NMSC: No Workers Compensation for Workers Injured at Isleta Casino

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The New Mexico Supreme Court recently released a new opinion on the intersection between Workers’ Compensation law and tribal sovereign immunity. In Mendoza v. Isleta Resort and Casino, the Court issued a highly fact-specific ruling that New Mexico workers’ compensation law provided no remedy to a worker for injuries she suffered while working for Isleta Casino.

The worker, Gloria Mendoza, injured her knee while working at Isleta Casino, an entity of the Pueblo of Isleta. On the day of the accident, she filed a notice of accident with the casino. Nevertheless, Tribal First (the casino’s insurer) denied her claim, stating that she had not reported it within 24 hours. (The opinion does not explain the apparent factual disagreement as to whether the claim was filed within 24 hours.)

The Pueblo had no workers compensation system. After the casino denied her claim, the worker filed a claim with the Workers’ Compensation Administration (WCA) against the casino and its workers compensation insurer. Although the tribe asserted sovereign immunity, the WCA held a non-binding mediation and recommended that the claim be awarded and that the court find that Tribal First had acted in bad faith. The Casino rejected the recommendation and sought to dismiss the case on the basis of sovereign immunity. The WCA agreed and dismissed the claim.

The court of appeals, in an opinion authored by then-Judge Vigil, reversed. A tribe enjoys sovereign immunity, but may waive its immunity if the waiver is express and unequivocal. The court of appeals found such a waiver in Section 4(B)(6) of the 2015 Indian Gaming Compact between New Mexico and the Pueblo. It also ruled that worker could bring her claim directly against the insurers, that the Pueblo was not an indispensable party, and that worker was a third-party beneficiary to the Pueblo’s workers’ compensation insurance policy.

The Pueblo Did Not Waive Sovereign Immunity

Perhaps the most important issue in this case was whether the Pueblo had expressly and unequivocally waived its sovereign immunity. The Compact contained language that allowed the parties (and, indeed, the different courts) to argue both sides of the issue. In particular, the Compact stated that the Pueblo was required to provide

all employees of the Gaming Enterprise . . . workers’ compensation insurance through participation in programs offering benefits at least as favorable as those provided by comparable State programs, and which programs . . . shall include an effective means for an employee to appeal an adverse determination . . . to an impartial forum, such as (but not limited to) the Tribe’s Tribal Court, which appeal shall be decided in a timely manner and in an administrative or judicial proceeding and as to which no defense of tribal sovereign immunity would be available[.]

Compact Section 4(B)(6).

The Court agreed with the WCA that this language was not a waiver. Instead, it was a promise that the tribe would not assert sovereign immunity in workers’ compensation cases brought in the Pueblo’s tribal courts. Although the Pueblo could have allowed employees to participate in the State workers’ compensation program, there was no evidence that it had elected to do so. Moreover, while the Court found that this clause was not ambiguous as to waiver, it noted that an ambiguous clause would have been interpreted in favor of the Pueblo.

The Court also rejected the argument that the Pueblo’s failure to implement a workers’ compensation program gave the WCA jurisdiction by default. Such a ruling, the Court observed, would operate as an implicit waiver of sovereign immunity. But since a waiver is required to be express and unequivocal, that result could not stand.

Worker Cannot Challenge the Pueblo’s Compliance with the Compact

Worker had also made an argument that the Compact gave her rights that she could enforce through a private cause of action. The Court made short work of this argument. The Compact was between New Mexico and the Pueblo and did not provide a mechanism for third-party enforcement. Moreover, the WCA lacked jurisdiction to adjudicate such a dispute (its jurisdiction is limited to disputes arising under the Workers’ Compensation Act).

In an amusing sidebar, the Court observes that if the Pueblo “is neglecting to provide workers’ compensation coverage to its employees, as mandated by the Compact”–and the opinion seems to make it clear that that is the case–then it is the Attorney General’s responsibility to challenge the Pueblo’s non-compliance:

It is concerning that employees such as Worker have no redress for work-related injuries suffered at Isleta Casino, and the Attorney General’s office has seemingly overlooked this deficiency, leaving New Mexico residents who choose to work for Isleta Casino without a remedy.

Mendoza v. Isleta Casino, No. S-1-SC-37034, ¶ 32.

The Pueblo Was an Indispensable Party

Finally, the Court concluded that the lawsuit against the insurers could not proceed without the Pueblo. The Court had already noted that the record created by the WCA was inadequate to evaluate the Pueblo’s interests, and required it to speculate what those interests might be. But this actually worked in favor of the defendants, since the Court chose to presume that the tribe’s interests “could potentially be affected.” Absent evidence to rebut this presumption, the Court concluded that the Pueblo was a necessary party. This seems a little puzzling, as generally the burden should be on the defendants to prove the lack of jurisdiction. And, in prior cases, the courts have declined to decide whether a pueblo was necessary and indispensable when the record was inadequate. See South v. Lujan, 2014-NMCA-109, ¶ 18. But perhaps I am missing something here. Either way, more analysis might have been helpful on this point.

The analysis of whether the Pueblo was indispensable is similarly deferential. The Court applied a four-factor test to decide whether the Pueblo was indispensable. As to the first factor, it again noted it had insufficient information and would therefore presume in the Pueblo’s favor. The Court next stated that the second factor weighed in favor of the Pueblo, but its analysis appeared to undermine that finding, and that same analysis caused the third factor to weigh against the Pueblo. And, while depriving the worker of a remedy would seem to make the equities tilt heavily in favor of the worker, the Court cited authority from other jurisdictions that a tribe’s sovereign immunity outweighs an individual’s lack of remedy.

Ultimately, especially in light of the apparently empty record in this case, the analysis on this point is not satisfying. But since the Pueblo was an indispensable party that could not be joined as a defendant, the case against the insurers had to be dismissed.

This case is limited both by its facts and by the Court’s express characterization of it as narrowly limited. At most, it would appear to stand for the proposition that worker-related injuries that occur at entities owned by the Pueblo of Isleta (or possibly just the Casino?) have no remedy for even wrongful, bad faith denials of workers’ compensation claims. This is a terrible result for the workers. We shall see if the Attorney General follows up on the Court’s suggestion that he enforce the terms of the Compact.

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