. Hagen v. Sisseton-Wahpeton Cmty. Coll., 205 F.3d 1040, 4043 (8th Cir. 2000). It has been long been recognized that Indian Tribes possess “common-law immunity from suit traditionally enjoyed by sovereign powers.” Santa Clara Pueblo v. Martinez, 436 U.S. 49, 59 (1978). Indian tribes may not be sued absent an express and unequivocal waiver of immunity by the tribe or “abrogation of tribal immunity by Congress.” Baker Elec. Coop. v. Chaske, 58 F.3d 1466, 1471 (8th Cir. 1994).

         A tribe's sovereign immunity certainly extends to tribal officers or agencies. Hagen, 205 F.3d at 1043 (citing Dillon v. Yankton Sioux Tribe Housing Auth., 144 F.3d 581, 583 (8th Cir. 1998)). However, the United States Supreme Court has held tribal officers are not protected by the tribe's immunity from suits for declaratory or injunctive relief. Santa Clara Pueblo, 436 U.S. at 59. Moreover, the Eighth Circuit has recognized a tribe's sovereign immunity is subject to the well-established exception expressed in Ex Parte Young, 209 U.S. 123 (1908) that “a suit challenging the constitutionality of a state official's action is not one against the State.” Baker Elec. Coop., 28 F.3d at 1471. Consequently, tribal officers may be liable to suit when the complaint alleges

the named officer defendants have acted outside the amount of authority that the sovereign is capable of bestowing, an exception to the doctrine of sovereign immunity is invoked. . . . If the sovereign did not have the power to make a law, then the official by necessity acted outside the scope of his authority in enforcing it . . . .

N. States Power Co. v. Prairie Island Mdewakanton Sioux Indian Cmty, 991 F.2d 458, 460 (8th Cir. 1993) (quoting Tenneco Oil Co. v. Sac & Fox Tribe of Indians, 725 F.2d 572, 574 (10th Cir.1984)).

         Judge Seaworth and Falcon contend that as tribal court officers they are cloaked in sovereign immunity as there has been no express and unequivocal waiver of immunity by the Tribe. In fact, Judge Seaworth and Falcon assert the Plaintiffs filed suit against them, in their official capacities, to evade the Tribe's immunity since the Plaintiffs' claims seek “relief from the imposition of the tribal law including the resolution entitled, Regulation of Flaring of Gas, Imposition of Tax, Payment of Royalties and Other Purposes.” See Docket No. 1-2 (No. 4:14-cv-085). In their complaints, Kodiak Oil, EOG Resources, and HRC Operating seek only injunctive and declaratory relief against the Tribal Court Defendants. Pursuant to the holding of Santa Clara Pueblo, 436 U.S. at 59, tribal officials are not protected by the tribe's immunity in this type of suit for declaratory and injunctive relief. Each of the Plaintiffs allege the Tribal Court Defendants, in their official capacities, acted unlawfully by permitting the underlying Tribal Court action to proceed. This Court's exercise of jurisdiction over Judge Seaworth, in her capacity as Acting Chief Judge of the Fort Berthold District Court, and Yvette Falcon, in her capacity as Court Clerk/Consultant of the Three Affiliated Tribes District Court of the Fort Berthold Indian Reservation, is warranted as they are not immune from suit. See Michigan v. Bay Mills Indian Cmty., 134 S.Ct. 2024, 2035 (2014) (concluding “tribal immunity does not bar such a claim for injunctive relief against individuals, including tribal officers, responsible for unlawful conduct”).

         2. FAILURE TO EXHAUST TRIBAL REMEDIES

         The Tribal Court Defendants also contend this Court lacks jurisdiction over this matter because Kodiak Oil, EOG Resources, and HRC Operating are required to exhaust tribal remedies before filing a federal suit, citing National Farmers Union Ins. Cos. V. Crow Tribe of Indians, 471 U.S. 845 (1985) (“National Farmers”). At the hearing on the motions for preliminary injunction, counsel for the Tribal Court Defendants specifically argued Kodiak Oil, EOG Resources, and HRC Operating are required to bring a factual challenge to the Tribal Court's jurisdiction and a factual determination of jurisdiction, as opposed to a facial determination, is to be made by the Tribal Court before tribal remedies are exhausted. The law in the Eighth Circuit requires no such factual challenge to jurisdiction in order to effectively exhaust tribal remedies before filing a federal suit.

         In Strate v. A-1 Contractors, the United States Supreme Court concluded National Farmers cannot be read to require exhaustion of tribal remedies: “we do not extract from National Farmers anything more than a prudential exhaustion rule . . . .” 520 U.S. 438, 450 (1997). Since the United States Supreme Court's decision in Strate, the Eighth Circuit has not required litigants to adjudicate the full merits of a case in tribal court before a federal court can exercise jurisdiction. Instead, “[a] federal court should stay its hand until after the Tribal Court has had a full opportunity to determine its own jurisdiction, ” but exhaustion of tribal remedies is not required, when it would serve no purpose other than delay. Belcourt Pub. Sch. Dist. v. Herman, 786 F.3d 653, 656 n. 2 (8th Cir. 2015). See also Nevada v. Hicks, 533 U.S. 353, 369 (2001).

         Here, the Tribal Court “had a full opportunity to determine its own jurisdiction.” See Belcourt Pub. Sch. Dist., 786 F.3d at 656 n. 2. In Belcourt Pub. Sch. Dist., the Eighth Circuit noted that non-members exhausted their tribal remedies upon the tribal appellate court determination of jurisdiction. Id. Both the Fort Berthold District Court and the MHA Nation Supreme Court determined they had jurisdiction over Kodiak Oil, EOG Resources, and HRC Operating. Upon completion of the MHA Nation Supreme Court's review, “all requisite tribal remedies were exhausted” and the doors of the federal court were thus opened for Kodial Oil, EOG Resources, and HRC Operating. See id. Based upon the foregoing, the Court is satisfied it has jurisdiction to address whether the Tribal Court had adjudicative authority over the underlying claim for breach of a mineral lease entered into pursuant to 25 U.S.C. § 396. See Plains Commerce Bank v. Long Family Land & Cattle Co., 554 U.S. 316, 324 (2008).[6] The Court then turns to this inquiry.

         B. TRIBAL COURT JURISDICTION

         In their complaints, Kodiak Oil, EOG Resources, and HRC Operating seek both declaratory and injunctive relief preventing the Tribal Court from exercising jurisdiction over the underlying Tribal Court action and preventing the Tribal Court Plaintiffs from proceeding with the underlying Tribal Court action. See Docket Nos. 17, 57, (No. 4:14-cv-085) and 6 (No. 4:14-cv-087). Consequently, in their motions for preliminary injunctive relief, Kodiak Oil, EOG Resources, and HRC Operating request a preliminary injunctive because the Tribal Court lacks jurisdiction over them.

         It is well-established that the movant has the burden of establishing the necessity of a temporary restraining order or a preliminary injunction. Baker Elec. Coop., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir. 1994). “No single factor in itself is dispositive; in each case all of the factors must be considered to determine whether on balance they weigh towards granting the injunction.” Id. at 1472. Kodiak Oil, EOG Resources, and HRC Operating, by separate motion, each seek a preliminary injunction pursuant to Rule 65(a) of the Federal Rules of Civil Procedure. The primary purpose of a preliminary injunction is to preserve the status quo until a court can grant full, effective relief upon a final hearing. Ferry-Morse Seed Co. v. Food Corn, Inc., 729 F.2d 589, 593 (8th Cir. 1984). A preliminary injunction is an extraordinary remedy, with the burden of establishing the necessity of a preliminary injunction placed on the movant. Watkins Inc. v. Lewis, 346 F.3d 841, 844 (8th Cir. 2003); Baker Elec. Coop., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir. 1994); Modern Computer Sys., Inc. v. Modern Banking Sys., Inc., 871 F.2d 734, 737 (8th Cir. 1989). The court determines whether the movant has met its burden of proof by weighing the factors set forth in Dataphase Systems, Inc., v. C L Systems, Inc., 640 F.2d 109, 114 (8th Cir. 1981). The Dataphase factors include "(1) the threat of irreparable harm to the movant; (2) the state of balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movant will succeed on the merits; and (4) the public interest." Id. "No single factor in itself is dispositive; in each case all of the factors must be considered to determine whether on balance they weigh towards granting the injunction." Baker Elec. Coop., Inc., 28 F.3d at 1472 (quoting Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir. 1987)); see CDI Energy Servs., Inc. v. W. River Pumps, Inc., 567 F.3d 398, 401-03 (8th Cir. 2009).

         1. PROBABILITY OF SUCCESS ON THE MERITS

         When evaluating a movant's likelihood of success on the merits, the court should “flexibly weigh the case's particular circumstances to determine ‘whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.'” Calvin Klein Cosmetics Corp. v. Lenox Labs., Inc., 815 F.2d 500, 503 (8th Cir. 1987). At this stage, the Court need not decide whether the party seeking the preliminary injunction will ultimately prevail. PCTV Gold, Inc. v. SpeedNet, LLC, 508 F.3d 1137, 1143 (8th Cir. 2007). Although a temporary restraining order or a preliminary injunction cannot be issued if the movant has no chance on the merits, “the Eighth Circuit has rejected a requirement as to a ‘party seeking preliminary relief prove a greater than fifty per cent likelihood that he will prevail on the merits.'” Id. The Eighth Circuit has also held that of the four factors to be considered by the district court in considering preliminary injunctive relief, the likelihood of success on the merits is “most significant.” S & M Constructors, Inc. v. Foley Co., 959 F.2d 97, 98 (8th Cir. 1992).

         The Court must consider the substantive claims in determining whether the Plaintiffs have a likelihood of success on the merits. All three plaintiffs assert claims of declaratory and injunctive relief. See Docket Nos. 17, 57, (No. 4:14-cv-085) and 6 (No. 4:14-cv-087). Specifically, the Plaintiffs seek a judgment declaring that the Tribal Court lacks jurisdiction over them and enjoining the Defendants from prosecuting the underlying action in Tribal Court. Id. A likelihood of success on the merits of even one claim can be sufficient to satisfy the “likelihood of success” Dataphase factor. See Nokota Horse Conservancy, Inc. v. Bernhardt, 666 F.Supp.2d 1073, 1078-80 (D.N.D. 2009).

         In their motions for preliminary injunction, the Plaintiffs contend they are able to demonstrate a strong likelihood of success on the merits of their claims because: (1) the underlying action gives rise to a federal question over which tribal courts lack jurisdiction, and, alternatively, (2) the United States Supreme Court decision in Montana v. United States, 450 U.S. 544 (1981) precludes the Tribal Court from exercising jurisdiction over the Plaintiffs. HRC Operating also contends the Tribal Court lacks jurisdiction over the underlying action because the Defendants failed to exhaust administrative remedies and failed to join the United States as a party to the Tribal Court action. See Docket No. 59, pp. 9-11. In response to the motions for preliminary injunctive relief, the Tribal Court Defendants contend this Court lacks jurisdiction over the case before it because (1) the Plaintiffs failed to exhaust tribal court remedies, Judge Seaoworth and Yvette Falcon are protected from suit by sovereign immunity, and (3) the Plaintiffs failed to join the Tribe as a necessary and indispensable party to this suit. See Docket Nos. 48 (No. 4:14-cv-085) and 33 (No. 4:14-cv-087) . In their response to the motion for preliminary injunction, Defendants Jolene Burr, Ted Lone Fight, Georgianna Danks, and Edward S. Danks assert the Tribal Court correctly determined its jurisdiction in the ...


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