In a case that has been ongoing since May 2008, on June 10, 2014, the Oklahoma Supreme Court upheld the trial court’s award of $47.7 million in favor of the State of Oklahoma for alleged violations of the Oklahoma Master Settlement Agreement Complementary Act. The sole question on appeal was whether the State was entitled to summary judgment as a matter of law. That means, the Oklahoma high court decided whether the trial court erred in finding for the State by not sending the case to a jury for a trial.
Initial Decisions Based on Jurisdiction
The lawsuit was originally filed against Native Wholesale Supply (“NWS”) in 2008 based on the allegations that NWS sold Seneca cigarettes in Oklahoma in 2007 and 2008 even though that brand of cigarettes and its manufacturer were removed from the Oklahoma Attorney General’s directory in 2006. The complaint alleged that NWS caused Seneca cigarettes to brought into Oklahoma knowing that manufacturer of the cigarettes did not comply with the Escrow Statute, the Complementary Act and were not listed on the state’s directory.
In 2009, NWS moved to dismiss the case, claiming the court lacked personal and subject matter jurisdiction to hear the case. NWS lost on the issue of personal jurisdiction, but won on the issue of subject matter jurisdiction. The State appealed the trial court’s ruling to the Oklahoma Supreme Court, and it concluded that the trial court had both personal and subject matter jurisdiction over NWS (“the initial appeal”).
In the initial appeal, in evaluating whether the trial court had personal jurisdiction over NWS, the Oklahoma Supreme Court relied on, among others, the following undisputed facts: (1) testimony from NWS’ president that NWS imported Seneca cigarettes from Canada to the U.S.; (2) that NWS sold them to tribal entities in the U.S.; (3) that NWS sold them to a tribal wholesaler located in Oklahoma that resold them to tribal retailers that state. With respect to the issue of whether the trial court had subject matter jurisdiction over NWS, the Oklahoma Supreme Court concluded that the NWS’ transactions were not covered by tribal immunity. The sale of Seneca cigarettes within Oklahoma extended beyond the boundaries of a single reservation. As a result, the Supreme Court concluded that the transactions were not beyond the reach of the State’s authority.
Based on its jurisdictional determinations, the Oklahoma Supreme Court remanded the case to the trial court. However, NWS filed a petition for certiorari review before the United States Supreme Court on the question of jurisdiction, but the Supreme Court declined to review the Oklahoma high court’s decision.
Remand and Subsequent Appeal
On remand, the State moved for and was granted summary judgment in the amount of $47.7 million. After having its motion for a new trial denied, NWS appealed both the summary judgment award and the ruling denying its request for a new trial to the Oklahoma Supreme Court.
In the second and recently decided appeal, the state high court addressed two questions to determine whether the trial court erred in granting the State summary judgment. First, whether the trial court, on remand, was bound by the facts supporting the Court’s holding in the earlier appeal over jurisdiction. Second, whether the trial court prematurely entered judgment in favor of the state by not proceeding with a jury trial. The Court answered “yes” to the first question and “no” to the second.
On Remand, the Trial Court Was Bound by the Factual Conclusions in the Initial Appeal
In its motion for summary judgment post-remand, the State argued that the factual conclusions in the first appeal were the settled law of the case and binding on the trial court. However, NWS argued that facts pertaining to jurisdiction were not binding as to the merits of the case and requested that the trial court deny summary judgment. In its opinion from earlier this month, the Oklahoma Supreme Court noted that, on remand, “the parties in this case were free to repress and rehash their claims and defenses except for the settled law of the case” and the factual conclusions from the prior appeal “are settled between the parties in this case and were binding on the [trial] court on summary judgment.” The Supreme Court did note that there is an exception to the law of the case doctrine if a prior decision was “palpably erroneous and will result in gross injustice;” however, it concluded that NWS’ arguments did not bring the case within the exception.
On Remand, NWS Was Not Entitled to a Jury and the Trial Court Did Not Err in Granting Summary Judgment to the State
On appeal, NSW argued that the Oklahoma Supreme Court did not conclude in the initial appeal that NWS knew its sales of Seneca cigarettes violated the Complementary Act. Instead, NSW argued that the Supreme Court only concluded that it had knowledge that the Seneca cigarettes would be sold in Oklahoma. In response, the State argued that: (1) the manufacturer of Seneca cigarettes was removed from the directory because it had an escrow deficiency in excess of $5 million for 2005 and 2006; (2) it notified NWS that the Seneca brand would be delisted on August 1, 2006; (3) NWS continued to ship Seneca brand cigarettes in Oklahoma after being notified that the brand had been delisted; and (4) sold more than 600 million contraband sticks in Oklahoma between August 2006 to August 2010. The Oklahoma Supreme Court concluded that the State’s position was supported by the record, stating that “NWS intentionally and purposefully brought contraband Seneca cigarettes into the Oklahoma marketplace.”
Additionally, with respect to any unsettled facts, the Supreme Court noted that neither the Complementary Act nor the Constitution guarantee NSW the right to a jury trial. The right to a trial by jury in civil cases is limited to common law actions. Instead, the 2008 action brought by the state was for an alleged violation of a statute. In terms of the remaining unsettled facts, the Supreme Court evaluated the evidence that the trial court relied upon in entering summary judgment in favor of the State. The Supreme Court concluded that such evidence was sufficient as a matter of law and upheld the $47.7 million award.