US SUPREME COURT DECISIONS

Respondent employee (hereafter respondent) of a ranch located on the Blackfeet Indian Reservation and owned by Indians, brought suit in Blackfeet Tribal Court seeking compensation from the ranch for personal injuries respondent suffered when the cattle truck he was driving "jackknifed," and seeking compensatory and punitive damages from petitioner, the ranch's insurer, for its alleged bad-faith refusal to settle the personal injury claim. Upon petitioner's motion to dismiss, the Tribal Court held that it had subject matter jurisdiction, ruling that the Tribe could regulate the conduct of non-Indians engaged in commercial relations with Indians on the reservation. Without seeking review by the Tribal Court of Appeals, petitioner brought an action in Federal District Court, alleging diversity of citizenship as the basis for federal jurisdiction, and seeking a declaration that petitioner had no duty to defend the ranch because respondent's injuries fell outside the applicable insurance policies' coverage. The District Court dismissed the action for lack of subject matter jurisdiction, and the Federal Court of Appeals affirmed, concluding that the Tribal Court system should be permitted to initially determine its own jurisdiction, which determination could be reviewed later in federal court.

Held:

1. A federal district court may not exercise diversity jurisdiction over a dispute before an appropriate Indian tribal court system has first had an opportunity to determine its own jurisdiction. Pp. 480 U. S. 14-20.

(a) The rule announced in National Farmers Union Ins.. Cos. v. Crow Tribe, 471 U. S. 845, requiring exhaustion of tribal remedies, applies here even though National Farmers Union was a federal question case, rather than a diversity case. Regardless of the basis for jurisdiction, federal policy supporting tribal self-government requires federal courts, as a matter of comity, to stay their hands in order to give tribal courts a full opportunity to first determine their own jurisdiction. Pp. 480 U. S. 15-16.

(b) At a minimum, the requirement of exhaustion of tribal remedies means that tribal appellate courts must have the opportunity to review lower tribal court determinations. Here, since petitioner did not obtain appellate review of the Tribal Court's initial determination that it had chanrobles.com-red

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jurisdiction, the National Farmers Union rule has not been satisfied, and federal courts should not intervene. Pp. 480 U. S. 16-17.

(c) Nothing in the diversity statute (28 U.S.C. §1332) or its legislative history suggests a congressional intent to override the federal policy of deference to tribal courts, and, in the absence of any indication of such an intent, civil jurisdiction over the activities of non-Indians on reservation lands presumptively lies in tribal courts. Pp. 480 U. S. 17-18.

(d) Petitioner's contention that local bias and incompetence on the part of tribal courts justify the exercise of federal jurisdiction is without merit, since incompetence is not among National Farmers Union's exceptions to the exhaustion requirement, and would be contrary to the congressional policy promoting tribal courts' development, and since the Indian Civil Rights Act, 25 U.S.C. §1302, protects non-Indians against unfair treatment in tribal courts. Pp. 480 U. S. 18-19.

2. Although a final determination of jurisdiction by the Blackfeet Tribal Courts will be subject to review in federal court, relitigation of any Tribal Court resolution of respondent's bad-faith claim will be precluded by the proper deference owed the tribal court system, unless a federal court determines that the Tribal Court, in fact, lacked jurisdiction. P. 480 U. S. 19.

3. The Federal Court of Appeals erred in affirming the District Court's dismissal of petitioner's suit for lack of subject matter jurisdiction, and, on remand, the District Court should consider whether that suit should be stayed pending further tribal court proceedings or dismissed under National Farmers Union's prudential rule. Pp. 480 U. S. 19-20.

774 F.2d 1174, reversed and remanded.

MARSHALL, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and BRENNAN, WHITE, BLACKMUN, POWELL, O'CONNOR, and SCALIA, JJ., joined. STEVENS, J., filed an opinion concurring in part and dissenting in part, post, p. 480 U. S. 20. chanrobles.com-red

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