Seminole Tribe Denied Sovereign Immunity in Construction Dispute

Encountering the Seminole Tribe of Florida as a litigation opponent presents a number of practical obstacles. Besides being well-funded (recent reports peg their annual gaming revenue in excess of $2 billion), the Seminole Tribe generally enjoys sovereign immunity from suit in the United States courts, unless, of course, they contract it away or it is waived. So not only can the Tribe outspend their opponents by huge margins, but when the going gets rough, they can claim that they are protected from suit by sovereign immunity. As a consequence, businesses and individuals are at an extreme disadvantage in litigating disputes with the Tribe. Not so for AECOM Technology Corp., a large multinational contractor which entered into a series of construction contracts with the Tribe to build water and wastewater treatment plants at three of the Tribe’s reservations in Florida. The contracts between AECOM and the Tribe provided for any disputes to be resolved by a Florida state court. When the Tribe refused to pay change orders totaling approximately $12 million, AECOM sued the Tribe for breach of contract in the Broward County Circuit Court. Despite having contracted away its sovereign immunity, the Tribe nonetheless claimed sovereign immunity from suit, arguing that the tribal representative who had signed the construction agreements lacked the authority to enter into them. Not exactly a winning argument. In a significant (but not entirely unexpected) victory for the plaintiff contractor, Judge Jeffrey Streitfeld rejected the Tribe’s sovereign immunity defense. The Tribe has appealed his ruling.

Although Florida circuit court decisions are typically unpublished, the Daily Business Review did a nice write up of the case (subscription required).

What is the lesson to be learned from this? When suing the Seminole Tribe, be prepared for a sovereign immunity defense, even in the face of a contractual waiver. Also be prepared to litigate every conceivable issue, as the Tribe will not hesitate to use its vast resources in the hopes of wearing down opponents financially. With AECOM’s annual revenues also measured in the billions, such a tactic obviously was not effective in this case. Finally, it would be naive for parties suing the Tribe to expect full disclosure and cooperation from the Tribe (at least not voluntarily). For example, in the AECOM case, the Tribe claimed that documents were “lost or missing,” including tribal ordinances, resolutions, contracts and email correspondence between tribal officials. This appeared to tip the scales in AECOM’s favor (although, quite frankly, the contractual waiver of sovereign immunity should have been more than enough), as Judge Streitfeld found after discovery that the facts warranted “the imposition of adverse evidentiary inferences as well as adverse presumptions against the Tribe.” Judge Streitfeld described this case as one of first impression, and we will be carefully following the appeal for any new developments in the case.