The Court finds that the Tribe has a personal stake in this litigation, insofar as it requests injunctive relief.^[4] In general, it is well established that a sovereign has standing under the doctrine of parens patriae to assert a claim on behalf of the interests of all its citizens. See Louisiana v. Texas, 176 U.S. 1 1 (1900). The United States Court of Appeals for the Eighth Circuit has recognized the rights of Indian tribes to assert claims of its members against the deprivation of members' rights under this doctrine. See Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135 (8th Cir. 1974)(Tribe has standing to assert claim against State for unlawful taxation of its members); Red Lake Band of Chippewa Indians v. United States, 1995 US APP LEXIS 21470 (unpublished opinion)(Tribe has standing as parens patriae to assert claims of unlawful taxation against the United States). Other courts that have addressed this issue have similarly upheld the right of an Indian tribe to assert claims as parens patriae against an alleged tortfeasor. See Assiniboine & Sioux Tribes v. Montana, 568 F.Supp. 269, 277 (D.Mont. 1983); In re Blue Lake Forests Products, 30 F.3d 1138 (9^th Cir. 1994). It is largely irrelevant whether the Tribe can demonstrate an injury sufficient to trigger its standing when an action is filed in parens patriae. See Pueblo of Isleta v. Universal Constructors Inc., 570 F.2d 300 (10^th Cir. 1978)(action for damage to privately-owned fee land within Pueblo reservation may be maintained by Tribe as parens patriae).

            The Court acknowledges that certain Courts have restricted the ability of Indian Tribes to commence suits in parens patriae to those cases where the Tribe asserts the rights of all tribal members, and not just those who have allegedly suffered certain injuries. See Kickapoo Traditional  Tribe of Texas v. Chacon, 46 F.Supp.2 644 (WD Tx. 1999); Kickapoo Tribe of Oklahoma v. Lujan, 728 F.Supp. 791 (D.D.C. 1990). The amended complaint filed in this action does assert claims on behalf of all tribal members, both those who smoke and those who do not, in the form of a claim that the Tribe and its members are being require to allocate resources disproportionately toward the diseases that smoking has caused. In addition, the foregoing cases refusing to recognize parens patriae standing on the part of a Tribe seem to involve disputes not involving discrete tribal interests. In this case, the Tribe asserts claims on behalf of its members as well as its own discrete claims for monetary relief asserting that it has been required to allocate resources because of smoking and smokeless-tobacco related injuries. In the case at bar, the Court concludes that the Tribe has a sufficient interest to assert the claims herein on behalf of itself and as parens patriae for its members.

            The Court must now determine whether the grant of injunctive relief requested by the Tribe herein would provide any concrete relief to the Plaintiff in light of the existent consent decrees in effect in the states of North and South Dakota. The Defendants’ arguments at first blush appear to have merit because they correctly note that the members of the Sisseton-Wahpeton Sioux Tribe who reside within the exterior boundaries of the Lake Traverse reservation are citizens of the state of South Dakota entitled to the benefits of state law. See Howe v. Ellenbecker, 8 F.3d 1258 (8^th Cir. 1994)(Indian children on reservation entitled to child support collection services from state governments) . This includes the right to benefit from state court judicial decrees purporting to provide relief to all state citizens, or a subsection thereof. Even though Indians residing in Indian country are generally outside the appropriate reach of state laws, see Williams v. Lee, 358 U.S. 217 (1959) no court has concluded that Indians are not the proper beneficiaries of beneficial state laws or judicial decrees. The Court agrees with the basic proposition being promoted by the Defendants herein that the members of the Sisseton-Wahpeton Sioux Tribe should benefit from the injunctive relief awarded the states of North and South Dakota in the consent decrees entered into between those states’ Attorneys General and the Defendants here.

            This does not resolve the instant inquiry, however, because the Tribe argues that the claims for injunctive relief are not moot because the Defendants could violate the consent decrees within the jurisdiction of the Lake Traverse reservation because state laws, and the judicial decrees implementing those laws, are not enforceable in Indian country. See Joe v. Marcum, 621 F.2d 358 (10^th Cir. 1980)(state judicial decree cannot be enforced in Indian country even if state court had jurisdiction); Annis v. Dewey County Bank, 335 F.Supp. 133 (D.S.D. 1971).  Therefore, for example, the Tribe would contend that the Defendants could continue to collude to sell unsafe cigarettes in Indian country or cigarettes with higher levels of nicotine in Indian country and the consent decrees in effect in the states of South and North Dakota would be of no utility because the Defendants would be subject to tribal regulatory laws and not state regulatory laws. Putting aside the issue of whether the Tribe could regulate the type of cigarettes manufactured and ultimately sold on the Lake Traverse reservation, an issue the Defendants obviously would contend is a matter of dispute, the Court must examine whether state law can regulate the activities of non-Indians engaged in commerce with Indian tribes and their members in the state of South Dakota. If South Dakota law permits such, and such regulation is not preempted by federal law, nor would infringe upon the rights of reservation Indians to make their own laws and to be governed by them, the Court must agree with the Defendants that the claims for injunctive relief are moot. However, if doubt exists regarding the efficacy of the state court consent decrees to protect the members of the Sisseton-Wahpeton Sioux Tribe from the wrongs addressed in those consent decrees, this Court must conclude that the Tribe has standing to assert the same claims for injunctive and declaratory relief alleged by the State Attorneys General in their respective lawsuits.

            Determining to what extent state law can govern the activities of non-Indians who engage in commerce with Indian tribes and/or their members is no easy task. As a general proposition, it is well established that the Indian commerce clause, see United States Constitution, Art. I, sec. 8, cl. 3, grants the federal government the exclusive authority to regulate commerce with Indian tribes and preempts state authority. See Warren Trading Post v. Arizona Tax Commission, 380 U.S. 685 (1965). This is especially true in the area of Indian trading when a State attempts to regulate the flow of merchandise into Indian country either through taxation or regulation. Cf. McClanahan v. Arizona State Tax Commission, 411 U.S. 164 (1973). Federal law also vests the Commissioner of Indian Affairs with the exclusive authority to regulate trade with Indians under the Indian Traders Act. See 25 USC 261.  Whether a state can regulate the activities of non-Indians who engage in commerce with reservation Indians and Indian tribes is dependent upon “ a particularized inquiry into the nature of the state, federal, and tribal interests at stake, an inquiry designed to determine whether, in the specific context, the exercise of state authority would violate federal law.” White Mountain Apache Tribe v. Bracker, 448 U.S. 136, 144-145 (1980).  Although the United States Supreme Court at one time seemed hesitant to permit state regulation of non-Indians who engage in commerce with Indian tribes, especially when that regulation conflicted with federal objectives, see Bracker, Id., that trend has apparently shifted to a much more state-friendly perspective on state regulation of non-Indians as evidenced by the recent United States Supreme Court decision in Arizona Department of Revenue v. Blaze Construction, 526 U.S. 32 (1999). In Blaze the Court rejected the balancing test of Bracker and instead held that a state can tax a non-Indian entity engaged in commerce with the federal government for the improvement of roads on an Indian reservation. The Court distinguished the contracts in question in Blaze – between the federal government and non-Indian entities- and contracts between non-Indians and Indian tribes, like those involved in Bracker and indicated that only in the latter situation would the balancing test of Bracker be appropriate. The Court, therefore, does not finding Blaze particularly helpful on the issue of whether the state can regulate the type of cigarettes sold on the Lake Traverse reservation.

            It is beyond peradventure that the State could not impose a tax upon tribal members who purchase cigarettes on the Lake Traverse reservation and require the retailer of those cigarettes, even non-Indian retailers, to collect that tax as the incidence of the tax would clearly fall upon the Tribe and its members. See Moe v. Salish & Kootenai Tribes, 425 U.S. 463(1976); Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134 (1980). It is equally clear that the State could impose restrictions upon these Defendants as wholesalers of cigarettes to ensure that the sell of cigarettes on the Lake Traverse reservation does not result in fraud or result in non-Indians escaping taxes lawfully owed the States. See Department of Taxation and Finance of New York v. Milhelm Attea, 512 U.S. 61. By analogy from the cigarette taxation cases, therefore, it is apparent that the states of North and South Dakota can impose restrictions upon these Defendants, as the manufacturers of tobacco products, to assure that cigarettes are not sold to non-Indians on the Lake Traverse reservation in violation of the consent decrees entered into with those States. Equally clear by analogy, however, the cigarette taxation cases would not permit states to regulate the conduct of manufacturers of cigarettes who sell their products to tribal members and the Tribe on the Lake Traverse reservation as such would be a direct interference with Indian commerce and would be both preempted by the Indian commerce clause and interfere with the right of the Tribe to make its own laws and to be governed by them.[5] See Washington v. Confederated Tribes of the Colville Reservation, supra.

            This inquiry is not an academic exercise in the case at bar. The Sisseton-Wahpeton Sioux Tribe operates three casinos on Indian trust land within the original exterior boundaries of the Lake Traverse reservation and one convenience store, all of which sell the Defendants’ cigarettes.[6] There is also a trading post located in Agency Village, South Dakota on trust land which sells the Defendants’ products. Tribal law grants the exclusive authority to the Tribe to market the Defendants’ cigarettes on the Lake Traverse reservation and creates a taxation scheme authorizing tribal taxes on cigarettes, thus benefiting the Tribe and its members.  If the states of North and South Dakota cannot regulate the Defendants’ marketing and merchandising of cigarettes on the trust lands within the exterior boundaries of the Lake Traverse reservation, it is difficult for this Court to conceive of how those respective states and these Defendants can agree by an consent decree filed in a state court to permit state regulatory authority over the types of cigarettes marketed on the Lake Traverse reservation without tribal consent. If this authority does not exist as a matter of federal law, it cannot be gained through state court judicial fiat. The consent decrees entered into in North and South Dakota with the respective States’ Attorneys General and these Defendants, even though they purport to provide protections to the members of the Sisseton-Wahpeton Sioux Tribe residing on the Lake Traverse reservation, provide no relief to the Tribe and its members if the respective States have no underlying authority to regulate the Defendants’ marketing of cigarettes on the Lake Traverse reservation.[7]

            The Court believes that the Tribe and its members residing on the Lake Traverse reservation have a concrete interest in procuring the injunctive and declaratory relief sought herein and that this interest has not been rendered moot by the state court consent decrees awarding the States of North and South Dakota the identical relief. This Court will only dismiss a claim based upon mootness if it is sufficiently clear that the Tribe and its members have achieved the injunctive and declaratory relief the Tribe requests in this action through alternate means. In this case, considering the rather unclear state of the federal law governing non-Indian commercial activity on Indian reservations, the Court cannot say with the degree of certainty necessary to dismiss the Tribe’s claims for injunctive that the Tribe and its members will benefit in any substantive way from the consent decrees entered into by the Defendants and the States of North and South Dakota. The Defendants herein could, for example, continue to manufacture cigarettes in a manner that violates the state court consent decrees and market them only in Indian country. [8] The fact that both North and South Dakota expressly provided in their consent decrees that the decrees did not preclude Indian tribes from bringing their own actions against these Defendants is perhaps reflective of the states’ recognition of their limited authority to provide meaningful relief to Indian tribes and their members in Indian country on the issues resolved in the consent decrees. [9]

            Because the extent to which state law can control the actions of non-Indians who engage in commerce with Indian tribes and their members on the reservation is so inexact, this Court cannot say with the necessary certainty to justify a dismissal of the Tribe’s complaint on mootness that the injunctive and declaratory relief sought herein has already been received by the Plaintiff’s members. Therefore, the Court denies the Defendants’ motion to dismiss for failure to allege a case or controversy.

The Defendants also challenge the standing of the Tribe to bring the actions for monetary

relief.[10] The Defendants contend that no federal or tribal law allows the Tribe to bring an action in subrogation for medical and other expenses incurred by tribal members harmed by smoking or utilizing smokeless tobacco. Second, they assert that the Tribe has no independent claim for monetary relief, absent a claim in subrogation, because the federal government, through the Indian Health Services, is the primary medical care provider for the Plaintiff’s members and the Tribe does not provide a fiscal match for the operation of Indian Health Services programs, unlike Title XIX of the Social Security Act which does require a state fiscal match.

            The Court must first dispose of an argument by the Tribe that a federal statute, 25 U.S.C. 1621e(a), authorizes the Tribe to bring this action against these Defendants to recoup the medical expenses incurred by the Indian Health Service in treating the smoking-related illnesses of tribal members. This section of the Indian Health Services Act was included in the IHSA to “expressly provide tribal organizations with a right of recovery to collect the reasonable costs of health care provided to Native Americans and Alaskan natives from third party insurers.” Yukon-Kuskokwim Health Corp., Inc. v. Trust Ins. Plan for Southwest Alaska, 884 F.Supp. 1360, 1363 (D. Alaska 1994)(Emphasis added). On its face, this statute seems to permit an Indian tribe to recoup the expenses borne by the United States through the Indian Health Services even in a situation where the Tribe is not contracting the delivery of health care services to tribal members under the Indian Self-Determination and Education Assistance Act, see 25 U.S.C 450a-450n. Although the language of the statute permits of such an interpretation, the legislative history clearly indicates that Congress intended to permit tribal governments contracting with the Indian Health Services for the delivery of health services to bring such actions. Another problem with the Tribe’s argument on this issue, however, is that it is fairly clear from the legislative history[11] to this section that the cause of action vested by federal law in the Tribe or the United States to recoup medical expenses lies only against insurors and not alleged tortfeasors. Congress was attempting to fill a gap left in the reimbursement statute originally enacted in the Indian Health Care Improvement Amendments of 1988, which had vested a cause of action for reimbursement in the United States against third-party insurors. The Court, therefore, concludes that this statute is not an express authorization to the Tribe to bring this action.[12]

            The Tribe also asserts that it may bring this action on behalf of its members notwithstanding the absence of a subrogation statute under federal or tribal law authorizing such suits. The Defendants fervently resist this notion and contend that several recent decisions restrict the right of a sovereign to bring a derivative action against cigarette manufacturers absent an express authorization to do so. See Hawaii Health and Welfare Trust Fund v. Philip Morris, Inc., Civil No 97-00833 SPK , Order Granting Motion to Dismiss, January 25, 1999 (D. Hawaii 1999); Indiana v. Philip Morris Inc., Cause No 49D07-9702-CT-000236 , Order of Dismissal July 23, 1998.

            The argument made by the Defendants that the Tribe’s claims for monetary relief are solely derivative misrepresents the claims for monetary relief requested by the Plaintiff Tribe. First, the Tribe contends that it has been required to expend millions of dollars in caring for tribal members “who have and are suffering from lung disease, cardiovascular disease, emphysema, chronic obstructive pulmonary disease and a variety of other cancers and diseases that were and are caused by Defendants’ cigarettes.” Amended Complaint of Plaintiff, at 15, paragraph 66. This claim, which of course the Tribe would have to prove at trial, must be accepted as true in the present posture of this case.[13] Assuming its verity, the Tribe is asserting that it has been directly harmed by the actions of the Defendants and this harm is not merely derivative of the harm experienced by tribal members. This harm is similar to the harm asserted by several States which sued these same Defendants under the theory that they had been forced to expend state monies, in the form of fiscal matches to the federal allocation for medical insurance under Title XIX of the Social Security Act (Medicaid).[14] 

The Defendants assert that the Plaintiff here is not similarly situated as State Plaintiffs that proceed under Medicaid reimbursement theories both because Tribes, unlike States in Medicaid schemes, need not provide fiscal matches to receive federal dollars to operate medical assistance programs and because the States which have commenced actions against these Defendants have countenanced those actions on state subrogation statutes. They also contend that even if the Plaintiff is allowed to proceed in subrogation, its complaint is deficient because it fails to identify specific tribal members who have sustained tobacco-related injuries or diseases. See, e.g., Conwed Corporation v. R.J. Reynolds, Inc., 1999 US LEXIS 9634 (D. Minn. 1999)(dismissing a claim in subrogation against tobacco companies for the failure of the Plaintiffs to plead specific injuries to specific parties). 

The Court initially must disagree with the Defendants’ assertion that the Tribe may not proceed in this matter absent a tribal or federal subrogation statute. This argument is contrary to a decision, Idaho v. Philip Morris Inc., Case No. CV-OC-97-03239*D, submitted by the Defendants in which an Idaho trial court upheld the right of a State to seek reimbursement under a direct injury theory in addition to an action in subrogation under state law. If the Tribe can demonstrate a loss of resources due to its need to allocate tribal resources to provide medical care for its members that have sustained smoking-related diseases and injuries, it can proceed under a direct injury theory rather than a derivative action. This conclusion also negates the Defendants’ argument that the Tribe’s amended complaint is fatally deficient because it fails to allege specific injuries to specific tribal members. Because the Tribe is not proceeding in subrogation, its complaint need not make those allegations to survive a motion to dismiss.

            Nor does the Court believe that the present posture of this case permits the Court to merely dismiss the complaint based upon the Defendants’ assertions that the Sisseton-Wahpeton Sioux Tribe has not contracted the delivery of health services through the Indian Health Services and thus the Tribe cannot make the necessary showing that it expends tribal dollars for smoking-related diseases. The Tribe should be allowed to demonstrate that it does expend its own monies for such diseases either at trial or in response to a motion for summary judgment. It does not appear in the present case at bar that any discovery has been completed on this issue. Because the Court must construe this allegation the Tribe makes in its complaint as true, the Court finds that the Tribe has asserted a direct injury in the form of a loss of tribal resources similar to the loss of state resources alleged by state governments in their suits against these Defendants. 

The Court also believes that the complaint of the Tribe is broad enough to sustain the Tribe’s assertion that it files this action in parens patriae for all its members. The Complaint asserts that the Tribe has had to reallocate medical resources away from other needed medical care for its members and to the delivery of services to those tribal members suffering from smoking-related diseases. If this can be demonstrated by the Plaintiff, it does support the Tribe’s contention that the claim it makes is an appropriate parens patriae claim because the interests of all tribal members are impacted by the actions of the Defendants. In general, it is well established that a sovereign has standing under the doctrine of parens patriae to assert a claim on behalf of the interests of all its citizens. See Louisiana v. Texas, 176 U.S. 11 (1900). The United States Court of Appeals for the Eighth Circuit has recognized the rights of Indian tribes to assert claims of its members against the deprivation of members' rights under this doctrine. See Standing Rock Sioux Indian Tribe v. Dorgan, 505 F.2d 1135 (8th Cir. 1974)(Tribe has standing to assert claim against State for unlawful taxation of its members); Red Lake Band of Chippewa Indians v. United States, 1995 US APP LEXIS 21470 (unpublished opinion)(Tribe has standing as parens patriae to assert claims of unlawful taxation against the United States). Other courts that have addressed this issue have similarly upheld the right of an Indian tribe to assert claims as parens patriae against an alleged tortfeasor. See Assiniboine & Sioux Tribes v. Montana, 568 F.Supp. 269, 277 (D.Mont. 1983); In re Blue Lake Forests Products, 30 F.3d 1138 (9^th Cir. 1994). It is largely irrelevant whether the Tribe can demonstrate an injury sufficient to trigger its standing when an action is filed in parens patriae. See Pueblo of Isleta v. Universal Constructors Inc., 570 F.2d 300 (10^th Cir. 1978)(action for damage to privately-owned fee land within Pueblo reservation may be maintained by Tribe as parens patriae).

            The Court acknowledges that certain Courts have restricted the ability of Indian Tribes to commence suits in parens patriae to those cases where the Tribe asserts the rights of all tribal members, and not just those who have allegedly suffered certain injuries. See Kickapoo Traditional  Tribe of Texas v. Chacon, 46 F.Supp.2 644 (WD Tx. 1999); Kickapoo Tribe of Oklahoma v. Lujan, 728 F.Supp. 791 (D.D.C. 1990). The amended complaint filed in this action does assert monetary claims on behalf of all tribal members, both those who smoke and those who do not but may have been denied medical services because of a tribal need to allocate resources towards members with smoking-related diseases. In addition, the foregoing cases refusing to recognize parens patriae standing seem to involve disputes not involving discrete tribal interests. In this case, the Tribe asserts claims on behalf of its members as well as its own discrete claims for monetary relief asserting that it has been required to allocate resources because of smoking and smokeless-tobacco related injuries. In the case at bar, the Court concludes that the Tribe has a sufficient interest to assert the claims herein on behalf of itself and as parens patriae for its members.

            The Court therefore concludes that the Tribe has sufficient standing in this matter to pursue its claims for monetary relief for alleged losses of tribal resources due to the allocation of those resources for smoking-related diseases. The Tribe also has standing to pursue the claims of its tribal members that they have sustained smoking related illnesses and diseases that have required the need for the Tribe to expend resources to provide medical care for them. Of course, the Tribe must still demonstrate at trial, or in response to a motion for summary judgment, both that these resources have been expended and for which tribal members they have been expended. However, the Tribe is entitled to demonstrate that it can carry this burden after an appropriate evidentiary examination and not at this stage.

            The last argument in support of the motion to dismiss is that this Court lacks subject matter jurisdiction over all claims asserted by the Plaintiff in its amended complaint. The Defendants conceded at oral argument that the Court has personal jurisdiction over these Defendants because their cigarettes are sold in the Indian country that lies within the original exterior boundaries of the Lake Traverse Indian reservation. [15]Notwithstanding this concession, the Defendants assert that this Court lacks subject matter jurisdiction under the principles recently enunciated by the United States Supreme Court in Strate v. A-1 Contractors, 117 S.Ct. 1404 (1997).

            In Strate v. A-1 Contractors, supra, the United States Supreme Court reconciled two apparently conflicting lines of cases regarding tribal authority over non-Indians. In Montana v. United States, 450 U.S. 544 (1981) the United States Supreme Court held that Indian tribes could not regulate the activities of non-Indians on privately-owned fee land within the exterior boundaries of an Indian reservation absent a showing that the non-Indian has entered into “consensual relationships with the tribe or its members, through commercial dealing, contracts. leases, or other arrangements” or the activities of the non-Indian “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the Tribe.” Montana, at 565-566. It is important to note, however, that the Court in Montana also concluded, with little discussion, that the Tribe’s authority to regulate the activities of non-Indians on tribal or trust land was relatively unrestricted. The Supreme Court, in subsequent decisions, went on to clarify that the Montana standard for the tribal exercise of regulatory authority also applied to other lands within an Indian reservation and was not necessarily applicable only to privately-owned fee lands. See South Dakota v. Bourland, 508 U.S. 679 (1993)(tribal authority over non-Indians on lands taken by United States under Flood control act proscribed under the Montana standard).

            This presumption against tribal regulatory authority over non-Indians on certain lands within Indian country should be juxtaposed to the relatively liberal authority tribal courts were apparently given to adjudicate claims against non-Indians by United States Supreme Court precedents prior to Strate. In the two seminal United States Supreme Court decisions that fashioned the tribal court exhaustion rule, National Farmer’s Union Insurance Co. v. Crow Tribe of Indians, 471 U.S. 845, 856 (1985) and Iowa Mutual Insurance Co. v. LaPlante, 480 U.S. 9, 14 (1987), the Court in dicta seemed to suggest that tribal courts presumptively have subject matter jurisdiction over civil disputes involving non-Indians that arise in Indian country. Therefore, there appeared to be two conflicting presumptions – one, in the regulatory context, against tribal authority and the other, in the adjudicatory context, favoring tribal court adjudicatory authority. 

The Strate court resolved this incongruity, at least for disputes arising on non-trust lands within the reservation, by holding that tribal adjudicatory authority over non-Indians is essentially coterminous with the authority of the tribe to regulate the underlying conduct that forms the gravamen of a tribal court dispute. The Court also took a very liberal interpretation of the concept of non-tribal lands by holding that a right of way given to a state for a state highway that runs through Indian trust land is equivalent to privately-owned fee land for Montana purposes. It is apparent to this Court that the United States Supreme Court now is of the opinion that its decision in Montana restricting tribal authority over non-Indians, although limited by the facts of that case to the activities of non-Indians on privately-owned fee land, is the appropriate litmus test for the determination of tribal court regulatory and adjudicatory authority over non-Indians, except in those situations when the non-Indians’ activities are occurring exclusively on Indian trust land. There is no indication in Strate that the Supreme Court disavowed its rather clear ruling in Montana that a tribe can regulate the activities of non-Indians on Indian trust land.

In many cases, because of the rather austere standard for exercising jurisdiction over non-Indians laid out by Montana and applied to tribal adjudicatory jurisdiction in Strate, tribal court jurisdiction over non-Indians is rather clearly precluded. So, for example, in Hornell Brewing Co. v. Rosebud Sioux Tribal Court, 133 F.3d 1087 (8^th Cir. 1998) the Court applied the Montana standard to overrule the Rosebud Sioux Tribal court’s attempt to exercise jurisdiction over a non-reservation distiller of a certain malt liquor called “Crazy Horse”, which was consciously not marketed on the Rosebud Indian reservation by the non-Indian distiller. The Court concluded that a Tribal Court had no authority to exercise jurisdiction over the conduct of non-Indians off the reservation finding that “neither Montana nor its progeny purports to allow Indian tribes to exercise civil jurisdiction over the activities or conduct of non-Indians occurring outside their reservations.” Hornell, at 1091. The Court strained, however, to stress that its ruling was based upon the “fundamental fact in the present case that the Breweries do not manafacture, sell, or distribute Crazy Horse Malt Liquor on the Reservation.” Hornell, at 1092(emphasis added). If it had been distributing the malt liquor on the reservation, the decision in Hornell may have been different especially in light of the United States Court of Appeals for the Eighth Circuit’s decision in City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d 554 (8^th Cir. 1993) holding that federal law vested Indian tribes with the authority to regulate the sell of alcoholic beverages within the exterior boundaries of an Indian reservation, even within non-Indian communities. Timber Lake clearly would have dictated that the Tribal could have regulated the sell of Crazy Horse Malt Liquor on the reservation and resultantly the tribal court could have exercised adjudicatory authority over any action filed regarding the sale of the malt liquor on the reservation.

            If the authority of this Court to adjudicate this case is coterminous with the authority of the Tribe to regulate the activities of the Defendants herein, the job of this Court is greatly simplified. This Court does not start with a blank slate. Disputes over cigarettes have made much Indian law.  The authority of Indian tribes and states to regulate the marketing and taxation of cigarettes has been the subject of much federal and tribal court attention which can guide this Court on the issue of its adjudicatory authority over this particular action. The basic inquiry this Court must explore is whether federal law countenances tribal regulation of cigarettes that are sold on the Indian trust lands that lie within the Lake Traverse reservation. If it does, this Court must carefully scrutinize each count of the Plaintiff’s complaint and each prayer for relief to assess whether each cause of action pertains to actions allegedly taking place on Indian trust lands or allotted lands within the reservation boundary and whether each prayer for relief requests relief that can be achieved through a regulation of activities that occur on the trust lands within the reservation boundaries.

            Initially, the Defendants make a perplexing argument based upon DeCoteau v. District Court, 420 U.S. 425 (1975)(finding that the United State’s purchase of surplus lands from the Sisseton-Wahpeton Bands removed those surplus lands from the Tribe’s reservation) that the Sisseton-Wahpeton Sioux Tribe’s authority to regulate non-Indians, and correspondingly this Court’s authority to adjudicate disputes involving that regulatory authority, is even more proscribed than the authority of other Tribes’ because the exterior boundaries of the Lake Traverse reservation were disestablished by the United States Supreme Court. As the Court understands this argument, the Defendants contend that all the actions challenged here took place within the disestablished portions of the reservations. The Court agrees with the Defendants that the Tribe cannot regulate the activities of non-Indians on the disestablished portions of the Lake Traverse reservation and to the extent that the Tribe’s complaint purports to rely upon such tribal authority, it cannot be sustained. However, the Court does not understand the Tribe’s complaint to allege such broad authority in the Tribe. The complaint seeks to enjoin the activities of the Defendants that lead to certain types of cigarettes being sold and merchandised on the trust lands within the reservation, and monetary relief for the smoking-related diseases of tribal members who purchased cigarettes on the trust lands within the reservation.[16] These Defendants are already precluded from engaging in the activities the Tribe seeks to enjoin in this complaint on the surplus lands that are no longer part of the Lake Traverse reservation by virtue of the consent decree entered into with the States of North and South Dakota. Certain tribal members may also benefit from the monetary relief awarded the States in those consent decrees under the premise that they contracted smoking-related diseases by purchasing cigarettes off the reservation.

            The Defendants have not pointed to one case wherein a Court took a more circumscribed perspective of tribal regulatory and tribal adjudicatory authority over non-Indians because the Tribe in question was located on a disestablished reservation. There is no such case. Indeed, the United States Supreme Court in Oklahoma Tax Commission v. Sac and Fox Nation, 508 U.S. 114 (1993) held that “informal reservations” in Oklahoma were equivalent to formal reservations for purposes of determining appropriate state regulatory authority. The Sisseton-Wahpeton Sioux Tribe has the same authority to regulate the activities of non-Indians within the trust lands that still lie within the Lake Traverse reservation that any other Tribe located on a non-disestablished reservation does. The fact that the Lake Traverse reservation is disestablished may produce severe proof problems for the Tribe in proving the allegations in the complaint, especially in light of the Hornell decision that the conduct of the non-Indians in question must be on-reservation conduct and on-reservation conduct is a much more convoluted issue on a disestablished reservation, but such does not dictate that the Tribe not be given the opportunity to demonstrate that the alleged wrongful conduct in the complaint occurred on the trust lands that still lie within the Lake Traverse reservation.

            The Court does not find the Montana analysis for determining whether an Indian tribe can regulate the activities of non-Indians on certain lands within reservation boundaries necessarily dispositive of the issues involved herein, except insofar as Montana discussed tribal regulation of the activities of non-Indians on trust lands. It is beyond peradventure that the Tribe here cannot regulate the conduct of non-Indians on the fee lands that were once within the exterior boundaries of the Lake Traverse Indian reservation because of DeCoteau. In addition, if the underlying activities that form the core of the instant dispute in this case were off-reservation activities, Hornell would necessarily dictate that this Court’s jurisdiction is precluded unless the more prohibitive Montana standard is met. [17] If the Tribe, however, purports to regulate the actions of the Defendants that impact upon commercial transactions that occur upon the trust lands within the Lake Traverse reservation, another line of cases forms the more relevant inquiry. Those cases involve the authority of Indian tribes to regulate the commercial activities of non-Indians on the trust lands that lie within the reservation boundaries. Those cases, including Montana v. United States, supra,(especially with regard to its discussion on tribal regulatory authority over non-Indians on trust lands), Merrion v. Jicarilla Apache Tribe, 455 U.S. 130 (1982), Cotton Petroleum v. New Mexico, 490 U.S. 163 (1989), and Moe v. Confederated Salish & Kootenai Tribes, , 425 U.S. 463(1976), seem to dictate a different result than that dictated by the decision in Strate which involved the activities of non-Indians on land that was found to be roughly equivalent to fee lands. It should also be noted that the Court in Strate, in dismissing the personal injury action brought by the non-Indian plaintiff, expressly found that the non-Indian litigant had an alternative remedy in a North Dakota state court. This Court must inquire into whether an alternative remedy exists for the Tribe herein to seek state intervention to regulate a non-Indian engaged in commerce with an Indian tribe and its members. [18]

            The Defendants strongly resist any finding that they have engaged in any conduct on the trust lands located within the reservation, despite their concession that their products are sold at the Tribe’s three casinos and one convenience store, all of which are located on trust land within the exterior boundaries of the reservation.[19] They contend that the complaint of the Tribe is nothing more than a naked attempt to extend its regulatory authority outside the trust lands of the Lake Traverse reservation, in violation of Hornell and Montana, and should be resisted by this Court. The Tribe responds by asserting that the only commercial activity it seeks to address through this litigation is the type of cigarette being sold on the trust lands within the Lake Traverse reservation and the type of marketing being undertaken by these Defendants on the trust lands within the reservation boundaries. The Court believes that to the extent that the Tribe seeks to regulate such activity, and to invoke this Court’s jurisdiction to adjudicate issues regarding its regulatory authority, this Court must look to the Merrion-Moe-Cotton Petroleum and Montana trust land analysis. To the extent that the Tribe attempts to regulate off-reservation conduct by the Defendants, however, the Court agrees with the Defendants that such regulation shall be governed by the more stringent Montana-Strate standard. 

            The Tribe makes no attempt in its complaint to allege to allege any on-reservation conduct by the Defendants other than the sale and marketing of their cigarettes. The Court does read the complaint of the Plaintiff as alleging that the Defendants engaged in a conspiracy to deny the addictive nature of nicotine by marketing the cigarettes in a misleading manner. Such marketing techniques culminated in the sale of cigarettes on the trust lands within the  Lake Traverse reservation which led to tribal members incurring smoking-related diseases and injuries which the Tribe allocated resources for medical attention.[20] The Defendants have no physical location on the Lake Traverse reservation, nor do they directly sell their products on the Lake Traverse reservation. Instead, they “manufacture and put into the stream of commerce”[21] their products and those products are sold by wholesalers to the Sisseton-Wahpeton Sioux Tribe which appears to be the exclusive retailer of cigarettes on the trust lands within the Lake Traverse reservation.[22]There is no evidence before the Court that these Defendants, unlike the distiller in Hornell, consciously attempted to avoid the sale of their products on any Indian reservations.

            This critical distinction between the facts presented here and the facts in Hornell makes that precedent somewhat inapplicable here. It appears to the Court that the Hornell decision would have been different had the brewery there sold its offending product on the Rosebud Sioux Indian reservation because the same court had recognized previously the right of Indian tribes to regulate all alcoholic beverages sold on an Indian reservation. City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d 554 (8^th Cir. 1993). Ergo, if the right to regulate vests in a tribal court the right to adjudicate any dispute arising from that regulation- a principle enunciated by the Court in Strate – it appears that the mere act of selling ones product on an Indian reservation, especially on the trust lands on that reservation, vests the Tribe with some authority to regulate and the Tribal Court with some authority to adjudicate the nature of that regulatory authority.

            What makes that principle so difficult to apply here is that the Tribe’s complaint makes no attempt to distinguish between acts that it seeks to adjudicate that occur on the reservation, as compared to those that occur off. The Court must therefore start with the principle that the Tribe has certain regulatory authority over the actions of non-Indians that occur within the trust lands of the reservations, and almost no regulatory authority over the actions of non-Indians that occur on the fee lands within the reservation or off the reservation.  The United States Supreme Court has recognized that an Indian tribe has the right to tax non-Indians that remove oil and gas from the trust lands within the exterior boundaries of an Indian reservation. See Merrion v. Jicarilla Apache Tribe, 455 US 130 (1982); see also Kerr-McGee v. Navajo Tribe of Indians, 471 US 195 (1985).  In Merrion, in response to the argument by the non-Indians being taxed that the Tribe had no inherent authority to regulate non-Indians on trust lands within reservation boundaries the Court strongly disagreed and stated that this authority “does not derive solely from the Indian tribe’s power to exclude non-Indians from tribal lands. Instead, it derives from the Tribe’s general authority, as sovereign, to control economic activity within its jurisdiction, and to defray the cost of providing governmental services by requiring contributions from persons or enterprises engaged in economic activities within that jurisdiction.” Merrion, at 137(emphasis added). The Merrion court relied heavily upon the Court’s decision in Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134 (1980), a decision which has much significance in the case at bar. In Colville, the Court recognized the authority of Indian tribes to tax cigarettes being sold both to tribal members and nonmembers on the trust lands lying within the impacted reservations there. The Court stated that “the power to tax transactions occurring on trust lands and significantly involving a tribe or its members is a fundamental attribute of sovereignty which the tribes retain unless divested of it by federal law or necessary implication of their dependent status.” Colville, at 152. 

            If the Tribe here has the authority to regulate by taxation the cigarettes sold to tribal members and others at its casinos located on trust land, which Colville clearly holds it does, does that authority extend to regulating the type of cigarettes sold? The Court believes that it clearly does as Merrion strongly suggests that the Tribe can regulate any aspect of commerce on its reservation including the manner in which cigarettes are sold and marketed and that it can also demand compensation from any entity engaged in that commerce on the trust lands within the reservation. Have the principles laid out in Colville and Merrion been modified by the Supreme Court’s recent decision in Strate, however, which appears to place much more reliance upon Montana?  The Court does not believe that Colville and Merrion have been disaffirmed by the Supreme Court’s more recent reliance upon the Montana standard as a barometer for determining whether tribal regulatory authority is appropriate. It must be remembered that the Montana standard only applies to tribal attempts to regulate the activities of non-Indians on fee lands within the reservation boundary (an issue not of critical distinction on the Lake Traverse reservation because of the DeCoteau decision depriving the Court of any jurisdiction over the fee lands), lands that are similarly situated as fee lands (Bourland and Strate) and off-reservation activities (Hornell). Tribal authority to regulate non-Indian activity on the trust lands within the reservation appears to remain intact. The United States Court of Appeals for the Ninth Circuit has recently held in Allstate Indemnity v. Stump, 1999 U.S. App. LEXIS 19623 (9^th Cir. 1999) that the Montana analysis “only applied to disputes arising on non-Indian fee land, not disputes on tribal land; otherwise the Strate Court’s analysis of why a state highway on tribal land was equivalent to non-tribal land would have been unnecessary.” Id, slip opinion at 9. Although that case involved the question of exhaustion, the Court in dicta distinguished the acts of the non-Indian insurer in selling a policy of insurance to a reservation-domiciled  Indian and mailing him premiums from the acts of Hornell which involved all off-reservation conduct. See also TTEA, A Texas Corp. v, Isleta Del Sur Pueblo, 181 F.3d 676 (10^th Cir. 1999)(tribal court properly exercised civil jurisdiction over non-Indian smokeshop owner over dispute regarding the validity of a contract not approved by Department of Interior). The United States Court of Appeals for the 10^th Circuit has similarly held, after Strate, that the Montana presumption against tribal regulatory authority does not apply to disputes arising on tribal land. See Enlow v. Moore, 134 F.3d 993, 996 (10^th Cir. 1998)(“in civil disputes involving non-Indian and Indian land, where no treaty provision or federal statute divests the tribal court of jurisdiction, the tribal court may properly exercise jurisdiction).

            Attempting to apply the lessons of Merrion, Montana and Hornell to this case is very troublesome because certain of the activities the Tribe seeks to address through its complaint clearly are occurring off the reservation while some certainly are occurring on the reservation. Therefore, the Court must examine each count of the complaint and prayer for relief and determine whether the Montana or Merrion standard should apply to the activity. The Court must then apply the Montana standard to the off-reservation activities to determine if the Court may exercise subject matter jurisdiction.

            Count 1 of the Complaint alleges that the Defendants engaged in unfair and deceptive acts or practices by denying that nicotine was addictive and in making false statements regarding the addictive nature of nicotine to consumers, thus leading to the addiction of numerous tribal members. The Court concludes that this count is subject to the more strict Montana and Hornell standard for assessing this Court’s subject matter jurisdiction as it clearly involves off-reservation conduct. The Tribe has failed to allege any on-reservation activity that forms the basis for this claim and the Hornell court clearly forecloses the argument that commercial advertising that is received on the reservation is a sufficient basis for making this conduct on-reservation conduct. See Hornell at 1093. The Court must therefore analyze this count under the Montana standard.

            Count 2 of the Complaint alleges “Negligent Misrepresentation” and claims that these Defendants in their advertisements and communications, knowing that nicotine was addictive and that the nicotine level in cigarettes was being manipulated, violated a duty of care owed to the Tribe and its members by not revealing its knowledge of these factors and as a result, tribal members became addicted to cigarettes. No specific misrepresentation on the reservation is alleged, but instead the Tribe refers to “advertisements and other communications”, the latter not being specifically identified. The Court believes that these allegations pertain to off-reservation activities and must be evaluated under the Montana standard. Hornell seems to preclude any inference that off-reservation communications received on the reservation either through the airwaves or other electronic means can be construed as on-reservation activity.

            Count 3 of the Complaint alleges “Intentional Infliction of Emotional Distress” and alleges that the Defendants acted in an extreme and outrageous manner toward the Tribe and its members by concealing the addictive nature of nicotine and manipulating the levels of nicotine in their cigarettes so as to addict tribal members who purchased cigarettes on the trust lands within the reservation. Again, the Tribe does not assert any specific on-reservation act of the Defendants which constitutes this cause of action and instead refers to marketing strategies and techniques of the Defendants, all of which occurred off-reservation. The Court again concludes that this cause of action must be analyzed under the more stringent Montana standard.

            Counts 4 and 5 of the complaint allege breaches of both express and implied warranties that cigarettes were not addictive and were safe for ordinary use. In addition, they assert that the Defendants warranted that the nicotine level in cigarettes was not being manipulated. The Plaintiff asserts that the Defendants’ cigarettes were sold in violation of these warranties because they were not merchantable for the purposes persons were purchasing them and that these breaches of warranty resulted in tribal members being injured for which the Tribe has paid medical expenses. In general, a cause of action for breach of warranty arises where the commercial transaction that is warranted occurs. In the seminal case in South Dakota, Opp v. Nieuwsma, 458 N.W.2d 352 (S.D. 1990) the Court addressed the question of whether a South Dakota court could exercise jurisdiction over a breach of warranty action filed by a South Dakota rancher who purchased infected livestock out of state from a seller who did not engage in business in South Dakota. The Court upheld the trial court’s assumption of jurisdiction on the ground that the warranty of merchantability was breached at the point of delivery of the livestock and that the seller knew that the livestock were being sold to a South Dakota rancher. This case strongly suggests that a cause of action for breach of warranty arises where the ultimate commercial transaction takes place and that it is irrelevant that the manufacturer has no commercial situs on the reservation. If a manufacturer places his merchandise into a stream of commerce, a cause of action for breach of warranty arises at the point that the merchandise is sold, which in this case occurred on the trust lands within the Lake Traverse reservation.

            The Court concludes that the Tribe has the authority to regulate the merchandise sold on its trust lands within the reservation to assure that it complies with the warranty of merchantability and any express warranty made by the manufacturer as to its fitness. This Court cannot conceive of a federal court upholding the authority of an Indian tribe to regulate by taxation cigarettes sold on the trust lands of an Indian reservation, see Colville, yet deny the Tribe the right to regulate the quality of the cigarette sold to assure that it does not injure tribal members.  Ergo, this Court has the authority to adjudicate any cause of action concerning a breach of that warranty. Because these causes of action involve only on-reservation conduct affecting tribal members, these counts should be judged by the Merrion standard and the Court therefore concludes that this Court has subject matter jurisdiction over Counts 4 and 5 of the Complaint.[23]

            Count 6 of the complaint has the same deficiencies regarding on-reservation conduct as counts 1-3. That count alleges that the Defendants conspired to suppress research regarding the addictive nature of nicotine and also conspired not to sale a safer cigarette with less nicotine. Again, no single act of on-reservation conduct is alleged here and the Court construes the allegations in this Count as involving only off-reservation conduct which must be judged by the Montana standard.

            Count 7 of the complaint alleges, in the alternative to the other counts, that these Defendants have been unjustly enriched by the fact that their products caused diseases among tribal members who purchased them on the trust lands within the reservation boundaries and the Tribe was required to pay for the medical expenses of those members who incurred smoking-related illnesses and diseases, all to the unjust enrichment of the Defendants. The Tribe seeks to shift the burden of paying for smoking-related diseases to the Defendants by requiring them to reimburse for medical expenses the Tribe has incurred in paying for tribal members’ diseases and illnesses. This count alleges specific on-reservation conduct because the unjust enrichment alleged occurred as the result of the Defendants’ cigarettes being sold on the Lake Traverse reservation to tribal members who then incurred medical problems on the reservation and who were treated on the reservation for these diseases utilizing tribal dollars. This count alleges on-reservation conduct that the Court has jurisdiction over under Merrion. The Court believes that the authority to regulate commercial activity includes the authority “to control economic activity within its jurisdiction, and to defray the cost of providing governmental services by requiring contributions from persons or enterprises engaged in economic activities within that jurisdiction.” Merrion, at 137(emphasis added). Since this count alleges that the Defendants’ commercial activities on the reservation have led to injuries to tribal members on the reservation which the Tribe has been required to allocate resources, this is the very type of contribution from non-Indians that the court in Merrion indicated was within the proper purview of tribal regulatory authority. If the Tribe has the authority to tax cigarettes sold on its reservation, it certainly has the authority to assess penalties on those commercial entities that violate tribal law regarding the nature of the products being sold. The Court therefore denies the motion to dismiss Count 7 of the Complaint.

            This leaves four counts of the complaint, which involve exclusively off-reservation conduct that must be assessed under the Montana and Hornell standard. Because these counts involve attempts by the Tribe to regulate conduct of non-Indians occurring off-reservation that conduct can only be regulated if the Tribe can demonstrate that these Defendants have entered into “consensual relationships with the tribe or its members, through commercial dealing, contracts. leases, or other arrangements” or the activity of the Defendants “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the Tribe.” Montana, at 565-566. The Tribe argues that these Defendants have entered into consensual relations with the Tribe by selling cigarettes in the stream of commerce that eventually are purchased by the Tribe which retails them to tribal members. Although this argument is suggestive of a commercial relationship between the Tribe and the Defendants, the Court does not find that this relationship is sufficient under the Montana standard to confer subject matter jurisdiction upon this Court. It appears from the cases discussing this standard that the cause of action being asserted against the non-Indian must be pertaining to the consensual relationship between the Tribe and the non-Indian in order to confer subject matter jurisdiction upon the Court. So, for example, in Strate the fact that the non-Indian sub-contractor there was on the reservation working on a project under a general contract with the Tribe did not confer subject matter jurisdiction on the Tribal Court to adjudicate a tort action against that non-Indian because the tort action had nothing to do with the underlying contractual relationship between the non-Indian and the Tribe. See also FMC v. Shoshone-Bannock Tribe, 905 F.2d 1311 (9^th Cir. 1990)( tribal court had jurisdiction over non-Indian who failed to comply with Indian preference law because non-Indian was working on tribal contract at the time).  Conversely, the tribal court in Strate probably would have had jurisdiction to adjudicate any dispute regarding the sub-contractor’s performance of its duties under the sub-contract had a dispute arose between the Tribe and the non-Indian. 

            In this case, Counts 1-3 and 6 of the Complaint do not allege any specific consensual relationship between the Tribe or its members and the Defendants other than the fact that tribal members purchased the Defendants’ cigarettes at tribally-owned casinos. There has been no contract between the Tribe as wholesaler and the Defendants as producers submitted into the evidence that could allow the Court to assess whether Counts 1-3 and 6 allege breaches of this contract. Nor does the Court find that the mere act of a tribal member purchasing the Defendants’ cigarettes on the reservation permit this Court to adjudicate claims regarding how the Defendants marketed those cigarettes off the reservation. The Complaint makes no specific reference to any on-reservation marketing techniques under attack, but only refers to off-reservation activities. Hornell appears to be controlling on this issue, notwithstanding the distinction here that the Defendants’ products were sold on the reservation.

            The Court does conclude that there is a consensual relationship between these Defendants and tribal members who purchased their cigarettes. When a manufacturer markets its products without limits and those products are purchased by consumers, a commercial relationship has been consummated. This, indeed, is the basic foundation for the concepts underlying products liability law. However, the Court does not find that Counts 1-3 and 6 assert a breach of conduct that is directly related to that consensual relationship between tribal members and these Defendants. Instead, it alleges tortious conduct that does not involve a breach of the consensual relationship ( in this case a contract between a manufacturer and consumer) between the Defendants and the tribal members. This should be compared to Counts 4 and 5 of the complaint, which allege a breach of warranty which is directly tied to the consensual relationship between the Defendants and tribal members who purchase the cigarettes. The Court, therefore, concludes that even if Counts 4-5 of the Complaint are assessed by the more stringent Montana standard that the Plaintiff has met its burden of demonstrating a consensual relationship underlying those causes of action for breaches of warranties.

            Having concluded that Counts 1-3 and 6 of the complaint do not satisfy the Montana consensual relationship test to sustain this Court’s exercise of subject matter jurisdiction, this Court must turn to the second prong of the Montana analysis to determine whether this Court’s subject matter jurisdiction can be properly invoked with regard to those claims. The Tribe has the burden of demonstrating that the activity of these Defendants “threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the Tribe.” This determination is necessarily imbued with factual considerations, which the Tribe should be able to demonstrate after an evidentiary hearing, yet the Court is now confronted with the request to dismiss before this evidentiary examination is done. The federal courts, which have federal question jurisdiction to determine whether a tribal court’s exercise of jurisdiction over a non-Indian comports with federal law, see National Farmer’s Union Insurance Co. v. Crow Tribe, supra, do not appear willing to allow this issue to be resolved after an appropriate evidentiary examination, but instead have reviewed tribal court determinations of their jurisdiction after the more cursory examination entailed by a motion to dismiss. In Hornell, for example, the Honorable Charles Kornmann, United States District Court Judge for the District of South Dakota, attempted to permit the Rosebud Sioux Tribal Court to conduct an evidentiary hearing on the second prong of the Montana test by remanding the matter back to the Tribal Court while he retained jurisdiction over the brewery’s request for injunctive relief. This appeared to be a logical method for a federal judge to assess a tribal court’s determination of its own jurisdiction, but that method was rebuffed by the United States Court of Appeals for the Eighth Circuit which ruled that the Tribal Court had no jurisdiction. Hornell, at 1093.

            In light of Hornell, it is apparent that this Court must explore the issue of its jurisdiction without the benefit of an appropriate evidentiary examination.  It must, nevertheless, assume the facts as alleged by the Tribe in its complaint in a light most favorable to the Tribe. The Tribe alleges that there are hundreds of tribal members of the Sisseton-Wahpeton Sioux Tribe who smoke cigarettes or use smokeless tobacco and that an unidentified number of those members have incurred diseases and illnesses related to smoking and the use of smokeless tobacco. Amended Complaint at 13 (a)(2). The Tribe further alleges that the Sisseton-Wahpeton Sioux Tribe has been forced to expend tribal resources to pay the medical expenses and loss of productivity expenses for these members. The Defendants strongly resist this contention, but the Court must assume it as correct for purposes of this motion.

            The Court also takes judicial notice of the recent United States Surgeon General’s Report entitled “ Tobacco Use Among U.S. Racial/Ethnic Groups”. That report found that the adult smoking prevalence was highest among native americans with 39.2% of adult Indians reporting that they smoke cigarettes or use smokeless tobacco compared to 25.5& for African-Americans and 25.9% for whites. For the Northern Plains area the smoking rate was even higher with 44.2% of adult males reporting that they smoke and of that number 13.5% smoked more than 25 cigarettes per day. Among young Indians, smoking is also a health problem with 41.1% of high school seniors reporting that they smoked compared to only 33.4 % of white high school seniors. That report also concludes that the tobacco companies target American Indians and Alaska Natives by funding cultural events such as powwows and rodeos to build its image and credibility in the community.[24]

            There can be no doubt that smoking and the useless of smokeless tobacco has some impact upon the health and welfare of tribal members and some derivative impact upon the economic security of the Tribe, which is forced to expend resources to treat smoking-related maladies. An injury to one or more tribal members, however, does not appear, at least in the eyes of federal judges who are the ultimate arbiters of this issue, sufficient to confer subject matter jurisdiction upon tribal courts to adjudicate claims arising from those injuries. Since the Strate decision, numerous federal courts have struck down tribal court attempts to exercise civil jurisdiction over non-Indians who have injured tribal members, relying principally upon Strate’s language that the impact must be so serious that denying the Tribe the right to regulate the matter would be tantamount to denying the Tribe the right to “make their own laws and to be ruled by them.” Strate at 459. See Wilson v. Marchington, 127 F.3d 805, 815 (9^th Cir. 1997)(injury to tribal member on federal highway caused by negligence of non-Indian not sufficient to invoke second Montana exception); County of Lewis v. Allen, 163 F.3d 509 (9^th Cir. 1999)(injury to tribal member caused by his arrest by county officials not sufficient to satisfy second prong of Montana test).

Potential injury to a substantial number of tribal members, however, does appear sufficient under the second prong of the Montana test. Direct potential injuries to the water supply of a Tribe may very well satisfy the second Montana prong. See Montana v. United States EPA, 137 F.3d 1135 (9^th Cir. 1998), see also City of Albuquerque v. Browner, 97 F.3d 415 (10^th Cir. 1996). This Court must determine whether the actions of these Defendants in utilizing unfair and deceptive acts or practices off the reservation, negligently misrepresenting the nature of their products off the reservation, intentionally inflicting emotional distress off the reservation, and conspiring to conceal the addictive nature of tobacco off the reservation has had a direct effect upon the health and welfare of the Tribe. The Court believes that the effect upon the Tribe of these actions is derived from the injuries and loss of productivity of tribal members who smoke and contract illnesses from smoking. There is a direct correlation between the welfare of the Tribe and its members, but with regard to the counts of the complaint charging off-reservation conduct Hornell requires much more than a mere showing of an abstract injury. The direct injury to tribal members and to the Tribe in having to allocate resources toward smoking-related illnesses is caused when the cigarettes are purchased and consumed on the reservation, not when the acts alleged in counts 1-3 and 6 of the complaint occurred off the reservation. If this Court were to conclude that any injury to a tribal member on the reservation would entitle the Court to exercise jurisdiction over any non-Indian activity arising off the reservation which set into motion the eventual act that caused the injury, the federal courts would clearly not countenance such broad jurisdiction in the post-Strate climate. In Hornell, the cultural degradation caused by the desecration of the name of a revered Indian spiritual leader by a rapacious desire of a non-Indian distiller to reap a profit at any cost clearly reverberated on the Rosebud reservation, but that type of indirect correlation did not satisfy the federal court there. Similarly, in this case if the Defendants are, or were, engaged in the activities alleged in counts 1-3 and 6 of the complaint, the effect of such will eventually impact the Tribe when its members purchase cigarettes at the casinos and contract diseases. The relationship is too attenuated, however, for this Court to find that these actions alleged have a direct impact upon the health and welfare of the Tribe.

Counts 4 and 5, alleging breaches of warranty, and Count 7 alleging unjust enrichment are of a different nature for several reasons. First, as the Court has already concluded, those counts do not attempt to address off-reservation conduct, but instead arise on the reservation when Tribal members purchase cigarettes from the trust land casinos and utilize them on the reservation. To that extent, they are governed by the general principle recognized in Merrion that Indian tribes have the regulatory authority over non-Indians whose activities on trust land are in question.

Even should the federal courts take the unprecedented step of holding that the Montana test for tribal authority over non-Indians on fee land should govern all tribal exercises of regulatory and adjudicatory authority over non-Indians, the Court is satisfied that counts 4-5 and 7 of the complaint satisfy the Montana criteria. The Tribe is certainly within its rights to regulate the cigarettes being sold on its own reservation to its own tribal members to assure that they comply with any express or implied warranties that generally attach to consumer goods. In Babbitt Ford, Inc. v. Navajo Indian Tribe, 710 F.2d 587 (9^th Cir. 1984) cert denied, 466 U.S. 926 (1984) the Court upheld the right of the Navajo Tribe to apply its repossession laws to off-reservation car dealers, even though the dealers did not have a commercial situs on the reservation and all transactions arising between the tribal members there and the dealers arose off the reservation. The Court noted that the Tribe has an interest in maintaining the “reservation peace and to protect and the health and safety of tribal members. The act of repossession “clearly threatens or has some direct effect on the health and welfare of the Tribe.”Id. at 592-593. It is just as clear to this Court that the act of selling a cigarette in violation of an express or implied warranty on the reservation which leads to injuries to tribal members which the Tribe is required to allocate scarce resources to provide for has a direct effect on the health and welfare of the Tribe. The Defendants should not be able to escape any potential liability in a tribal forum for any defects in its merchandise by contending that they do not actually sell the cigarettes on the reservation. They are responsible for the quality of the cigarettes they put into the stream of commerce and which are eventually sold on the reservation and the Tribe must be able to monitor that quality or the Tribe’s  ability to make its own laws to protect its members are compromised. If a non-Indian’s off-reservation discharges into waters that flow into an Indian reservation can be regulated by the Tribe,  see Montana v. United States EPA, 137 F.3d 1135 (9^th Cir. 1998); see also City of Albuquerque v. Browner, 97 F.3d 415 (10^th Cir. 1996), it is difficult for this Court to conceive of a rule of law which would bar a Tribe from regulating the commerce that flows onto its own reservation. Stripping a Tribe of the ability to regulate the commerce that comes onto an Indian reservation would strike at the heart of a Tribe’s self-governance and would debilitate the Tribe’s ability to protect its members. Because the warranties that attach to products that are sold on the reservation are an integral part of that commerce, the Court believes that the Tribe has the ability under Montana to regulate that aspect of commerce and the natural corollary of this regulatory authority is that this Court can exercise jurisdiction over the claims alleging defective merchandise and unjust enrichment for selling such defective merchandise.

There is another reason why, even under the more stringent Montana analysis, that this Court can exercise subject matter jurisdiction over causes of action 4-5 and 7. The United States Supreme Court in Williams v. Lee, 358 U.S. 217 (1959) clearly expressed its belief that Indian tribes can enact laws governing private commercial transactions between non-Indian vendors and tribal members consummated on the reservation. This case was the precursor for the Court’s announcement in Montana that the Tribe could regulate those non-Indians who enter into commercial relationships with tribal members as Williams v. Lee was cited by the United States Supreme Court in Montana in announcing this rule. Montana, at565. The Strate court went on to again reiterate that William v. Lee was the basis for the Court’s announcement in Montana that tribal regulatory authority could extend to commercial transactions between tribal members and non-Indians. Strate, 117 S.Ct 1404, 1414. The Strate court cautioned, however, that in order to exercise jurisdiction under this section the dispute in question must pertain to the consensual relationship.

The Defendants have conceded that they sell their products at the casinos located on the trust lands within the Lake Traverse reservation. Transcript at 29-30. Counts 4-5 of the complaint allege a breach of warranties that occurred at the time the commercial transactions occurred. A breach of warranty action arises from the sale of cigarettes, not the manufacturing of those cigarettes. See Opp v. Nieuwsma, 458 N.W.2d 352 (S.D. 1990). A manufacturer who is aware that his merchandise is being sold on the reservation, unlike the situation in Hornell where the brewery consciously opted not to engage in commerce on the reservation, engages in commercial transactions with tribal members and this Court can exercise subject matter jurisdiction over any dispute that arises from that commercial transaction. The Court does not find the Defendants’ argument that because it does not actually physically sell the cigarettes to tribal members, but only introduces its products into the stream of commerce, persuasive on the issue of jurisdiction. The auto dealers in Babbitt Ford did not actively sell their products on the Navajo reservation, but the Court still allowed the Tribe to regulate the commercial aspect of repossession.

In conclusion, and for the reasons stated herein, the Court finds that this Court lacks subject matter jurisdiction over counts 1-3 and 6 of the complaint but has subject matter jurisdiction over counts 4-5 and 7 of the complaint. Now, therefore, based upon the foregoing discussion, it is hereby

ORDERED, ADJUDGED AND DECREED that the Defendants’ motion to dismiss the complaint, insofar as it prays for injunctive and declaratory relief, on the ground that it does not state an actual case or controversy is hereby DENIED, and it is further

ORDERED, ADJUDGED AND DECREED that the Defendant’s motion to dismiss on the Plaintiff’s lack of standing is hereby DENIED, and it is further

ORDERED, ADJUDGED AND DECREED that the Defendants’ motion to dismiss counts 1-3 and 6 of the complaint for lack of subject matter jurisdiction is hereby GRANTED and the motion to dismiss counts 4-5 and 7 of the complaint is DENIED.

            So decreed this 2^nd day of November 1999.

                                                            BY THE COURT:

                                                            __________________

                                                            B.J. Jones

                                                            Chief Judge

ATTEST: _______________

Clerk of Courts

^[4]. The request for monetary relief for health-related problems associated with cigarette and smokeless tobacco use among tribal members presents a different issue with regard to standing which is addressed infra.

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