N.M. Supreme Court Holds Tribal Casino Immune from Work Comp Claims

On Jan. 16, 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.

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.

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.

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: