On January 25, 2016, the Supreme Court issued a decision in Menominee Indian Tribe of Wisconsin v. United States, rejecting an argument that equitable tolling preserves some claims against the United States for failure to pay tribes the full amount owed under self-determination compacts and contracts.
The Menominee Indian Tribe of Wisconsin, like many other tribes, had contracted with certain federal agencies to carry out federally-funded health programs. But the United States failed to pay to Menominee and other tribes the contract support costs (“CSC”)—that is, the administrative and overhead costs associated with carrying out the contracted programs—required by contract and statute. It took years of litigation for tribes to establish that the United States was in fact obligated to pay CSC. The tribes finally prevailed on that point in 2012, with the Supreme Court’s decision in Salazar v. Ramah Navajo Chapter. But in the intervening years, the limitations period on many tribes’ claims expired, and those tribes could only hope to collect on claims starting in 2006—and thus within the 6 year limitations period at the time of the Ramah Navajo decision.
However, the Menominee Tribe had an argument to toll some of the pre-2006 claims based on the doctrine of equitable tolling. The Menominee Tribe had relied on earlier lower court decisions in deciding not to pursue its claims while related class actions were pending. The Menominee Tribe did present its claims as soon it became clear that such reliance was in doubt. The Tribe argued that under these circumstances, the doctrine of equitable tolling should preserve those claims. The Supreme Court rejected the Tribe’s argument, finding that equitable tolling only applies when “some extraordinary circumstance stood in [the litigant’s] way and prevented timely filing,” Holland v. Florida, 560 U.S. 631, 649 (2010), and that this requires a showing that a litigant’s delay is both extraordinary and beyond its control. The Court found that Menominee had not made such a showing. The Court rejected as “mistakes” and “excuses” Menominee’s arguments that it reasonably relied on lower court decisions that would toll the claims and that presenting its claims any earlier would have been futile. The Court also rejected the argument that consideration of the United States’ trust relationship with tribes should lead to a different result, declaring that “[t]he ‘general trust relationship’ does not override the clear language of [other] statutes.”
Although this is a disappointing turn of events in CSC litigation, the direct impact of this case is limited to the facts of Menominee’s case. The decision does not alter the United States’ obligation to pay reasonable CSC to tribes that enter self-determination compacts or contracts. The decision simply emphasizes the importance of acting quickly to pursue underpayments. For tribes that are not already pursuing CSC claims, this means that claims for fiscal year 2010 and onward can likely still be pursued. Although the United States has vigorously opposed such claims in the past, the current policy appears to favor settlement. Dorsey & Whitney has experience in this area, and we would be happy to answer questions.