Gilmore v. Weatherford , 694 F.3d 1160 ( 2012 )

FILED
United States Court of Appeals
Tenth Circuit
PUBLISH
September 4, 2012
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
JAMES E. GILMORE; TAMMY S.
GILMORE SPRINGER; JOANNA K.
STAND, individual owners in Indian trust
property,
Plaintiffs–Appellants,
v.
No. 11-5025
CATHY J. WEATHERFORD, personal
representative of the estate of Joseph E.
Mountford, deceased; BINGHAM SAND
& GRAVEL COMPANY, INC., a foreign
corporation, KEN SALAZAR; KAREN
KETCHER; PAUL YATES,
Defendants–Appellees.
Appeal from the United States District Court
for the Northern District of Oklahoma
(D.C. No. 4:10-CV-00257-CVE-PJC)
Stephen Richard Ward (John L. Williams and Daniel E. Gomez, with him on the briefs),
Conner & Winters, LLP, Tulsa, Oklahoma, for Plaintiffs-Appellants.
Matthew Littleton (Ignacia S. Moreno, Elizabeth Ann Peterson, and Mary Gabrielle
Sprague, on the briefs), United States Department of Justice, Environment & Natural
Resources Division, Washington, DC, for Defendants-Appellees Ken Salazar, Karen
Ketcher, and Paul Yates.
Theodore Q. Eliot (Graydon Dean Luthey, Jr., with him on the briefs), Hall, Estill,
Hardwick, Gable, Golden & Nelson, P.C., Tulsa, Oklahoma, for Defendants-Appellees
Bingham Sand & Gravel, Co.
Barry G. Reynolds and Kelley Gilbert Loud, Titus Hillis Reynolds Love Dickman &
McCalmon, Tulsa, Oklahoma, and Charles Wylie Chesnut, Chesnut & Chesnut, Miami,
Oklahoma, filed a brief for Defendant – Appellee Catherine J. Weatherford.
Before LUCERO, MCKAY, and GORSUCH, Circuit Judges.
LUCERO, Circuit Judge.
Decades of lead and zinc mining in northeastern Oklahoma have left behind piles
of mine tailings, known locally as “chat,” that now have value as fill and gravel. This
case concerns two chat piles, the Sooner and Ottawa piles, which share a convoluted
ownership history. Some of the chat in these piles is owned by descendants of members
of the Quapaw Tribe who were deemed incompetent to manage their own affairs. These
individuals hold undivided “restricted” ownership interests; that is, they cannot freely
alienate their interests in the chat as a matter of federal law. Not all of the chat in the
Sooner and Ottawa piles, however, is restricted. These piles are considered “comingled”
because they contain both restricted chat and unrestricted chat.
Plaintiffs in this case are three restricted owners of chat in the Sooner and Ottawa
piles. They allege that Bingham Sand and Gravel Co., Inc. (“Bingham”), an owner of
unrestricted chat, has been removing tailings from the Ottawa pile without compensating
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the restricted owners. Plaintiffs further claim that the Estate of Joseph Mountford (the
“Estate”) has sold chat from the Sooner pile to Bingham. Under plaintiffs’ theory of the
case, federal law prohibits the sale or removal of any chat from commingled piles without
the approval of the Bureau of Indian Affairs (“BIA”). Despite numerous informal
requests that the BIA halt chat removal by Bingham and the Estate (collectively, the
“private defendants”), the agency has not done so.
Seeking to stop chat removal and obtain an accounting for the chat that has already
been removed, plaintiffs sued the Secretary of the Interior and several BIA officials
(collectively, the “federal defendants”), Bingham, and the Estate in federal court.
Against the federal defendants, they asserted claims under the Administrative Procedure
Act (“APA”) and pled an accounting claim that they contend arises under federal
common law. The district court dismissed these claims for failure to exhaust
administrative remedies. Although it assumed that plaintiffs could plead a common law
accounting claim outside the ambit of the APA, the court nonetheless required exhaustion
as a matter of judicial discretion. Exercising jurisdiction under 28 U.S.C. § 1291, we
affirm that determination.
As to the private defendants, plaintiffs asserted claims for conversion and an
accounting. Following dismissal of the federal defendants, the district court concluded it
lacked jurisdiction over these claims. We reverse that holding. Plaintiffs’ conversion
claim rests on a substantial and disputed issue of federal law in which the federal
government possesses a serious interest: whether BIA approval is required before
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restricted Indian personal property may be sold. Because we hold that the district court
had jurisdiction over this claim, we reverse and remand for further proceedings.
I
A
In 1895, Congress confirmed the Quapaw Tribe’s allotment of certain lands in
northern Oklahoma to individual members of the tribe. See Act of March 2, 1895, 28
Stat. 876, 907; see also United States v. Hallam, 304 F.2d 620, 622 (10th Cir. 1962)
(describing allotment process). These allotments were made inalienable for a period of
25 years. Id. At the end of that 25-year period, Congress lifted the restriction on
alienation except as to lands held by 62 Quapaw members who were deemed
incompetent. Act of March 3, 1921, Pub. L. No. 66-359, 41 Stat. 1225, 1248-49. The
regulation of these restricted parcels has been extended indefinitely. See Act of July 27,
1939, Pub. L. No. 76-235, 53 Stat. 1127, 1127; Act of June 25, 1970, Pub. L. No. 91-290,
84 Stat. 325, 325; Act of May 24, 1990, Pub L. No. 101-301, 104 Stat. 206, 207. As a
result, these lands feature a checkerboard pattern of restricted and unrestricted parcels.
Congress allowed for the leasing of Quapaw lands for mineral development,
primarily lead and zinc, in 1897. See Act of June 7, 1897, 30 Stat. 62, 72; see also
Haynes v. Eagle-Picher Co., 295 F.2d 761, 762-63 (10th Cir. 1961) (describing lead and
zinc mining practices in the “Tri-State Mining District”). Mining activity created the
piles of mine tailings or chat. See Holder v. Gold Fields Mining Corp., 506 F. Supp. 2d
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792, 794-96 (N.D. Okla. 2007) (discussing the creation of chat piles); see also 40 C.F.R.
§ 278.1(b) (defining chat as “waste material that was formed in the course of milling
operations employed to recover lead and zinc from metal-bearing ore minerals in the Tri-
State Mining District of Southwest Missouri, Southeast Kansas and Northeast
Oklahoma”).
In the 1930s, the federal government permitted certain mining interests to remove
chat from restricted Quapaw lands to extract minerals from the tailings at off-site mills.
See Holder, 506 F. Supp. 2d at 795. However, the restricted Indian owners retained their
proportional interests in the removed chat. Id. And because restricted chat was
intermixed with unrestricted chat during the re-milling process, the chat piles at issue in
this case—the Ottawa and Sooner piles—became “comingled”; that is, these piles now
contain both restricted and unrestricted tailings. See id. A 2002 letter from BIA Acting
Field Representative Dennis Wickliffe describes this ownership arrangement as follows:
“Every interest, restricted and unrestricted, is undivided, and therefore, cannot be defined
or described, except by partitioning the chat pile in proportionate shares. When you
remove one grain of material, you move both restricted and unrestricted ownership.”
In 1983, the Environmental Protection Agency declared a portion of the mining
area a federal Superfund site. See Holder, 506 F. Supp. 2d at 796. The agency began
formal remediation efforts to abate lead contamination in the area in 1996. See id. at 797.
Although chat is now used as construction material, federal regulations restrict its use for
federally funded projects. See 40 C.F.R. §§ 278.1 to .4; see also Criteria for the Safe and
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Environmentally Protective Use of Granular Mine Tailings Known as “Chat,” 72 Fed.
Reg. 39,331, 39,336 (July 18, 2007) (“Certain uses of raw chat have caused threats to
human health and the environment as a result of the concentrations of lead, cadmium and
zinc present in the chat.”).
To further complicate matters, the restricted ownership interests have been
apportioned among the heirs of the original restricted Indian owners such that numerous
individuals hold fractional shares. According to the BIA, Bingham owns 76.237% of the
chat in the Ottawa pile, 78 restricted owners own 16.565%, and an unknown number of
unrestricted owners hold 7.198%. Ownership of the chat in the Sooner pile is similarly
dispersed. The BIA claims that the Estate owns 61.97583% of the Sooner chat, 34
restricted owners own 37.43667%, and an unknown number of unrestricted owners own
the remaining 0.587%. Plaintiffs dispute the BIA’s numbers.
B
Plaintiffs allege that Bingham began removing and selling chat from the Ottawa
pile sometime in 2001 or 2002. They also claim that the Estate began selling chat from
the Sooner pile to Bingham around the same time. Plaintiffs allege that this chat removal
was not approved by the BIA and that neither Bingham nor the Estate has compensated
the restricted owners for their interests in the removed chat. According to plaintiffs, the
BIA requested that chat removal from the Sooner pile cease in 2002, but that the
unauthorized transportation nevertheless continued.
The restricted owners claim that they requested an accounting of the removed chat
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as well as other action from the BIA “on multiple occasions since at least 2005.” One of
the restricted owners, James Gilmore, avers that he brought the issue to the attention of
the Superintendent of the BIA’s Miami Agency approximately once a month since 2002.
The BIA has attempted to broker an agreement between Bingham, the Estate, and the
restricted owners. In 2002, a BIA Field Representative stated that the agency was
“finalizing arrangements to assist restricted chat owners in selling chat.” And in 2004, a
Department of the Interior Field Representative set up a meeting between representatives
of Bingham, the Estate, and several restricted owners. These efforts, however, were
unsuccessful. In November 2005, counsel for several restricted owners formally
requested that Department of the Interior Field Solicitor halt the chat removal and
provide an accounting. The record does not indicate how the agency responded, but it is
undisputed that the issue was not appealed up the administrative ladder. A 2010 affidavit
from the Superintendent of the Miami Agency states that Bingham recently submitted
another offer to the restricted owners, but that no BIA-approved contract is currently in
place.
In April 2010, restricted owners James Gilmore, Tammy Gilmore Springer, and
Janna Stand filed suit against Bingham, the Estate, and several Department of the Interior
officials. They asserted six causes of action: (1) an accounting claim against the BIA;
(2) a challenge under the APA, 5 U.S.C. § 704, seeking to compel agency action; (3) an
accounting claim against the Estate and Bingham; (4) a conversion claim against
Bingham; (5) a claim for injunctive and declaratory relief; and (6) a claim for attorneys’
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fees.
The federal defendants moved to dismiss based on the plaintiffs’ failure to exhaust
administrative remedies. Although the district court acknowledged that exhaustion is not
mandatory for non-APA claims, it concluded that exhaustion of even non-APA claims
would be required in this case as a matter of judicial discretion and granted the motion.
Having dismissed the federal defendants, the district court requested briefing as to
whether the court possessed jurisdiction over the remaining claims against the Estate and
Bingham. After that briefing was complete, the court held that it lacked jurisdiction over
those claims and accordingly dismissed them. The plaintiffs now appeal.
II
When a district court concludes that it lacks jurisdiction over a claim based on the
plaintiffs’ failure to exhaust administrative remedies, we review its conclusion de novo.
See Forest Guardians v. U.S. Forest Serv., 641 F.3d 423, 430 (10th Cir. 2011). Because
exhaustion of APA claims is generally required, see Darby v. Cisneros, 509 U.S. 137,
146 (1993), the parties devote substantial briefing to the question of whether plaintiffs’
claims arise under the APA or common law. However, as the district court recognized,
“in cases not governed by the APA, the doctrine of exhaustion applies as a matter of
judicial discretion.” United Tribe of Shawnee Indians v. United States, 253 F.3d 543,
550 (10th Cir. 2001). The district court accordingly assumed that certain claims arose
under the common law but nonetheless determined that exhaustion should be required.
We review the decision to require exhaustion in this context for abuse of discretion. See
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Quarles v. United States ex rel. BIA, 372 F.3d 1169, 1171 (10th Cir. 2004).1
A
Among various Department of the Interior regulations of “general application
relating to Indian Affairs” are the procedure and practice rules found at 25 C.F.R. §§ 2.8
& 2.9. See 25 C.F.R. § 1.3. The district court held that plaintiffs should have followed
the administrative process set forth in these regulations to exhaust their claims against the
federal defendants. The regulations provide that any “person or persons whose interests
are adversely affected, or whose ability to protect such interests is impeded by the failure
of an official to act on a request to the official, can make the official’s inaction the subject
of appeal.” 25 C.F.R. § 2.8(a). An aggrieved individual must “[r]equest in writing that
the official take the action originally asked of him/her,” describing “the interest adversely
affected by the official’s inaction.” Id. If the official does not respond within a
prescribed timeframe or fails to respond to the applicant’s satisfaction, the individual may
“file a written notice of appeal in the office of the official whose decision is being
1
Whether plaintiffs’ claims arise under the APA or common law is also
immaterial with respect to the sovereign immunity analysis. Under 5 U.S.C. § 702, the
United States waives sovereign immunity as to actions “in a court of the United States
seeking relief other than money damages and stating a claim that an agency or an officer
or employee thereof acted or failed to act in an official capacity or under color of legal
authority.” As we held in Simmat v. U.S. Bureau of Prisons, 413 F.3d 1225 (10th Cir.
2005), § 702’s waiver of sovereign immunity “is not limited to suits under the
Administrative Procedure Act.” Id. at 1233; see also Hanson v. Wyatt, 552 F.3d 1148,
1173 n.11 (10th Cir. 2008) (Gorsuch, J., concurring) (“Section 702 is a waiver of
sovereign immunity, but we have not treated Section 704 as a limit on that waiver.”
(citation omitted)).
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appealed.” § 2.9(a).
Although the record contains a letter sent from an attorney representing some
restricted owners to a Field Solicitor in the Department of the Interior’s Tulsa office,
there is no dispute that plaintiffs did not avail themselves of the procedures set forth in 25
C.F.R. §§ 2.8 and 2.9. Accordingly, plaintiffs did not exhaust the procedures set forth in
these regulations. See Jones v. Bock, 549 U.S. 199, 218 (2007) (“[T]o properly exhaust
administrative remedies [litigants] must complete the administrative review process in
accordance with the applicable procedural rules.” (quotation omitted)).
Like the district court, we will assume that plaintiffs’ accounting and equitable
claims arise under the common law rather than the APA. Adopting this assumption, we
nonetheless conclude that the district court appropriately exercised its discretion by
requiring exhaustion. In United Tribe of Shawnee Indians we explained that
“[e]xhaustion serves the twin purposes of protecting administrative agency authority and
promoting judicial efficiency.” 253 F.3d at 550 (citation and quotation omitted).
As to the first of these purposes, the exhaustion doctrine recognizes the
notion, grounded in deference to Congress’ delegation of authority to
coordinate branches of Government, that agencies, not the courts, ought to
have primary responsibility for the programs that Congress has charged
them to administer. Exhaustion concerns apply with particular force when
the action under review involves exercise of the agency’s discretionary
power or when the agency proceedings in question allow the agency to
apply its special expertise.
Id. (quoting McCarthy v. Madigan, 503 U.S. 140, 145 (1992)).
Although plaintiffs attempt to paint their case as a simple request for an
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accounting that does not rely on any particular agency expertise, we disagree with this
characterization. As the district court noted, the complaint sought various forms of relief,
including orders requiring the Secretary to determine:
(a) “the correct status of the restricted Indian title in the chat in the Sooner
and Ottawa piles, as well as in the underlying trust land, including the
legality of the various conveyances by which” the Estate claim an interest;
(b) that “trust chat . . . lawfully cannot, and could not in the past, be
conveyed to any party, including in fee (to non-Indian parties) except under
controlling law and pursuant to the Secretary’s trust obligations”; and
(c) “that Indian trust chat may not be lawfully removed from the Sooner
and Ottawa Piles” except in compliance with “environmental laws and
directives” and in accordance with “agreements endorsed by the
Restrict[ed] Owners and approved by the Secretary.”
Plaintiffs thus seek to compel various agency actions that would affect numerous
restricted owners and other individuals beside the plaintiffs in this action. Further, as the
plaintiffs acknowledge in their complaint, the chat piles are also impacted by the
Environmental Protection Agency’s Record of Decision for Operable Unit 4 at the Tar
Creek Superfund Site. See generally Berrey v. Asarco Inc., 439 F.3d 636, 640 (10th Cir.
2006) (discussing Superfund listing). Given the need to weigh numerous interests and
potentially to consult with another agency, we agree with the district court that the BIA’s
expertise and its development of an administrative record would greatly assist in the
disposition of this dispute.
B
Plaintiffs advance several arguments to challenge the district court’s
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determination. First, they contend that the regulations at issue do not apply to their
claims, relying primarily on a set of unpublished district court cases that allowed similar
claims to proceed unexhausted. In Otoe-Missouria Tribe v. Kempthorne, 2008 U.S. Dist.
LEXIS 99548 (W.D. Okla. Dec. 10, 2008) (unpublished), a tribe demanded an accounting
of certain non-monetary assets held by the BIA in trust. In an order denying a motion to
dismiss, the district court summarily concluded that “Defendants have failed to
demonstrate that the administrative remedies they allege Plaintiff failed to exhaust are
applicable to the issues in this case.” Id. at *13-14. The court held that “nothing in that
process would have even remotely addressed the relief Plaintiff seeks here,” in an
apparent reference to 25 C.F.R. §§ 2.8 and 2.9. Id. at *14. Plaintiffs also cite to
Tonkawa Tribe of Indians of Oklahoma v. Kempthorne, 2009 U.S. Dist. LEXIS 21484(W.D. Okla. Mar. 17, 2009) (unpublished), in which the court identified the regulations at
issue, but stated without citation that plaintiffs’ claims arose under “federal common law
to which administrative exhaustion doctrines do not apply.” Id. at *15. Lastly, in
Seminole Nation v. Salazar, 2009 U.S. Dist. LEXIS 27836 (E.D. Okla. Mar. 31, 2009)
(unpublished), the court simply cited the two previous cases to conclude that “the
amended complaint in this case states plausible claims for relief outside the APA that are
within the Court’s subject matter jurisdiction.” Id. at *3.
To the extent that these cases suggest that non-APA claims never require
exhaustion, this suggestion is incorrect: “[I]n cases not governed by the APA, the
doctrine of exhaustion applies as a matter of judicial discretion.” United Tribe of
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Shawnee Indians, 253 F.3d at 550. Nor do we observe any textual basis to conclude that
25 C.F.R. §§ 2.8 and 2.9 would not apply to plaintiffs’ claims. Plaintiffs allege that they
are “person or persons whose interests are adversely affected, or whose ability to protect
such interests is impeded by the failure of an official to act.” 25 C.F.R. § 2.8(a). Under
these circumstances, the district court possessed discretion to require exhaustion of §§ 2.8
and 2.9 as a prerequisite to filing suit.
Plaintiffs also contend that these regulations are not mandatory by their own terms
because they state that an aggrieved individual “can make the official’s inaction the
subject of appeal.” § 2.8(a) (emphasis added). By using the optional “can,” rather than
“shall,” plaintiffs suggest that the regulations are rendered optional. But the optional
“can” applies to the ability of an aggrieved individual to appeal—an individual is not
compelled to appeal simply because she is aggrieved by agency inaction. Proper
exhaustion, however, requires that a litigant “complete the administrative review process”
before seeking judicial review. Jones v. Bock, 549 U.S. at 218.
Next, plaintiffs argue that exhaustion would be futile. Exhaustion is excused
“when administrative remedies would be futile, when they would fail to provide relief, or
when an agency has adopted a policy or pursued a practice of generally applicability that
is contrary to the law.” Urban ex rel. Urban v. Jefferson Cnty. Sch. Dist. R-1, 89 F.3d
720, 724 (10th Cir. 1996) (citation and quotations omitted). The futility exception,
however, is a narrow one; to fit within the futility exception, a plaintiff must show that
resort to the administrative process would be “clearly useless.” McGraw v. Prudential
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Ins. Co. of Am., 137 F.3d 1253, 1264 (10th Cir. 1998) (quotation omitted).
Plaintiffs argue that the BIA has “predetermined” that it will deny the relief they
seek because the agency has resisted providing similar relief in the three district court
cases discussed supra. See Otoe-Missouria Tribe, 2008 U.S. Dist. LEXIS 99548;
Tonkawa Tribe of Indians of Oklahoma, 2009 U.S. Dist. LEXIS 21484; Seminole Nation,
2009 U.S. Dist. LEXIS 27836. However, this court has explicitly rejected the position
that it is “futile to lodge an objection before an administrative body simply because the
body has precedent which contradicts the party’s position.” Tinker AFB v. FLRA, 321
F.3d 1242, 1248 (10th Cir. 2002); see also C.E. Carlson, Inc. v. SEC, 859 F.2d 1429,
1439 (10th Cir. 1988) (“Although petitioners contend that raising a disparate treatment
argument below would have been futile given the SEC’s past response, that alone is not a
sufficient ground for presuming futility.”). As the Supreme Court explained in United
States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33 (1952), we require an individual to
seek relief from an agency as a matter of “[s]imple fairness” even when the agency is
unlikely to grant the relief requested because “courts should not topple over
administrative decisions unless the administrative body not only has erred but has erred
against objection made at the time appropriate under its practice.” Id. at 37. Requiring
exhaustion of such claims allows agencies to take into account the specific facts of each
matter, see Ass’n for Community Living in Colo. v. Romer, 992 F.2d 1040, 1044 (10th
Cir. 1993), and to change course if appropriate.
Finally, plaintiffs argue that they are not required to exhaust claims that can be
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characterized as arising under 5 U.S.C. § 706(1). That section permits a court to “compel
agency action unlawfully withheld or unreasonably delayed.” Id. Plaintiffs cite authority
from other circuits suggesting that claims arising under § 706(1) are not subject to the
APA’s “final agency action” requirement. See Cobell v. Norton, 240 F.3d 1081, 1095
(D.C. Cir. 2001) (if “an agency is under an unequivocal statutory duty to act, failure so to
act constitutes, in effect, an affirmative act that triggers ‘final agency action’ review”).
We note that the “the judicial doctrine of exhaustion of administrative remedies is
conceptually distinct from the doctrine of finality,” Darby v. Cisneros, 509 U.S. 137, 144
(1993), and that plaintiffs have not cited any authority for the proposition that § 706(1)
claims are free from the exhaustion requirement. One might argue that a plaintiff seeking
to challenge agency inaction in the absence of regulations allowing for such a challenge
would be excused from exhaustion. In this case, however, circuit precedent requires us to
reject plaintiffs’ position. In Coosewoon v. Meridian Oil Co., 25 F.3d 920 (10th Cir.
1994), the plaintiff filed suit to compel the Secretary of the Interior to cancel certain oil
and gas leases. Id. at 924. The district court dismissed the suit for failure to exhaust
administrative remedies and we affirmed. Id. Citing to 25 C.F.R. § 2.8, we noted that
“the Secretary has instituted an administrative procedure by which a party may challenge
the Secretary’s inaction concerning a particular issue.” Id. at 925.
Although we acknowledge that agency inaction or undue delay may occur within
the administrative process, we have no need to consider the plight of a hypothetical
plaintiff trapped in administrative limbo who cannot complete the appeals process as a
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result of agency foot-dragging. It is undisputed that plaintiffs did not attempt to exhaust
the complete administrative process set forth in 25 C.F.R. §§ 2.8 and 2.9. Further, as we
noted in Coosewoon, the administrative process set forth in those sections sets various
deadlines by which relief is deemed denied if the appropriate official fails to respond.
See 25 C.F.R. § 2.8(b). Under these circumstances, we must reject plaintiffs’ assertions
that 5 U.S.C. § 706(1) claims are categorically exempt from the exhaustion requirement.
For the foregoing reasons, we affirm the district court’s dismissal of all claims
against the federal defendants.
III
The district court initially possessed jurisdiction over this case under 28 U.S.C.
§ 1361 because plaintiffs named federal officials as defendants. Once it dismissed those
defendants, however, there was no clear jurisdictional basis for the suit to proceed. After
additional briefing, the court dismissed the claims against the remaining defendants. We
review de novo a district court’s dismissal for lack of subject matter jurisdiction. See
Urban, 89 F.3d at 724.
A
Plaintiffs urge us to hold that the district court possessed federal question
jurisdiction over their accounting and conversion claims against Bingham and the Estate.
See 28 U.S.C. § 1331 (granting jurisdiction over “all civil actions arising under the
Constitution, laws, or treaties of the United States”). A case “arises under” federal law
under two circumstances: “a well-pleaded complaint establishes either that federal law
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creates the cause of action or that the plaintiff’s right to relief necessarily depends on
resolution of a substantial question of federal law.” Empire HealthChoice Assurance,
Inc. v. McVeigh, 547 U.S. 677, 690 (2006). Plaintiffs rest on the second half of this
formulation. State law creates the actions for accounting and conversion asserted against
the private defendants. See Fleet v. Sanguine, Ltd., 854 P.2d 892, 896 (Okla. 1993)
(recognizing right to equitable accounting remedy from co-tenant); U.S. Zinc v. Colburn,
255 P. 688, 689 (Okla. 1927) (describing state tort of conversion). But plaintiffs contend
that a substantial question of federal law is implicated by this dispute.2
2
In their reply brief, plaintiffs also argue that federal common law creates their
causes of action against the private defendants. The district court rejected this contention
below, and plaintiffs did not contest that determination in their opening brief. Although
plaintiffs argued that their accounting claim against the federal defendants was a cause of
action created by federal law, this argument does not appear with respect to their claims
against the private defendants. Plaintiffs quote Nicodemus v. Union Pacific Corp., 440
F.3d 1227 (10th Cir. 2006), for the proposition that a claim “arises under federal law if its
well-pleaded complaint establishes either that federal law creates the cause of action or
that the plaintiff’s right to relief necessarily depends on resolution of a substantial
question of federal law.” Id. at 1232 (quotation omitted). They urge reversal of the
district court’s jurisdictional ruling solely on the second prong, asserting that issues of
federal law are substantial and disputed. In the jurisdictional section of their opening
brief, the words “cause of action” do not appear. Nor does that submission cite Oneida
Indian Nation v. County of Oneida, 414 U.S. 661 (1974), the case upon which they rested
their federal common law argument both below and in their reply brief.
Because plaintiffs did not argue in the opening brief that federal law created their
causes of action against the private defendants, we are denied briefing on this complex
issue. Accordingly, we will enforce the rule that “a party waives those arguments that its
opening brief inadequately addresses.” Harsco Corp. v. Renner, 475 F.3d 1179, 1190
(10th Cir. 2007); see also United States ex rel. Ramseyer v. Century Healthcare Corp., 90
F.3d 1514, 1518 n.2 (10th Cir. 1996) (“Our duty to consider unargued obstacles to
subject matter jurisdiction does not affect our discretion to decline to consider waived
arguments that might have supported such jurisdiction.”). We thus do not consider
Continued . . .
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The “substantial question” branch of federal question jurisdiction is exceedingly
narrow—a “special and small category” of cases. Empire, 547 U.S. at 699. The Supreme
Court discussed this prong thoroughly in Grable & Sons Metal Products, Inc. v. Darue
Engineering & Manufacturing, 545 U.S. 308 (2005). After the IRS seized and
subsequently sold Grable’s property, Grable sued to quiet title, arguing the IRS’s seizure
notice was invalid under federal law. Id. at 310-11. Although the quiet title action was
created by state law, the Court allowed the case to proceed in federal court because the
validity of the seizure notice—an issue controlled by federal law—was “an essential
element of [Grable’s] quiet title claim.” Id. at 315.
The Grable Court nonetheless stressed that the “mere need to apply federal law in
a state-law claim” will not “suffice to open the ‘arising under’ door.” Id. at 313. Instead,
“federal jurisdiction demands not only a contested federal issue, but a substantial one,
indicating a serious federal interest in claiming the advantages thought to be inherent in a
federal forum.” Id. The contested federal tax issue qualified as “substantial” because
proper notice under federal law was an element of the state law claim and the federal
government has “a direct interest in the availability of a federal forum to vindicate its
own administrative action.” Id. at 315. In addition, the federal courts could entertain the
issue “without disturbing any congressionally approved balance of federal and state
judicial responsibilities.” Id. at 314.
whether federal common law might create a cause of action against the private
defendants.
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Since Grable was decided, the Court has stressed that this branch of arising-under
jurisdiction is a slim one. See Empire, 547 U.S. at 699. In Empire, the Court considered
claims brought by a federal employee health plan administrator seeking reimbursement of
funds it had provided to an enrollee following the enrollee’s recovery in a state tort suit.
Id. at 687. Plaintiffs argued that federal jurisdiction covered such claims because
“reimbursement directly affects the United States Treasury and the cost of providing
health benefits to federal employees” and the federal government possessed an “interest
in maintaining uniformity among the States on matters relating to federal health-plan
benefits.” Id. at 688. Describing the dispute as “poles apart from Grable,” the Court
rejected plaintiffs’ jurisdictional assertion. Id. at 681. In Grable, the Empire Court noted,
the disputed federal-law question “presented a nearly pure issue of law, one that could be
settled once and for all and thereafter would govern numerous tax sale cases.” 547 U.S.
at 700 (quotations omitted). The Empire claims, in contrast, were “fact-bound and
situation-specific.” Id. at 701. Although the Court acknowledged that the federal
government “has an overwhelming interest in attracting able workers to the federal
workforce, and in the health and welfare of the federal workers upon whom it relies to
carry out its functions,” it concluded that these interests did not warrant federal
jurisdiction given that “[t]he state court in which the personal-injury suit was lodged is
competent to apply federal law.” Id. at 700 (quotations omitted).
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B
1
We conclude that plaintiffs’ accounting claim does not depend on any issue of
federal law, substantial or otherwise. Plaintiffs contend that Bingham and the Estate have
wrongfully removed chat without approval of the Secretary. But Oklahoma law
recognizes that a cotenant may compel an accounting regardless of whether the cotenancy
property is obtained by legitimate or wrongful means. See Ludey v. Pure Oil Co., 11
P.2d 102, 104 (Okla. 1931) (“A tenant in common receiving the common property, either
wrongfully or by consent, holds it as trustee for his cotenant to the extent of the interest
of the cotenant, who may compel an accounting.” (quotation omitted)). To prevail on an
accounting claim, plaintiffs needed to show that they were cotenants and that Bingham
held possession of the cotenancy property. Id. In other words, the alleged wrongfulness
of the chat removal is not an essential element of plaintiffs’ accounting claim. See
Nicodemus, 440 F.3d at 1232 (“A case arises under federal law if its well-pleaded
complaint establishes . . . that the plaintiffs right to relief necessarily depends on
resolution of a substantial question of federal law.” (emphasis added, quotation omitted)).
It is true that federal law is tangentially related to plaintiffs’ accounting claim
because their ownership interest implicates federal law. But as the Court held in Oneida,
“a controversy in respect of lands has never been regarded as presenting a [f]ederal
question merely because one of the parties to it has derived his title under an act of
Congress.” 441 U.S. at 676-77; see also Grable, 545 U.S. at 316 n.3 (noting that federal
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jurisdiction does not lie over all “suits involving rights to land acquired under a law of the
United States,” otherwise “every suit to establish title to land in the central and western
states would so arise under federal law, as all titles in those [s]tates are traceable back to
those laws” (quotation and alterations omitted)).
2
Plaintiffs’ conversion claim presents a closer question. Under Oklahoma law,
“[c]onversion is any act of dominion wrongfully exerted over another’s personal property
in denial of or inconsistent with his rights therein.” Steenbergen v. First Federal Savings
and Loan of Chickasha, Okla., 753 P.2d 1330, 1332 (Okla. 1987). In their complaint,
plaintiffs allege:
Contrary to federal law, Bingham has removed nearly all of the trust chat
from the Ottawa Pile without approval by the Secretary or the BIA and
without any compensation to the Restricted Owners. Bingham has
therefore converted Indian trust property for Bingham’s own use and profit.
Plaintiffs thus claim that the private defendant’s removal of chat violated their property
rights—and amounted to conversion under state law—because, and only because, the
removal was conducted without approval from the Secretary, as required by federal law.
That is, they contend that Oklahoma personal property law includes and incorporates the
federal requirement for purposes of the conversion claim. To win under this particular
theory of conversion, plaintiffs must show that the Secretary’s advance approval is
required under federal law and that this claimed right is among those recognized under
Oklahoma personal property law.
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Accordingly, the conversion claim “necessarily raise[s] a stated federal issue.”
Grable, 545 U.S. at 314. To determine whether an issue is “necessarily” raised, the
Supreme Court has focused on whether the issue is an “essential element” of a plaintiff’s
claim. Id. at 315. At least at the motion to dismiss phase, we employ the standard “well-
pleaded complaint” rule. A case might fail for any number of reasons, but jurisdiction
“must be determined from what necessarily appears in the plaintiff’s statement of his own
claim in the bill or declaration, unaided by anything alleged in anticipation of avoidance
of defenses which it is thought the defendant may interpose.” Taylor v. Anderson, 234
U.S. 74, 75-76 (1914). Whether the Secretary must approve any and all removal of
restricted Indian property as plaintiffs allege is an issue that “arises in [p]laintiffs’ case-
in-chief, not by way of defense.” Nicodemus, 440 F.3d at 1235.
The district court declined jurisdiction because it concluded that the federal issue
of secretarial approval is not contested, as required by Grable. 545 U.S. at 313. We
cannot agree with this conclusion. As the federal defendants note in their brief, the
Department of “Interior has never made a definitive decision on the issue of whether
federal law in all circumstances prohibits an unrestricted owner from removing its
fractional share of chat from a pile unless and until it enters into a contract with the
restricted owners approved by the BIA.” Bingham and the Estate, moreover, plainly
disagree with the plaintiffs’ contention that approval is necessary. Plaintiffs rely heavily
on United States v. La Motte, which required secretarial approval for leases of certain
Indian lands held in common in part by “noncompetents,” 256 F. 5 (8th Cir. 1919), aff’d,
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254 U.S. 570, and contend the same rule applies to the comingled restricted and
unrestricted chat piles. But Bingham disputes the applicability of La Motte, arguing that
the case is “inapplicable to separate personal property” and applies only to realty. The
Estate likewise takes the position that the “status of Plaintiffs as restricted owners . . . is
immaterial.” Even absent these statements, plaintiffs’ allegations that the private
defendants have been removing chat without approval from the Secretary for years, if
true, strongly suggests the private defendants do not deem secretarial approval to be
required. We accordingly conclude that the federal issue asserted in this case is indeed
disputed.
The determinative questions then are whether the federal issue is “substantial” and
whether resolution of the issue in federal court would “disturb[] any congressionally
approved balance of federal and state judicial responsibilities.” Grable, 545 U.S. at 314.
In Empire, the Court clarified the meaning of “substantial” in this context. It
distinguished between “a nearly pure issue of law” that would govern “numerous” cases
and issues that are “fact-bound and situation-specific.” 547 U.S. at 700-01. The issue in
this case falls closer to the former end of this spectrum. Whether the Secretary must
approve the disposition of restricted Indian personalty is a legal question that does not
appear to depend on the specific facts of a case, though we do not speak to the merits of
such a claim here.
Moreover, a decision on that question would apply to a fair number of disputes.
As discussed above, the chat piles in the tri-state mining district have generated a not
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insignificant number of federal court cases. See Tonkawa Tribe of Indians of Oklahoma,
2009 U.S. Dist. LEXIS 21484; Seminole Nation, 2009 U.S. Dist. LEXIS 27836; Otoe-
Missouria Tribe, 2008 U.S. Dist. LEXIS 99548. And much other Indian personal
property is similarly restricted. See, e.g., United States v. Rice, 327 U.S. 742, 746 (1946)
(noting that dispute involved personal property “restricted under the laws of the United
States” held by “restricted Indians and wards of the United States”); Smith v. Babbitt, 96
F. Supp. 2d 907, 915 (D. Minn. 2000) (plaintiff Indians “contend that the interest they
seek to inherit constitutes an interest in restricted personal property”); Landman v. United
States, 103 Ct. Cl. 199, 206 (1945) (“Title to personal property, other than clothing, etc.,
was taken on a restricted bill of sale in the name of the United States for the use and
benefit of the” decedent Creek Indian).
In delineating the contours of substantiality, the Supreme Court also distinguished
Grable, in which the issue was “centered on the action of a federal agency (IRS) and its
compatibility with a federal statute,” from the issue in Empire, which “was triggered, not
by the action of any federal department, agency, or service, but by the settlement of a
personal-injury action launched in state court.” Empire, 547 U.S. at 700. Once again, the
issue in this case resembles that in Grable rather than that in Empire. In Grable, the legal
relationship between two private parties would be determined by whether a federal
agency had complied with its duty to the plaintiff. 545 U.S. at 314-15. In the case at bar,
the legal relationship between the parties turns on whether defendants satisfied their
(alleged) duties to a federal agency; the merit of plaintiffs’ conversion claim rests on the
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allegation that defendants could not remove chat without first obtaining approval from
the Secretary.
The involvement of the federal government in this dispute is a key factor. As
explained in Grable, a “substantial federal issue” is one that “indicat[es] a serious federal
interest in claiming the advantages thought to be inherent in a federal forum.” 545 U.S.
at 313. Such an interest is present here. Unlike the typical dispute between two private
litigants, this action concerns the responsibilities that a private defendant owes to a
federal agency. The federal government itself has a strong interest in determining
whether private assets comingled with restricted Indian personalty can be disposed of
without BIA approval regardless of the private parties’ stakes in that issue. Although the
federal defendants in this case did not brief the jurisdictional issue, they nonetheless take
the position that plaintiffs’ claims against the Estate and Bingham “present one or more
federal law questions that can fairly be characterized as substantial and disputed.” There
can be little doubt that this dispute is far more material to the federal government than a
typical conversion claim between private litigants.
In this sense, the suit at bar bears strong resemblance to that in Nicodemus. There,
the plaintiff landowner asserted numerous state-law claims alleging that a railroad had
exceeded the scope of its federally granted right-of-way. 440 F.3d at 1233-34. As in this
case, the federal government itself had a “direct interest” in the dispute because “the
United States has a reversionary interest in the lands when no longer used for their
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designated purposes.” Id. at 1236.3
Courts have also looked to whether the federal law issue is central to the case in
conducting the substantiality analysis. In Smith v. Kansas City Tile & Trust Co., 255
U.S. 180 (1921), the Court “recognized federal-question jurisdiction because the
principal issue in the case was the federal constitutionality of the bond issue.” Grable,
545 U.S. at 312. And in Grable, the contested issue of federal law “appeared to be the
only legal or factual issue contested in the case.” Id. at 315; see also Gully v. First Nat’l
Bank, 299 U.S. 109, 118 (1936) (federal question jurisdiction may hinge upon “the
distinction between controversies that are basic and those that are collateral, between
disputes that are necessary and those that are merely possible”). In comparison, when a
state-law claim “involve[s] substantial questions of state as well as federal law,” this
factor weighs against asserting federal jurisdiction. Bender v. Jordan, 623 F.3d 1128,
1131 (D.C. Cir. 2010).
Whether the federal law issue in this case is central is not entirely clear at this
3
We recognize that Nicodemus, which this court decided a few weeks before the
Supreme Court handed down Empire, contains sweeping language regarding
substantiality which, in light of the latter decision, may no longer be good law. See
Nicodemus, 440 F.3d at 1236 (“A case should be dismissed for want of a substantial
federal question only when the federal issue is (1) wholly insubstantial or obviously
frivolous, (2) foreclosed by prior cases which have settled the issue one way or another,
or (3) so patently without merit as to require no meaningful consideration.” (quotation
omitted)). However, this broad reading of substantial federal question jurisdiction
doctrine was not necessary to the outcome of Nicodemus, and we do not rely on this
statement here.
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stage of the litigation. However, we do not read the complaint to allege that the private
defendants have violated those property interests in the chat that exist only as a matter of
state law.4 Rather, we understand plaintiffs to allege that their state-law property rights in
the chat include the federal requirement of advance BIA approval. In so alleging,
plaintiffs have framed their state-law claim in such a fashion that they succeed only if
they are correct that the defendants failed to meet federal requirements for removal.
This is akin to Grable in which the plaintiff “premised [his] superior title claim on a
failure by the IRS to give it adequate notice, as defined by federal law.” Grable, 545 U.S.
at 314-15. Although plaintiffs could lose their conversion claim without the court
reaching the federal question, it seems that they cannot win unless the court answers that
question. Thus, plaintiffs’ “right to relief necessarily depends on resolution of a
substantial question of federal law.” Nicodemus, 440 F.3d at 1232 (quotation omitted,
emphasis added). Although we acknowledge that this claim is close to the line, we
conclude that the federal law question is “substantial” under these circumstances.
Finally, we must consider “whether resolution of the issue in federal court would
4
In certain contexts, Oklahoma common law permits a cotenant to alienate
personal property without the consent of the other cotenants. See Chaparral Energy,
L.L.C. v. Pioneer Exploration, Ltd., 241 P.3d 1161, 1164 (Okla. Civ. App. 2010)
(cotenant with working interest in an oil or gas well “has the right to develop the property
and market production, subject only to the duty to account to other cotenants” and thus
“under ordinary circumstances, the sale of gas to a purchaser by a cotenant without the
consent of other cotenants is lawful and does not constitute conversion on the part of
either the working interest cotenant or the purchaser”). We have not uncovered an
Oklahoma case dealing specifically with chat cotenancy, and have no occasion to opine
on whether Oklahoma courts would analogize chat to oil and gas.
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“disturb[] any congressionally approved balance of federal and state judicial
responsibilities.” Grable, 545 U.S. at 314. The fact that Congress has not elected to
provide a statutory right of action to plaintiffs is a thumb on the scale of dismissal. But
as the Court stressed in Grable, the “absence of a federal private right of action [is]
evidence relevant to, but not dispositive of, the sensitive judgments about congressional
intent that § 1331 requires.” Id. at 318 (quotation omitted). When exercising federal
jurisdiction would “herald[] a potentially enormous shift of traditionally state cases into
federal courts” the congressional decision not to provide a private right of action takes on
heightened significance. Id. at 319. But when the exercise of jurisdiction will “not
materially affect, or threaten to affect, the normal currents of litigation” federal question
jurisdiction may be proper notwithstanding the absence of a federal right of action. Id. at
319-20.
We conclude that plaintiffs’ conversion claim satisfies the latter criterion.
Although claims that touch on restricted Indian personalty arise with some degree of
frequency, as noted supra, hearing such claims in federal court “will portend only a
microscopic effect on the federal-state division of labor.” Id. at 315. Even rarer will be
those cases that depend upon an issue of federal law that directly impact a federal agency.
We further note that although Congress has not provided for a statutory conversion action
for owners of restricted Indian personalty, many claims relating to Indian property arise
under federal common law. See Nahno-Lopez v. Houser, 625 F.3d 1279, 1282 (10th Cir.
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2010) (recognizing federal common law claim for trespass to certain Indian lands).5
Thus, congressional silence on this matter is less than deafening given the federal
judiciary’s somewhat unique role in crafting common law as to Indian property issues.
Considering the numerous factors set forth in Grable and Empire, and our own
precedent in Nicodemus, we conclude that plaintiffs’ conversion claim presents a
substantial and disputed question of federal law sufficient to confer federal question
jurisdiction under 28 U.S.C. § 1331. We accordingly reverse the dismissal of all claims
against Bingham and the Estate because “if any one claim within Plaintiffs’ complaint
supports federal question jurisdiction, a federal court may assert jurisdiction over all the
claims, including any alleged state-law claims, arising from the same core of operative
facts.” Nicodemus, 440 F.3d at 1235 n.8 (citing 28 U.S.C. § 1367).6
IV
For the foregoing reasons, we AFFIRM the district court’s dismissal of plaintiffs’
claims against the federal defendants. We REVERSE its dismissal of the claims against
Bingham and the Estate and REMAND for further proceedings consistent with this
5
As discussed in n.2, supra, we do not decide here whether plaintiffs’ claims
against the private defendants are created by federal common law.
6
Although we remand all claims against the private defendants to the district
court, the propriety of exercising supplemental jurisdiction under § 1367 was not fully
briefed to this court, and may be considered below. We also note that the federal
defendants suggest that the claims against the private defendants should be stayed
pending exhaustion of administrative remedies of the claims against the federal
defendants. This too is a matter we leave to the district court to consider in the first
instance.
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opinion.
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