National Labor Relations Board Holds That NLRA Applies to Tribal Employers on Indian Lands

December 06, 2004

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Summary
In a reversal of prior decisions, the National Labor Relations Board ("NLRB") held on May 28, 2004 that the National Labor Relations Act ("NLRA") may apply to tribes as employers, even when a tribe is operating on reservation land. Previous decisions have held the NLRA applicable to tribal enterprises only when such enterprises are operating outside of the tribe's reservation. The NLRB's decision opens many tribal casinos and other tribal operations to possible unionization under the NLRA.

Executive Summary:

In a reversal of prior decisions, the National Labor Relations Board ("NLRB") held on May 28, 2004 that the National Labor Relations Act ("NLRA") may apply to tribes as employers, even when a tribe is operating on reservation land. Previous decisions have held the NLRA applicable to tribal enterprises only when such enterprises are operating outside of the tribe's reservation. The NLRB's decision opens many tribal casinos and other tribal operations to possible unionization under the NLRA.

Analysis:

In San Manuel Indian Bingo and Casino and Hotel Employees & Restaurant Employees International Union, AFL-CIO, CLC and Communication Workers of America AFL-CIO, CLC, Party in Interest and State of Connecticut, Intervenor, 341 NLRB No. 138, 2004 NLRB LEXIS 286 (May 28, 2004), the NLRB considered a casino operated by the San Manuel Band of Serrano Mission Indians on the San Manuel Indian Reservation in San Bernardino County, California. The casino is wholly owned and operated by the tribe and is located entirely within the San Manuel reservation. The tribe had enacted its own labor relations ordinance, as required by California state law. The Hotel Employees and Restaurant Employees International Union ("HERE") alleged that the casino was supporting the Communications Workers of America Union ("CWA") in violation of the NLRA and filed an unfair labor practice charge against the casino, which asserted that the NLRB lacked jurisdiction over its operations.

In San Manuel, the Board reviewed its own precedent on its jurisdiction over tribes as employers. In Fort Apache, 226 NLRB 503 (1976), the Board concluded that an Indian mining company located on Indian land was not within the meaning of "employer" under the NLRA because the tribal enterprise was a "governmental entity" analogous to "political subdivisions" excluded from the definition of employer in § 2(2) of the NLRA. Similarly, in Southern Indian, 290 NLRB 436 (1988), a health clinic operated by a consortium of Indian tribes on a reservation was held to be excluded from section 2(2)'s definition of employer.

Outside reservation land, however, the NLRB has held that tribally-owned enterprises are subject to the NLRA. In Sac & Fox, 307 NLRB 241 (1992), the Board held that a tribal corporation involved in a commercial venture (manufacture of chemical resistant suits) off the reservation was subject to the NLRA. The Board's reasoning in Sac & Fox was expressly based on the location of the tribe's operation off the reservation, as the decision was harmonized with the result in the previous Fort Apache case.

The Board's decision in San Manuel expressly reassesses the analysis used in these prior Board decisions. The core of the Board's analysis is the language in § 2(2) of the NLRA, which provides that the NLRA does not apply to:

The United States or any wholly owed Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway Labor Act . . . or any labor organization (other than when acting as an employer).

29 U.S.C. § 152(2).

The Board noted that § 2(2), on its face, does not expressly exclude application of the NLRA to Indian tribes. Tribes are clearly not the United States, or States, or political subdivisions thereof. The Board noted that the holding NLRB v. Pueblo of San Juan, 276 F.3d 1186, 1192 (10th Cir. 2002) is inconsistent with this conclusion. The Board described San Juan as concluding that tribes are not States or political subdivisions thereof, but nonetheless holding that the Pueblo of San Juan's right to work ordinance was not preempted by the NLRA. San Manuel, 2004 NLRB LEXIS 286, *16, note 10. Citing Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e(b), which specifically excludes tribes from the definition of "employer," the Board noted that Congress knew how to exclude Indian tribes when it wanted to do so. The Board rejected its prior analysis that the location of the employer at issue (on or off the reservation) was relevant to the NLRA's definition of employer and the exclusions listed in § 2(2). The Board therefore held: (1) the NLRA does not explicitly exempt Indian tribes, wherever they operate; (2) the law does not support implicit exemptions or exceptions by analogy based on a tribal employer's location or any other factor. Prior Board precedent to the contrary was expressly overruled.

The Board then considered as a separate question whether Federal Indian policy requires that the Board decline jurisdiction. In examining the nature of Federal Indian policy, the Board turned to the rule stated in Federal Power Commission v. Tuscarora Indian Nation, 362 U.S. 99 (1960), as applied by Donovan v. Coeur d'Alene Tribal Farm, 751 F.2d 1113 (9th Cir. 1985). Under the Board's Tuscarora analysis, statutes of general applicability are applicable to tribes and Indians unless (1) the law touches exclusive rights of self-government in purely intramural matters; (2) the application of the law would abrogate treaty rights; or (3) there is proof in the statutory language or legislative history that Congress did not intend the law to apply to Indian tribes. Finding none of these factors present in the case before it, the Board concluded that Federal Indian policy did not preclude application of the NLRA to tribes as employers.

The Board's majority opinion distinguished cases such as Iowa Mutual Ins. Co. v. LaPlante, 480 U.S. 9 (1987), and Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), on the basis that these cases "have protected Indian sovereignty in cases involving tribal justice systems and tribal tax authority, which the courts have found to be critical to tribal self-government." The Board held that Tuscarora is applied to assess the applicability of regulatory schemes that do not implicate such critical self-governance issues.

The key to the Board's discussion of federal Indian policy is the Board's distinction between governmental and commercial activities. Unlike a tribal tax, in the Board's analysis, the tribe's operation of a casino (which employs many non-Indians and caters to non-Indians) is commercial in nature and therefore subject to Tuscarora.

The Board further dismissed the tribe's argument that its inherent right to exclude nonmembers from its reservation precludes the Board's jurisdiction. Without significant discussion, the Board apparently concluded that the federal government's interest in the application of generally applicable laws under Tuscarora outweighed the Tribe's inherent authority to exclude outsiders from the reservation. It is unclear whether the existence of a treaty specifically reserving such rights to a tribe would impact the Board's analysis.

Finally, the Board assessed "whether policy considerations militate in favor of or against the assertion of the Board's discretionary jurisdiction," in a stated attempt to "accommodate the unique status of Indians in our society and legal culture." The Board concluded that strong policy considerations existed regarding application of the NLRA to tribes; the error in prior cases was in using such policy considerations to warp the clear language in § 2(2). Rather, the Board concluded that the determination of whether to assert jurisdiction should involve a case-by-case balancing of the tribal conduct at issue. Where the conduct is in the nature of a commercial enterprise, employing significant numbers of non-Indians, and catering to non-Indian customers, "the special attributes of their sovereignty are not implicated." Therefore, application of the NLRA would serve the policies of the Act in such circumstances while doing little harm to the Indian tribes' special attributes of sovereignty.

On the other hand, when tribes are acting with regard to the particularized sphere of traditional tribal or governmental functions, the Board should defer to the tribes by declining to assert its "discretionary jurisdiction." While the Board recognized that this approach lacks the predictability of the former approach, "the process of litigation will mark the contours in due time" and referenced in a very general way the body of law differentiating governmental functions from proprietary functions.

Turning to the facts before it, the Board concluded that the tribe's operation of the casino is not an exercise of self governance, regardless of the fact that the revenue generated will be used to address the tribe's intramural needs. Since the casino is a commercial enterprise, employing non-Indians and catering to non-Indians, the Board held that the policy considerations favor assertion of the Board's discretionary jurisdiction.

An extensive dissent was submitted in San Manuel by Member Schaumber. The dissent challenges the assumptions made by the Board's majority opinion, particularly with respect to the application of Tuscarora. The dissent argues that the Board deviates from Tuscarora by over-emphasizing the analysis used in Couer d'Alene.

The dissent also raises an interesting issue regarding the nature of the tribal conduct regulated by the NLRA. The majority opinion distinguishes San Juan as a case that related to the Pueblo of San Juan's authority to enact a tribal ordinance regulating the employment relationship, while the San Manuel case involved tribal operation of a commercial enterprise.

As the dissent noted, however, the San Manuel Band had a comprehensive tribal labor relations ordinance regulating labor relations at the casino. The tribe's ordinance provides rights to self-organization, collective bargaining, to engage in other concerted activities for mutual aid and protection, and to refrain from any of these activities. The ordinance provides for the primacy of tribal law, ordinances, personnel policies, and tribal customs and traditions regarding Indian preference, promotion, seniority, layoffs and retention. Strikes are allowed only when the parties reach impasse and have exhausted dispute resolution procedures, and strike-related picketing is prohibited on Indian lands. As a result, the application of the NLRA to the San Manuel Band would require preemption of the tribal ordinance.

As noted by the dissent, the existence of the comprehensive labor relations ordinance places the San Manuel case squarely in conflict with the Tenth Circuit's decision in NLRB v. Pueblo of San Juan, 276 F.3d 1186 (10th Cir. 2002), where the court reached a different conclusion with respect to the way in which the NLRA applies to tribal entities. In San Juan, the court considered the authority of the Pueblo of San Juan to enact a "right to work" law; that is, a law that prohibits union security clauses in collective bargaining agreements, so that employees may work at unionized employers without joining the union themselves. The NLRA includes a general prohibition against such right to work ordinances, but then specifically permits States and their political subdivisions to enact right to work ordinances. As a result, the question posed in San Juan was whether the Pueblo of San Juan could similarly enact a right to work ordinance by analogy; that is, did Congress intend for tribes to be included in the phrase "States and their political subdivisions" for purposes of granting authority to enact right to work laws. Note that this is not exactly the same inquiry faced in San Manuel; however, it is very similar, as § 2(2) of the NLRA (at issue in San Manuel) excludes the United States, States and their political subdivisions from the definition of "employers" subject to the Act.

To date, the NLRB’s decision in San Manuel has not been the subject of further reported NLRB or court decisions (although in a companion case, Yukon Kuskokwim Health Corp., 341 NLRB No. 139 (May 28, 2004), the NLRB held that policy considerations required that the NLRB not exercise jurisdiction over an Indian Self-Determination Act contractor that was performing traditional governmental functions). Shortly after San Manuel was issued, a bill was introduced in the 108th Congress (H.R. 4680) seeking to overturn the result through amendment of the NLRA, but the bill was referred to committee and no vote was taken.

Because the San Manuel decision has potentially significant impacts on the operation of tribal casinos as well as on the nature of the sovereignty exercised by tribes generally, further development of these issues is anticipated. Tribal employers and those doing business with them will need to carefully consider the potential application of the NLRA to their operations. Given the fundamental inconsistencies between San Manuel and the approach in Pueblo of San Juan, the Tenth Circuit’s approach will likely be an important part of challenges to the San Manuel decision. Within the Tenth Circuit, this conflict will place employers potentially affected by San Manuel in an ambiguous situation with respect to whether tribes or tribal employers should be considered analogous to states or territories for purposes of the NLRA.

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