On January 16, 2020, the New Mexico Supreme Court issued its decision in Mendoza v. Isleta Resort and Casino, holding that a tribe does not waive its sovereign immunity to workers’ compensation claims merely by committing in a tribal gaming compact¹ to establish a workers’ compensation program.  Tribal employers that negotiate gaming compacts will find this case of interest.

Plaintiff’s Claim

The plaintiff worked as a porter for Isleta Casino, owned and operated by the Isleta Pueblo.  After injuring her knee at work, she filed an accident form with the Casino.  The Pueblo’s insurance administrator sent the plaintiff a letter, denying her claim as untimely.

The plaintiff responded by filing a claim with the New Mexico Workers’ Compensation Administration (WCA).  The insurance administrator took the position that the WCA had no jurisdiction over this claim due to the tribal sovereign immunity. The WCA nonetheless submitted the plaintiff’s claim to mediation.  Based on the mediator’s findings, the WCA’s Director concluded that the Pueblo waived its sovereign immunity by entering a gaming compact (the Compact) with the State of New Mexico to operate the Casino that included a requirement that the Casino implement a workers’ compensation program with recourse for denied claimants before tribal adjudicators.  The Director then concluded that the WCA could exercise jurisdiction and the claim was compensable.

The Casino and insurance administrator disagreed and moved to dismiss the claim, arguing that tribal sovereign immunity deprived the WCA of subject matter jurisdiction.  The Pueblo alone, they argued, had jurisdiction over the claim.  The plaintiff responded that because neither the Pueblo nor the Casino had actually implemented tribal workers’ compensation, the state system had to fill the gap.  The WCA agreed with the Casino and insurance administrator, and, notwithstanding the position previously taken by the WCA’s Director, dismissed the plaintiff’s claim.

The plaintiff appealed to the New Mexico Court of Appeals, which reversed the dismissal, holding that the insurance administrator was not immune to suit and that, even if the tribal entities had immunity, the insurance administrator and the insurer were not.  Further holding that the Pueblo was not an indispensable party in the proceeding, the Court of Appeals determined the WCA could hear the plaintiff’s claim.  The Casino, insurance administrator, and insurer sought and obtained state supreme court review.

The New Mexico Supreme Court Decision

In an exhaustive 29-page decision, the New Mexico Supreme Court reversed the Court of Appeals in favor of the Casino and associated parties.

First, the Court disagreed with the plaintiff’s position that the Compact itself created a private right of action.  The Court held that she had no such right as she was not a party to the Compact.

The Court also held that the Pueblo’s sovereign immunity barred the plaintiff’s claim regardless of whether she had a right of action under either the Compact or New Mexico workers’ compensation law.  The New Mexico Supreme Court rejected the plaintiff’s suggestion that the Pueblo’s commitment in the Compact to implement a workers’ compensation program had waived sovereign immunity.  The Pueblo’s commitment, satisfied or not, did not permit the WCA to adjudicate workers’ compensation claims or apply state law.

Having concluded that the Pueblo and its Casino were immune to suit, the Court considered whether the plaintiff could maintain her claim against their non-tribal insurer.  It decided she could not, because the Pueblo was an indispensable party to the litigation.  Resolution of the plaintiff’s claim would affect the Pueblo’s resources, and the insurer would not necessarily always share its identical interests.  Although indispensable, the Pueblo could not be joined given its immunity to suit.  Consequently, the plaintiff could not pursue her claim.  Although this left her without a remedy, the Court decided that tribal sovereignty took precedence.

Suggestions for Tribal Employers

The Court’s holding is certainly a win for tribal employers hoping to protect their sovereignty against aggressive state workers’ compensation agencies.  But the Court paused to “caution parties, such as an insurer, against adopting a presumption that a tribe’s involvement in a case will always necessitate dismissal.”  The Court also suggested that the state attorney general might sue under the terms of the Compact to enforce the Pueblo’s commitment to provide workers’ compensation.  Tribal employers should accordingly review the decision and take certain steps to help safeguard their sovereign immunity in similar circumstances:

1. Waive immunity to workers’ compensation claims in the tribe’s own courts or administrative tribunals.  In its compact, the Isleta Pueblo had done just that.  The Court noted this offhandedly in deciding that the Pueblo’s commitment to provide workers’ compensation was insufficient to waive sovereign immunity.  By waiving immunity to tribal adjudication, tribes can not only deter state intrusion, but also strengthen their own courts and administrative forums.
2. Provide for tribal law as the law of decision.  In interpreting the scope of waiver in the Compact, the New Mexico Supreme Court analyzed not only its allocation of jurisdiction but its choice of law.  While ideally, a state workers’ compensation law may be unable to adjudicate tribal employees’ claims, tribes could agree to ensure that if they do, tribal law alone applies.
3. Provide workers’ compensation through tribal insurers.  As the Court cautioned, an insurer may not always depend on the sovereignty of its tribal client to protect itself.  And if the insurer cannot avoid suit and potential judgment, the economic impact may fall on the tribal entity.  Thus, tribes may consider seeking out insurers or even creating their own, so the insurer can independently assert sovereign immunity.
4. For ease of administration, opt into the state workers’ compensation scheme.  While the Isleta Pueblo declined such an option, tribes seeking to provide employees workers’ compensation without the burden of administering the system themselves can sometimes opt into state programs.  Arizona, Wisconsin, Washington, and other states allow such an arrangement.  Similarly, tribes may have their businesses pay into state workers’ compensation but adjudicate claims and enforce payment themselves.