Barclay Damon
Barclay Damon

Legal Alert

Tribal Possessory Land Claims “Out”; Unjust Compensation Claims “In”?

On June 3, 2008, the United States Court of Appeals for the Second Circuit heard oral argument regarding the Oneida Indian Nation’s (the “Nation”) claims to land in New York State. The appeal concerned a 2007 decision and order from the United States District Court for the Northern District of New York (Kahn, J.), which held that the Nation had a non-possessory land claim for fair compensation based on the common law of contracts.1 Before a three judge panel, the Nation asserted its entitlement to fair compensation for its sale of 250,000 acres of ancestral land to New York State (the “State”) during the eighteenth and nineteenth centuries. The State refuted the Nation’s unfair compensation concept; asserting that a damages award would call into question title to the subject land and, thus, be based on challenge to title.

Throughout argument, the Second Circuit panel expressed concern over inherent distinctions between the appeal and Cayuga Indian Nation of New York, et al. v. Pataki, et al., 413 F.3d 266 (2d Cir. 2005)(Cabranes, C.J.)(“Cayuga”). The panel noted that Cayuga involved damages for the inherently possessory land claim of trespass, as contrasted to the Nation’s money damages claim (an award for which would not be based on which party took title to the land).2 The panel questioned whether such an award would lead to the disruption that the United States Supreme Court sought to avoid in City of Sherrill v. Oneida Indian Nation of New York, 544 U.S. 197 (2005)(“Sherrill”). The panel also pointed out that the Nation’s initial request for disgorgement of profits put the State on sufficient notice of the unfair compensation claim. The panel did not declare any open hostility toward the idea that the Non-Intercourse Act could permit an equitable remedy of fair compensation.

The State argued that the Nation’s sought-after damages would cause impermissible disruption comparable to that rejected in Sherrill and Cayuga. According to the State, a court cannot justify an unfair compensation damages award without first adjudging the subject land transactions as void from the beginning. Such a finding inherently would cast doubt upon the validity of title in all landowners subsequent to the Nation, including current landowners. Therefore, because the Nation predicated its unfair compensation claim on the status of title, the claim truly had the character of a possessory land interest. The State posited that, as with the trespass damages claim barred in Cayuga, laches barred the Nation’s claims for inherently disruptive fair compensation.

The United States government (the “Government”), having intervened as a plaintiff, argued that the Cayuga decision did not control the damages issue on appeal because of fundamental differences between trespass and unfair compensation. Unlike in an action for trespass, a common law unfair compensation action does not require a showing that the claimant has the right to possess the land. Additionally, Sherrill carried the implication that the curative objectives of the Non-Intercourse Act - because it did not seek to limit available remedies - permitted restitution where possessory remedies otherwise were unavailable. Furthermore, the Government argued, the purely retrospective nature of the damages sought had the added advantage of preserving the status quo; money damages insulated current landowners from any cloud on title.

The Nation continued this thread and argued that contract reformation (i.e., at a fair price) affected no one other than the State and the Nation. The Nation’s claims did not jeopardize title in the current landowners because unfair compensation claims anticipate the prospect of the subject title passing to innocent third party transferees; an unfair compensation claim calls only the Buyer and the Seller into battle with each other. According to the Nation, the State merely hid behind the rights of innocent third- (and fourth-, and fifth-, etc.,) party transferees. The Nation argues that in the absence of any true disruption, the lower court correctly denied summary judgment against the unfair compensation claim.

The Second Circuit panel now has the task of determining whether an unfair compensation cause of action exists under the Non-Intercourse Act. Although the panel noted certain differences between the claims on appeal before it and the claims in Cayuga, those differences may or may not trigger a different result. The unfair compensation claims do not seek possession; but the panel most probably will need to determine whether those claims are possessory. If they are, then, consistent with Cayuga, the Nation’s complaint likely would be dismissed in its entirety. If the claims are not possessory, then the Nation could return to federal district court to pursue its case - as would other tribal communities seeking to cross the thresholds of courthouse doors across the country.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact any of the members of the Practice Area.

1The District Court also ruled that the Nation's possessory land claim is barred by the doctrine of laches under the Second Circuit's recent decision in Cayuga Indian Nation of New York v. Pataki, et al., 413 F.3d 266 (2d Cir. 2005)(Cabranes, C.J.)(“Cayuga”).

2Madison and Oneida Counties (the “Counties”) also appeared, advocating for affirmance of the lower court’s dismissal of the Nation’s claims for possession. Apparently satisfied that it had already disposed of this issue, in Cayuga, the panel did not pursue any substantial inquiry with regard to this topic and declined to address it at all throughout the argument.