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Court throws out suit challenging Indian preference
Friday, April 28, 2006

Private companies that enter into contracts with tribal governments cannot be sued for following Indian preference laws, a federal appeals court ruled on Thursday.

In the first case of its kind, the 4th Circuit Court of Appeals was confronted with a precedent-seeing dispute. Can Edward Yashenko, a non-Indian man, sue Harrah's Entertainment after he lost his job at the casino owned by the Eastern Band of Cherokee Indians?

The tribe entered into a federally-approved management contract with Harrah's to manage the casino. The agreement requires the gaming company to follow tribal laws that give preference to Eastern Cherokees and other Native Americans.

Yashenko argued that the Indian preference law violated his civil rights because it discriminates on the basis of race. But in a unanimous decision, a three-judge panel threw out the suit because the Eastern Cherokee Band wasn't named as a defendant and can't be named without waiving its sovereignty.

"The fundamental problem with this argument is that, due to the management agreement between Harrah's and the tribe, Yashenko cannot assert a [civil rights] claim against Harrah's unless he joins the tribe as a party to the lawsuit, and the tribe enjoys sovereign immunity from suit," Judge Diana Gribbon Motz wrote for the majority.

And in an equally important holding, the court said the federal Family and Medical Leave Act doesn't give Yashenko an "absolute right" to employment at the Harrah's Cherokee Casino. While he was on medical leave, his job as a manager had been eliminated as a result of a reorganization.

Normally, the law ensures a person can return to the workforce after an approved family or medical related absence. But in this case, the court determined that "an employer may deny restoration when it can show that it would have discharged the employee in any event regardless of the leave," a situation that occurred with the reorganization at the casino.

The ruling is the latest in a round of court cases that test Indian preference in hiring. The 9th Circuit dealt with the issue in a lawsuit brought by a member of the Hopi Tribe who said his civil rights were violated by a Navajo preference law followed by Peabody Coal.

The court, back in 2000, set precedent when it said a private company like Peabody couldn't avoid suit for following a tribal preference law. But two years later, the 9th Circuit ruled that the Navajo Nation was an "indispensable party" to the case and couldn't be joined without waiving its sovereignty.

The 4th Circuit relied on this ruling in determining that the Eastern Band was "indispensable" to the dispute. The court listed three reasons -- including negative effects on the tribe's economy -- as the basis for its judgment.

Recent developments in the 9th Circuit could change the landscape, at least with respect to tribal-specific preference laws. In two separate disputes, the Equal Employment Opportunity Commission, a federal agency, is challenging hiring practices on behalf of Native Americans.

In one case, the EEOC sued Peabody Coal on behalf of two members of the Hopi Tribe and a deceased member of the Otoe Tribe. The 9th Circuit ruled that the lawsuit can go forward because it was brought by the federal government.

"Because the EEOC is an agency of the United States, the Navajo Nation cannot assert its sovereign immunity," the court wrote in March 2005. Peabody appealed to the U.S. Supreme Court but the justices rejected the case without comment.

In the second case that is still pending at the district court level, the EEOC sued the Bashas' Supermarket chain over hiring practices at a store on the Navajo Nation. The lawsuit alleges the store violated the civil rights of two Hopi tribal members by following a Navajo preference law.

The EEOC differentiates these cases from those pursued by non-Indians like Yashenko. The agency believes that private companies can follow general Indian preference laws but not tribal-specific preference laws like the ones at issue in the 9th Circuit.

The Eastern Band's law is a combination of Indian and regional preferences. First in line for recruiting, training and employment are enrolled Eastern Cherokees, then spouses, parents or children of enrolled members. Other Native Americans, followed by people from the local community and then others from the region and the state come next.

The Eastern Band employs more than 1,800 people at its casino and is the largest single employer in its region of western North Carolina. The tribe's development is helping draw tourists to the area and revitalize the economy.

The tribe wants to create more jobs with the addition of more Class III games at the casino. But talks with Gov. Mike Easley (D) recently broke down.

4th Circuit Decision:
Yashenko v. Harrah's NC Casino (April 27, 2006)

Relevant Links:
Eastern Band of Cherokee Indians -
Harrah's Cherokee Casino -
Equal Employment Opportunity Commission -

Related Stories:
Lawsuit filed over store's failure to hire Hopis (08/24)
Court joins Navajo Nation in discrimination case (03/11)
Oil company accused of not promoting Natives (11/10)

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