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Equal Employment Opportunity Commission v. Peabody Western Coal Co.

June 23, 2010


Appeal from the United States District Court for the District of Arizona, Mary H. Murguia, District Judge, Presiding, D.C. No. CV-01-01050-MHM.

The opinion of the court was delivered by: W. Fletcher, Circuit Judge



Argued and Submitted September 22, 2008 -- San Francisco, California.

Before: Procter Hug, Jr., Andrew J. Kleinfeld, and William A. Fletcher, Circuit Judges.

The Equal Employment Opportunity Commission ("EEOC") appeals various rulings of the district court in its suit against Peabody Western Coal Company ("Peabody"). Peabody leases mines from the Navajo Nation ("the Nation"), and maintains a preference for employing Navajo workers at these mines. EEOC alleges that in maintaining its employment preference Peabody discriminates against non-Navajo Indians, including two members of the Hopi Nation and one member of the Otoe tribe, in violation of Title VII, 42 U.S.C. § 2000e-2(a)(1). The district court first dismissed EEOC's suit in 2002. EEOC v. Peabody Coal Co. ("Peabody I"), 214 F.R.D. 549 (D. Ariz. 2002). We heard EEOC's appeal from that dismissal in EEOC v. Peabody Western Coal Co. ("Peabody II"), 400 F.3d 774 (9th Cir. 2005). We reversed, holding that it was feasible to join the Nation under Federal Rule of Civil Procedure 19 and that the suit did not present a non-justiciable political question. On remand, the district court granted summary judgment to Peabody. EEOC appeals.

In this appeal, we address questions arising out of the join-der of two different parties. We first address the joinder of the Nation. We hold that the amended complaint filed by EEOC after our remand does not render it infeasible to join the Nation. We next address the joinder of the Secretary of the Interior ("the Secretary"). We hold that the Secretary is a required party under Rule 19(a), and that joining him is not feasible. We hold further that Peabody and the Nation may not bring a third-party damages claim against the Secretary under Federal Rule of Civil Procedure 14(a), and that EEOC's claim against Peabody for damages must therefore be dismissed under Rule 19(b). However, we hold that Peabody and the Nation may bring a third-party claim against the Secretary for prospective relief under Rule 14(a), and that EEOC's injunctive claim against Peabody should therefore be allowed to proceed.

We vacate the remainder of the district court's rulings and remand for further proceedings consistent with this opinion.

I. Background

A. Factual Background

Peabody mines coal at the Black Mesa Complex and Kayenta Mine on the Navajo and Hopi reservations in northeastern Arizona. Peabody does so pursuant to leases with the Navajo and Hopi tribes inherited from its predecessor-in-interest, Sentry Royalty Company ("Sentry"). This case involves two leases Sentry entered into with the Nation: a 1964 lease permitting it to mine on the Navajo reservation (lease no. 8580) and a 1966 lease permitting it to mine on the Navajo portion of land jointly used by the Navajo and Hopi nations (lease no. 9910).

Both leases require that Peabody provide an employment preference to Navajo job applicants. The 1964 lease provides that Peabody "agrees to employ Navajo Indians when available in all positions for which, in the judgment of [Peabody], they are qualified," and that Peabody "shall make a special effort to work Navajo Indians into skilled, technical and other higher jobs in connection with [Peabody's] operations under this Lease." The 1966 lease provides similarly, but also states that Peabody may "at its option extend the benefits of this Article [containing the Navajo employment preference] to Hopi Indians." We will refer to these provisions as "Navajo employment preference provisions." Many business leases on the Navajo reservation contain similar employment preferences for Navajo job applicants.

As we noted in Peabody II, the Department of the Interior ("DOI") approved both mining leases, as well as subsequent amendments and extensions, under the Indian Mineral Leasing Act of 1938 ("IMLA"). Peabody II, 400 F.3d at 776; see 25 U.S.C. §§ 396a, 396e; see also United States v. Navajo Nation ("Navajo Nation I"), 537 U.S. 488, 493 (2003) (explaining that DOI's approval is necessary before leases on reservation land become effective). Former Secretary of the Interior Stewart Udall, who served as Secretary during the period the leases were drafted and approved, stated in a declaration submitted to the district court that DOI drafted the leases and required the inclusion of the Navajo employment preferences. This statement is undisputed. The leases provide that, if their terms are violated, both the Nation and the Secretary retain the power to cancel them after a notice and cure period. Amendments to the leases must be approved by the Secretary.

B. Procedural Background

This is the latest in a series of cases involving Navajo employment preferences. See Dawavendewa v. Salt River Project Agric. Improvement & Power Dist. ("Dawavendewa II"), 276 F.3d 1150, 1163 (9th Cir. 2002); Dawavendewa v. Salt River Agric. Improvement & Power Dist. ("Dawavendewa I"), 154 F.3d 1117, 1124 (9th Cir. 1998). We discussed the history of Navajo employment preferences in detail in the first appeal in this case. See Peabody II, 400 F.3d at 777.

EEOC filed this suit against Peabody in June 2001, alleging that Peabody was unlawfully discriminating on the basis of national origin by implementing the Navajo employment preferences contained in the leases. EEOC's complaint charged that Peabody had refused to hire non-Navajo Indians including two members of the Hopi and one now-deceased member of the Otoe tribe, as well as unspecified other non-Navajo Indians, for positions for which they were otherwise qualified. EEOC alleged that such conduct violated Title VII, 42 U.S.C. § 2000e-2(a)(1), which prohibits employers from refusing to hire applicants because of their national origin. EEOC's position throughout this litigation has been that the Indian preference exception of Title VII, § 2000e-2(i), permits discrimination in favor of Indians living on or near a particular tribe's reservation, but does not permit discrimination against Indians who live on or near that reservation but are members of another tribe. Peabody II, 400 F.3d at 777-78. EEOC alleged further that Peabody had violated the record-keeping requirements of § 2000e-8(c). EEOC requested three forms of relief: (1) an injunction prohibiting Peabody from continuing to discriminate on the basis of national origin and requiring Peabody to provide equal employment opportunities for non-Navajo Indians living on or near the Navajo reservation; (2) damages, including back pay with interest, compensatory damages, and punitive damages; and (3) an order requiring Peabody to make and preserve records in compliance with Title VII.

Peabody moved for summary judgment and for dismissal of the action. Peabody argued, first, that Rule 19 required dismissal because the Nation was a necessary and indispensable party to the action and, second, that the action presented a non-justiciable political question between EEOC and DOI because DOI had approved the mining leases. The district court agreed and granted Peabody's motion to dismiss on both grounds. Peabody I, 214 F.R.D. at 559-63. The district court also dismissed EEOC's recordkeeping claim, even though Peabody had not sought dismissal of this claim. Id. at 563.

We reversed in Peabody II. First, we held that the Nation was a necessary party under Rule 19, but that EEOC's suit need not be dismissed because joinder of the Nation was feasible. Peabody II, 400 F.3d at 780-81. Because EEOC is an agency of the United States, the Nation could not assert sovereign immunity as a defense to joinder. Although EEOC lacked statutory authority to state a cause of action against the Nation, joinder of the Nation for the purposes of res judicata was still possible and would be effective in providing "complete relief between the parties." Id. at 781. Second, we held that EEOC's claim did not present a non-justiciable political question. Id. at 784-85. Third, we held that the district court erred in dismissing EEOC's recordkeeping claim. Id. at 785. We remanded for further proceedings with the Nation joined under Rule 19. Id. at 785.

On remand, EEOC filed an amended complaint that included the same claims and prayer for relief as its initial complaint. The newly joined Nation moved to dismiss under Rule 19, arguing, inter alia, that EEOC's amended complaint impermissibly seeks affirmative relief against the Nation, and that the Secretary of the Interior is a necessary and indispensable party. Peabody filed its own motion to dismiss. Inter alia, it agreed with the Nation's argument that the Secretary was a necessary and indispensable party. This was the first time in this litigation that anyone had argued that the Secretary was a necessary and indispensable party.

The district court converted the motions to dismiss into motions for summary judgment. The district court granted summary judgment against EEOC, holding, in the alternative, that (1) EEOC was seeking affirmative relief against the Nation in its amended complaint, and that the Nation therefore could not be joined under Rule 19; (2) the Secretary was a necessary and indispensable party for whom joinder was not feasible; and (3) the Rehabilitation Act of 1950, 25 U.S.C. § 631-638, authorized the tribe-specific preferences challenged by EEOC. The district court also granted the Nation's motions to strike two EEOC exhibits and to strike an EEOC footnote reference. Finally, the court denied EEOC's motion to strike two forms upon which Peabody relied. EEOC timely appealed all of the district court's rulings.

We reach only holdings (1) and (2), as to which we reverse the district court. We vacate the rest of the court's decision and remand for further proceedings.

II. Standard of Review

We review a district court's decision on joinder for abuse of discretion, and we review the legal conclusions underlying that decision de novo. Peabody II, 400 F.3d at 778.

III. Discussion

[1] This case continues to present somewhat complex compulsory party joinder issues. As we explained in Peabody II, Federal Rule of Civil Procedure 19 governs compulsory party joinder in federal district courts. In its recently amended form, Rule 19 provides, in relevant part:

(a) Persons Required to Be Joined if Feasible.

(1) Required Party.

A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:

(i) as a practical matter impair or impede the person's ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

(2) Joinder by Court Order.

If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant ...

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