Appellate, Constitutional and
Governmental Litigation Alert
March 2007
Authors:
Bart J. Freedman
+1.206.270.7655
bart.freedman@klgates.com
Linda J. Shorey
+1.717.231.4510
linda.shorey@klgates.com
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Federal Appeals Court Holds Tribes Are
Subject to Federal Labor Law
Tribal businesses operating on reservation land have traditionally been exempt from federal
labor law. The inapplicability of federal labor law to tribes was recognized in the 1976
National Labor Relations Board (“NLRB”) ruling, Fort Apache Timber Company, which
held that a tribal government operating an on-reservation timber mill was not an “employer”
within the meaning of the National Labor Relations Act (“NLRA”).1 Recently, however, in
San Manuel Indian Bingo and Casino v. National Labor Relations Board, the federal Court
of Appeals for the D.C. Circuit overruled Fort Apache to hold that Indian tribes running
certain on-reservation businesses are now subject to the NLRA.
This ruling, discussed in detail below, directly affects tribal casinos, which must now
comply with federal labor regulations and submit to NLRB oversight. Tribal casinos may
also, as a result of this ruling, experience an increase in unionization efforts directed at
casino employees, most of whom are not currently unionized. The ruling is also of interest
to the broader gaming community, which may see the increasing standardization of labor
relations across the industry, as the NLRA is now uniformly applicable to both tribal and
non-tribal casino enterprises.
San Manuel Indian Bingo and Casino
In San Manuel Indian Bingo and Casino, 2007 WL 420116 (D.C. Cir. February 9, 2007),
the San Manuel Band of Mission Indians challenged an NLRB ruling that it had engaged in
unfair labor practices in violation of the NLRA. The San Manuel tribe owns and operates a
casino on their reservation in San Bernardino County, California that employs approximately
2,500 workers. The tribe regulates fair labor practices through its own tribal ordinances, as
required by its gaming compact with the state of California. In 1999, the Hotel Employees
& Restaurant Employees International Union (“HERE”) filed an unfair labor practice
charge with the NLRB, claiming that the San Manuel casino had denied it access to casino
employees, while giving another union, the Communications Workers of America (“CWA”)
preferential access. At the time HERE filed its charge, employees at the tribe’s casino were in
the process of unionizing with CWA under the tribal labor ordinances. Applying the NLRA,
the NLRB found that the casino had engaged in unfair labor practices and, in 2004, ordered
the tribe to give HERE equal access to the casino. The tribe petitioned the federal court of
appeals for review of the NLRB ruling, arguing that, under Fort Apache, the NLRA did not
apply to tribal businesses on reservation land and the NLRB therefore had no jurisdictional
basis to decide HERE’s claim.
The Court of Appeals upheld the NLRB ruling in a decision that discussed the historical and
legal nature of tribal sovereignty as well as more technical issues of statutory construction in
the tribal context. The Court framed its analysis around two questions: 1) Would application
of the NLRA to San Manuel’s casino violate federal Indian law by impinging upon protected
tribal sovereignty? and 2) If the NLRA applies, does the term “employer” in the NLRA
reasonably encompass Indian tribal governments operating commercial enterprises?
1. Fort Apache Timber Co., 226 N.L.R.B. 503 (1976).
Appellate, Constitutional and
Governmental Litigation Alert
In answering the first question, the Court reasoned that
tribal sovereignty is strongest where a tribe acts within
its territorial borders to regulate purely internal matters
and weakest where a tribe engages in off-reservation
business activities with non-Indians. Within this
framework, the San Manuel casino presented a hybrid
circumstance. The casino itself is located on reservation
land, is regulated by tribal ordinances and economically
supports the tribal government. However, the casino is
primarily operated as a commercial enterprise that
employs non-Indians and markets to non-Indians living
outside the reservation. The Court determined that
the commercial aspects of the San Manuel casino
far outweighed its governmental functions and held,
therefore, that applying the NLRA to regulate labor
relations at the casino would only minimally impinge
on the tribe’s sovereignty.
With respect to the second question – whether a tribe
is an “employer” within the meaning of the NLRA
– the Court recognized that the federal statute itself
does not specifically define what constitutes an
“employer.” Because Congress did not explicitly speak
to this question when it enacted the NLRA, courts
are required to defer to NLRB determinations on this
issue and give “controlling weight” to “permissible”
interpretations of the statute. Under this deferential
standard of review, the Court held that the NLRB had
reasonably interpreted the statute to find that, in its
casino operations, the tribe constituted an “employer”
within the meaning of NLRA.
Conclusion
The ultimate impact of the San Manuel decision
remains to be seen. It is unclear, for instance, whether
the decision will provide a basis for applying the NLRA
to other types of tribal businesses that are more closely
identified with a tribe’s governmental functions, like
schools or health care facilities, or tribal businesses
that employ and serve only tribal members. What
is clear, however, is that San Manuel overturns the
longstanding exemption of tribes from the requirements
of the NLRA with respect to tribal casinos. It permits
the NLRB to regulate labor relations within those
casinos, irrespective of whether the tribe maintains
its own labor ordinances or inconsistent decisions by
other federal circuit courts. In the absence of this case
reaching the Supreme Court of the United States on
appeal of an inconsistent decision by a different federal
circuit court, San Manuel governs and makes tribal
casinos subject to NLRA regulations.
In 2005, after the NLRB issued its ruling,
Representative J.D. Hayworth of Arizona introduced
“The Tribal Relations Restoration Act” (House Bill
16), which aimed restore the longstanding Fort Apache
rule by amending the NLRA to add Indian tribes to the
list of other governments exempt from the statute. The
Act died in committee, and Hayworth lost re-election
in 2006. It is unclear whether current legislators will
introduce similar amendments to the NLRA. In the
meantime, San Manuel governs and makes tribal
casinos subject to NLRA regulations.
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March 2007 |