Tribal Hiring Preference Doesn't Violate Title VII, 9th Circuit Affirms

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Kevin McGowan

Sept. 26 — A coal company that grants hiring preference to Navajo Nation members over members of other Indian tribes under its mineral leases on Navajo land in Arizona isn't engaging in national origin discrimination under Title VII of the 1964 Civil Rights Act, the U.S. Court of Appeals for the Ninth Circuit ruled Sept. 26.

Affirming summary judgment for Peabody Western Coal Co., the Navajo Nation and the Department of the Interior, the court said tribal affiliation is a “political classification” rather than one based on national origin and therefore isn't covered by Title VII.

The legislative history of Title VII also shows Congress didn't intend to overturn traditional provisions in Interior-approved mineral leases that give members of specific tribes hiring preferences when private companies seek to mine on their reservations, the court said.

“Nothing indicates that Congress viewed Title VII as a recalibration of its policy toward tribal communities that had been articulated in its prior legislation,” Judge William A. Fletcher wrote. “Nor is there any suggestion that Congress viewed Title VII as a specific disapproval of Interior's longstanding and settled practice of approving tribal hiring preferences in mineral leases.”

“We therefore conclude that Title VII does not reach the tribal hiring preferences in the Peabody leases and affirm the district court's grant of summary judgment against the EEOC,” the court said.

Judges Susan P. Graber and Richard A. Paez joined in the decision.

Repeated Trips to Ninth Circuit

The EEOC originally sued Peabody in 2001, based on its investigation of discrimination charges filed by members of the Hopi and Otoe tribes about being denied jobs at two mines on the Navajo reservation because of their tribal membership.

The EEOC contended Peabody was engaging in national origin discrimination by preferring Navajo Nation members for employment and by not hiring members of other Indian communities for jobs for which they were qualified.

Peabody argued the Navajo hiring preference was required by its mineral leases, which the Interior Department had approved under the Indian Mineral Leasing Act. A district court in Arizona dismissed the EEOC's suit, finding it was infeasible to join the Navajo Nation as a party to the suit because of a Title VII exemption for Indian tribes but it would be unfair to try Peabody alone because the Navajo nation was an “indispensable party” under the Federal Rules of Civil Procedure.

But the Ninth Circuit revived the EEOC's suit, saying the Navajo Nation could be joined as a necessary party for complete relief, even though the EEOC has no legal claim against the tribe (400 F.3d 774, 95 FEP Cases 588 (9th Cir. 2005). The appeals court also rejected the argument the EEOC's challenge to the hiring preference was a political question outside the court's jurisdiction.

The U.S. Supreme Court in 2006 denied Peabody's petition for review, sending the case back to the district court.

The district court in 2006 dismissed the EEOC's amended complaint, reasoning that adding the Navajo Nation as a defendant contradicted Title VII's “exemption of Indian tribes from suit”.

On a second appeal, the Ninth Circuit in 2010 again reinstated the EEOC's suit, ruling the agency could pursue injunctive relief against Peabody Coal but not damages if the district court found the hiring preference against non-Navajo Indians violates Title VII (610 F.3d 1070, 109 FEP Cases 993 (9th Cir. 2010)).

“Nothing indicates that Congress viewed Title VII as a recalibration of its policy toward tribal communities that had been articulated in its prior legislation,” Judge Fletcher wrote.

The Supreme Court subsequently denied three petitions for review from Peabody, the Navajo Nation and the EEOC, clearing the way for the district court to consider the merits of the Title VII claim.

After the secretary of the interior was impleaded as a third-party defendant, the district court granted summary judgment against the EEOC. It decided the Navajo hiring preference in the leases was a political classification rather than one based on national origin and therefore didn't violate Title VII (2012 BL 280502 (D. Ariz. 2012)).

The EEOC appealed once again to the Ninth Circuit.

Title VII Exemption Is Limited

The appeals court said while the Title VII issue raised was “one of first impression” for the circuit, the court “did not walk on untrodden ground.”

“We have previously stated that differential treatment in employment based on tribal affiliation can give rise to a Title VII national origin discrimination claim,” Fletcher wrote. “Outside the context of Title VII, however, we have recognized that where differential treatment serves to fulfill the federal government's special trust obligation to the tribes as quasi-sovereign political entities, tribal preferences are permissibly based on political classifications.”

The hiring preference in the context of mineral leases on Navajo lands, approved by the secretary of interior under the Indian Mineral Leasing Act and the Indian Reorganization Act as a means of advancing tribal sovereignty and promoting tribal self-governance and economic independence, doesn't violate Title VII, the Ninth Circuit decided.

The district court correctly deemed the tribal preference a permissible “political” classification rather than one based on national origin and it therefore doesn't trigger Title VII's prohibition on national origin bias, the appeals court said.

Title VII contains two provisions expressly addressing Indian tribes, the court noted. The act provides the term “employer” doesn't include “an Indian tribe,” thus excluding Indian tribal governments entirely from Title VII coverage, the court said.

Section 703(i) of the act expressly permits the preferential hiring of Indians over non-Indians when the favored individual is “an Indian living on or near a reservation.”

The legislative history of Section 703(i) is “sparse,” the Ninth Circuit said, but “we at least know it was intended to help remedy past and present discrimination against Indians as a ‘minority group.' ”

“We have previously noted that the ‘primary impetus behind § 703 (i) was concern that by enacting Title VII Congress would render unlawful otherwise permissible hiring preferences for Native Americans,' ” Fletcher wrote. “The exemption was designed ‘to protect existing or future preference programs.' ”

But Title VII's text and legislative history “give little indication as to Congress's views, if any, on preferences for tribal members over Indians from other tribes, as distinct from general preferences for Indians over non-Indians,” the court said.

The Ninth Circuit doesn't disagree with an EEOC policy statement that Section 703(i) is limited to general Indian hiring preferences and doesn't, by itself, authorize preferential hiring treatment based on tribal affiliation, the court said.

“But this statement does not end the inquiry,” the court said. “That Section 703(i) does not itself authorize or create an exemption for tribal hiring preferences on or near Indian reservations does not dispose of the question before us: whether Title VII's prohibition against national origin discrimination prohibits the tribal hiring preferences in the mineral leases.”

‘Political Classification' Is No Breach

The Ninth Circuit decision in Dawavendewa v. Salt River Project ( Dawavendewa I), 154 F.3d 1117, 77 FEP Cases 1312 (9th Cir. 1998), established that “at least in some cases, a tribal hiring preference can give rise to a Title VII national origin discrimination claim,” the court said.

But the court rejected the EEOC's argument that Dawavendewa provides the last word on that issue. Instead, the Ninth Circuit in Dawavendewa v. Salt River Project Agricultural Improvement & Power Dist. (Dawavendewa II), 276 F.3d 1150, 87 FEP Cases 1106 (9th Cir. 2002), specifically rejected the notion that its original decision found that hiring practices based on tribal affiliation violated Title VII.

The Supreme Court denied review.

“We observed in [Dawavendewa II] that ‘in appropriate situations, federal law yields out of respect for treaty rights or the federal policy fostering tribal self-governance,' ” Fletcher wrote.

The instant case regarding the Navajo hiring preference in the mineral leases “presents such a situation” in which tribal self-governance is implicated, the court said.

Congress's failure to address tribal affiliation in the Title VII exemption suggests Congress understood that in certain contexts, tribal affiliation is a political classification outside the act's purview, the court said.

“Congress was plainly aware that Title VII could have ramifications for Indian communities, and it saw clearly the need to mitigate those possible effects,” Fletcher wrote. “For that reason, Congress excluded triable employers from Title VII's scope and exempted general Indian hiring preferences.”

But Congress didn't carve out from Title VII any similar exemption for preferences on tribal affiliation, the court said.

“That Congress could have created such an exemption or exception, but saw no need to do so, suggests that it did not understand Title VII to reach tribal affiliation because such affiliation is a political classification,” the court said.

“Both the text and the legislative history [of Title VII] show that Congress anticipated possible effects of Title VII on federal Indian policy and crafted provisions specifically designed to preserve the status quo,” the court said.

The Interior Department's “approval of mineral leases containing tribal hiring preferences is a well-established practice that long predates the enactment of Title VII,” the court said. “Tribal hiring preferences were, and are, intended to further the policy goals embodied in” the Indian Reorganization Act of 1934 and the Indian Mineral leasing Act of 1938.

A tribal hiring preference contained in a lease for mining operations on a specific Indian reservation therefore doesn't run afoul of Title VII, the court said.

P. David Lopez, Lorraine C. Davis and Susan R. Oxford in Washington represented the EEOC. John F. Lomax Jr. and Kathryn H. King of Snell & Wilmer in Phoenix, Louis Denetsosie and Paul Spuhan of the Navajo Nation Department of Justice in Window Rock, Ariz., and Paul E. Frye and William G. Kelly of the Frye Law Firm in Albuquerque, N.M., represented Peabody Coal and the Navajo Nation. Richard Dreher, Ethan G. Shenkman, James C. Kilbourne and Kristofer Swanson of the Justice Department in Washington represented the Department of the Interior.

To contact the reporter on this story: Kevin McGowan in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of the opinion is available at

Request Labor & Employment on Bloomberg Law