The Alaska Supreme Court recently affirmed and expanded Tribal sovereignty in Ito v. Copper River Native Association, issued on April 26, 2024, in which the court adopted a new multi-factor inquiry to determine whether an entity is entitled to sovereign immunity as an “arm of the tribe.” The Ito decision reversed a previous ruling by the Alaska Supreme Court in Runyon v. Association of Village Council, which had ruled that financially isolated entities are not entitled to sovereign immunity as an “arm of the Tribe.”

In Ito, Copper River Native Association (CRNA), an Alaska nonprofit formed by several tribes to provide healthcare services to their members, was sued by a former employee over her termination. CRNA claimed it qualified as an arm of its member tribes and therefore possessed sovereign immunity, which would bar the former employee from pursuing her claim in state or federal court, and require the former employee to seek relief directly from the tribes.

The Alaska Supreme Court agreed with CRNA and adopted a version of the Tenth Circuit’s multi-factor test in Breakthrough Mgmt. Grp., Inc. v. Chukchansi Gold Casino & Resort to determine whether an entity such as CRNA is an arm of the tribe. Although several states and circuits use a six-factor version, the adoption of this five-factor test brings Alaska courts into line with other states and multiple federal circuits.

The multi-factor test adopted by Ito directs Alaska courts to examine five factors to determine whether an entity is an “arm of the Tribe,” and therefore entitled to sovereign immunity:

• The purpose of the entity
• The way in which the entity was created
• The structure, control, and ownership of the entity
• The intentions of the Tribe or Tribes forming the entity; and
• The financial relationship between the entity and the Tribe

The Ito court held that “[n]o single factor is dispositive[.]” In practice, this means if a tribal entity fails to satisfy one of the factors, it is still not necessarily precluded from qualifying as an “arm-of-the-Tribe” and sovereign immunity.

Applying these factors, the court found CRNA to be an arm of its member tribes, and entitled to immunity from most suits in state or federal court. In reaching this decision, the court highlighted several critical facts:

• CRNA was formed by Tribes through resolutions to provide a “core government function”
• CRNA is controlled by its member Tribes
• CRNA was intended to be the successor of “the traditional consultive and governing assembly of the Athabascan people of the Copper River Region” and to “possess all the rights, duties, powers, and privileges” afforded that historic inter-Tribal body; and
• CRNA is reliant on federal funds set aside for Tribal healthcare to provide healthcare services to its member Tribes.

The Ito court explained that its reversal of Runyon is a result of changing legal standards regarding Tribal sovereign immunity:

The legal landscape surrounding tribal sovereign immunity has developed substantially since we decided Runyon in 2004. As in Runyon, our interpretation of federal law governing tribal immunity is informed by developments in federal and state approaches, so we discuss each of them below. Multiple federal circuit courts have adopted frameworks for evaluating arm-of-the-tribe immunity, and none treat financial insulation as dispositive. A number of states have also considered arm-of-the-tribe immunity, with most embracing approaches that do not rely primarily on financial insulation.

The Ito court concluded, after a review of those other federal and state court actions, that Runyon was too limiting and did not account for the practical impact that judgments against entities such as CRNA could have on its sponsoring Tribes:

The United States and the tribally affiliated amici are correct that Runyon’s narrow financial insulation inquiry undermines tribal sovereignty and fails to account for the “federal policies of tribal self[-]determination, economic development, and cultural autonomy.” By choosing to form CRNA and pool federally provided resources to deliver services to their members, the tribes exercised their sovereign rights to self-governance and self-determination. Looking only at whether the tribes would be directly legally liable for a judgment against CRNA ignores the actual impacts of a judgment on the tribal interests that immunity is meant to protect. It is critical to our analysis in CRNA’s case that, despite being a separate legal entity, most if not all of its federal funding comes directly from money that would otherwise go to the tribes. Applying a threshold financial insulation inquiry here would deprive the tribes of those funds while simultaneously relying on the notion that a judgment would not be satisfied out of the tribes’ coffers. This ignores the practical reality of a judgment.

Finally, the Ito court also recognized the benefits, and need, to align Alaska jurisprudence with federal law, and provide a uniform standard for determining when Tribal sovereign immunity applied:

Considering the conflict between Alaska law in Runyon and the federal law governing arm-of-the-tribe analysis, we consider it a harm in itself to leave employees and employers subject to navigating an ongoing conflict between our state and federal law, particularly on issues of sovereign immunity controlled by federal law. We take seriously the potential harm involved in leaving employers subject to two contradictory standards under state and federal law, which can be cumbersome to interpret and understand for employers and factfinders alike, and risks the determination of an entity’s immunity being a function of the forum.

            In adopting the five-factor test and overturning Runyon, the court clarified a pathway for Tribes to exercise their sovereignty and take advantage of a powerful tool: creating an “arm-of-the-tribe” immunity that can advance Tribal interests while retaining sovereign immunity. Specifically, most claims against tribal entities with sovereign immunity must be pursued in Tribal court or a Tribal forum, as opposed to state or federal court. This provides Tribes an opportunity to exercise their judicial powers and adjudicate disputes involving their entities based on Tribal law or custom.

A wide variety of entities can qualify as an arm of the tribe. Courts in jurisdictions using similar tests have found Tribal nonprofit educational institutions, repatriation committees, and health associations, in addition to for-profit gaming entities and lending businesses, qualify as arms of the tribe and are entitled to sovereign immunity.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

We also acknowledge the contributions of Sam Schimmel, one of our 2024 Summer Associates, in the development and drafting of this article