United States Court of Appeals, District of Columbia Circuit
March 15, 2018
from the United States District Court for the District of
Columbia (No. 1:16-cv-01652)
Benjamin Fenner argued the cause for appellants. With him on
the briefs were Patricia A. Marks and Joseph V. Messineo.
Peter D. Lepsch entered an appearance.
William E. Havemann, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Jessie K. Liu, U.S. Attorney, and Mark B. Stern, Attorney. R.
Craig Lawrence and Benton G. Peterson, Assistant U.S.
Attorneys, entered appearances.
Before: Rogers and Pillard, Circuit Judges, and Randolph,
Senior Circuit Judge.
RANDOLPH SENIOR CIRCUIT JUDGE.
the "Ho-Chunk" Tribe occupied portions of what are
now several midwestern states. In the 1800's the Tribe
entered into treaties with the United States and divided into
two branches: the Ho-Chunk Nation of Wisconsin and the
Winnebago Tribe of Nebraska. Both are federally-recognized
Indian tribes with federal reservations. See 83 Fed.
Reg. 4, 235, 4, 237, 4, 239 (Jan. 30, 2018).
four appellants in this case - a parent corporation and three
of its subsidiaries - are incorporated under the laws of the
Winnebago Tribe of Nebraska. Ho-Chunk, Inc., the parent
corporation, is the Tribe's wholly-owned economic
development arm. Among its wholly-owned subsidiaries are the
three corporations who are also parties here. They are
involved in the manufacture and distribution of cigarettes.
Each corporation's principal place of business is the
Tribe's reservation in Winnebago, Nebraska.
Rock River Manufacturing Company, one of these corporations,
manufactures and imports tobacco products, including
cigarettes. Rock River sells its products to another
subsidiary corporation, HCI Distribution Company, as well as
to state-licensed distributors. HCI Distribution resells
these products to businesses owned or licensed by other
Indian tribes. Woodlands Distribution Company, the third
subsidiary corporation, sells tobacco products to off- and
2016, the federal Bureau of Alcohol, Tobacco, Firearms and
Explosives sent letters to Rock River, HCI Distribution, and
Woodlands. The letters notified the companies that the Bureau
intended to inspect and copy their records of tobacco
transactions and asked them to name a mutually-acceptable
inspection date within fifteen business days from receipt of
companies and their parent responded with a complaint seeking
a declaratory judgment that they are not subject to federal
recordkeeping laws dealing with the distribution of
cigarettes. The district court entered summary judgment
against them. Ho-Chunk, Inc. v. Sessions, 253
F.Supp.3d 303, 304 (D.D.C. 2017). Their appeal presents a
question of statutory interpretation - do the federal
recordkeeping laws cover these corporations?
the Bureau is commonly known, issued its inspection notices
pursuant to the Contraband Cigarette Trafficking Act of 1978,
as amended. See 18 U.S.C. § 2343(c). The Act
sought to remedy the "problem of organized crime and
other large scale operations of interstate cigarette
bootlegging and to help provide law enforcement assistance
and relief to cities and States." S. Rep. 95-962, at 3
(1978). To this end, "[a]ny person who ships,
sells, or distributes any quantity of cigarettes in excess of
10, 000 . . . in a single transaction . . . [must] keep such
information as the Attorney General considers appropriate . .
.." 18 U.S.C. § 2343(a). This may include
identifying information about cigarette purchasers and
declarations of the purchasers' purposes in receiving the
cigarettes. Id. § 2343(a)(1)-(3).
River, HCI Distribution, and Woodlands claim that they are
exempt from the Act's recordkeeping requirements. They
are exempt, they say, because the statute and the regulations
do not cover wholly-owned corporations of a
federally-recognized Indian tribe.
the years, the Supreme Court has dealt with issues regarding
Indian tribes and their sale of cigarettes. The law, as the
Court has developed it, now stands as follows. Indians and
Indian tribes may sell untaxed cigarettes on their
reservations to tribal members for their personal
consumption. See Moe v. Confederated Salish &
Kootenai Tribes of the Flathead Reservation, 425 U.S.
463, 480-81 (1976). States, however, retain the authority to
tax non-Indian customers of Indian cigarette distributors on
the reservation. See Washington v. Confederated Tribes of
the Colville Indian Reservation, 447 U.S. 134, 150-51
(1980). Under Moe and Colville, "a
State may require Indian retailers to collect a tax imposed
on non-Indian purchasers of cigarettes." Dep't
of Taxation & Fin. of N.Y. v. Milhelm Attea & Bros.,
Inc., 512 U.S. ...