The opinion of the court was delivered by: Sullivan, District Judge.
MEMORANDUM OPINION AND ORDER
The parties to this action have been actively involved in its
litigation for the past two and a half years. The case is in a
unique procedural posture, as many of the claims asserted by
Navajo Nation and the Hopi Tribe against the defendants are at
issue in a lawsuit filed by the Navajo Nation in the Federal
Circuit against the United States. The Supreme Court recently
granted the United States' petition for writ of certiorari in
the Federal Circuit case.
Three matters are presented to the Court for resolution.
First, defendant Salt River Project ("SRP") asks the Court to
enter final judgment in its favor. The Navajo Nation and the
Hopi Tribe conversely seek to reinstate claims against SRP.
Second, defendants Peabody Holding Co., Peabody Coal Co. and
Peabody Western Coal ("Peabody defendants") move the Court to
transfer this case to the District Court for the District of
Arizona or, in the alternative, to stay this matter until
litigation in that district has been resolved. Finally, the
Peabody defendants and defendant Southern California Edison
("SCE") have filed motions for entry of a protective order that
would stipulate that neither Peabody nor SCE waived
privileges with respect to documents that were disclosed in the
Court of Federal Claims case pursuant to a confidentiality
In December 1993, the Navajo Nation sued the federal
government in the Court of Federal Claims for actions relating
to coal leases on tribal land. Navajo Nation alleged that the
government had breached its statutory and fiduciary duties by
first delaying a decision on the disputed royalty rate, and then
approving an inadequate rate. Specifically, the area director
had recommended a 20% royalty rate, but Secretary of the
Interior Donald Hodel delayed approving that rate. After the
Navajo were allegedly pressured into accepting a 12.5% rate in
negotiations with Peabody, Secretary Hodel approved that lower
rate. The Court of Federal Claims issued an opinion highly
critical of the government, but did not find a breach of
fiduciary duty. See The Navajo Nation v. United States, 46
Fed.Cl. 217 (2000). The Federal Circuit reversed, holding that
the United States breached its fiduciary duty by "suppressing
and concealing" the Board of Indian Affairs' decision to the
detriment of Navajo interests. 263 F.3d 1325, 1332 (Fed.Cir.
2001). The Supreme Court recently granted the United States'
petition for certiorari, ___ U.S. ___, 122 S.Ct. 2326, 153
L.Ed.2d 158 (Mem.) (2002), and scheduled the case for oral
argument in tandem with White Mountain Apache Tribe v. United
States, 249 F.3d 1364 (Fed.Cir. 2001), cert. granted by ___
U.S. ___, 122 S.Ct. 1604, 152 L.Ed.2d 619 (Apr. 22, 2002).
The instant case was filed in February 1999 by Navajo Nation
against the Peabody defendants, SCE and SRP. The suit claims
that the defendants conspired to improperly influence the
federal government's decisions regarding the coal leases. It
alleges a violation of the federal Racketeer Influenced and
Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.,
and related claims such as breach of contract, interference with
fiduciary relationship, conspiracy and fraudulent concealment.
The core of the complaint is the revelation stemming from
discovery received in the Court of Federal Claims case that
defendants hired a lobbyist, Stanley Hulett, who met with
Secretary Hodel ex parte and allegedly persuaded him not to
approve a recommendation by the area director to raise the
royalty rate to 20%.
On June 17, 1999, Navajo Nation filed its first amended
complaint, naming Peabody, SCE and SRP as defendants. On
September 9, 1999, all defendants filed a joint motion to
dismiss the amended complaint. On the same day, SRP also filed a
supplemental motion to dismiss. The defendants' joint motion was
denied by the Court on March 15, 2001. On May 15, 2001, the
Court issued an order granting SRP's supplemental motion to
dismiss the Navajo Nation's amended complaint.
The Hopi Tribe moved to intervene in February 2000. On March
15, 2001, the Court granted the Hopi Tribe's motion to
intervene. On July 3, 2001, the Court granted SRP's motion to
dismiss the Hopi Tribe's claims against SRP. Thus, all claims
against SRP have been dismissed.
The Court denied the remaining defendants' joint motion to
dismiss the Hopi Tribe's complaint for failure to state a claim.
See Order, Oct. 31, 2001.
II. Plaintiffs' Motions for Restoration of Claims against
SRP and SRP's Motion for Entry of Judgment
Pursuant to Fed.R.Civ.P. 54(b), "[w]hen more than one claim
for relief is presented in an action, . . . or when multiple
parties are involved, the court may direct the entry of a final
judgment as to one or more but fewer than all of the claims or
parties only upon an express determination that there is no just
reason for delay and upon an express direction for the entry of
The Navajo Nation suggests that new Arizona case law should
persuade the Court to reinstate the claims against SRP.
Specifically, the Navajo Nation claims restoration of its claims
against SRP is "appropriate because, as applied to the facts of
this case, the notice of claims statute violates the equal
protection and anti-abrogation clauses of the Arizona
Constitution." Pl.'s Mot. for Restoration of Claims against SRP
at 1. The Navajo Nation argues that the Arizona Supreme Court's
decision in Clouse v. State, 199 Ariz. 196, 16 P.3d 757
(2001), and the "depublication" of Hendel v. Salt River Project
Agric. Improvement & Power Dist., No. 1 CA-CV 97-0329, 1998 WL
404489 (Ariz.Ct. App. July 21, 1998), may be read to suggest
that the notice of claims statute is unconstitutional when it is
extended to cover claims arising out of proprietary conduct of a
political subdivision of the State. However, the Navajo Nation
argued these authorities to the Court at oral argument and in
their briefs prior to the Court's decision to dismiss the
Nation's claims motion to "restore" claims against SRP is, in
essence, a motion for reconsideration.
Navajo Nation contends that the Court failed to address
whether plaintiffs' complaints arose out of SRP's proprietary
activities and whether application of the statute to actions
arising out of proprietary activities would violate the Arizona
Constitution. However, in granting SRP's motions to dismiss, the
Court held that the notice of claims statute applied to SRP,
citing Stulce v. Salt River Project Agric. Improvement & Power
Dist., 197 Ariz. 87, 3 P.3d 1007 (App. 1999). Stulce, in
addition to recognizing SRP as a political subdivision of the
State, held that "the Arizona Constitution specifically empowers
the legislature to enact statutes of limitations and procedures
that may treat lawsuits against the state differently from other
lawsuits." Id. at 1013. The Arizona Constitution, Arizona
statutes and case law all establish that municipal entities such
as SRP are entitled to notice of claims in conformance with the
statute prior to filing suit. See Ariz.Rev.Stat. §
No court has suggested that the Arizona notice of claims
requirement is unconstitutional, or may be dependent on the type
of conduct that gives rise to suit. Navajo Nation relies on
Clouse, a case that considered the constitutionality of
governmental immunity statutes under the Arizona Constitution.
In Clouse, the plaintiffs argued that a law granting immunity
to public employees acting within the scope of their employment
violated the State's constitutional provision of "open courts."
16 P.3d at 758; see Ariz. Const. art. IV, pt. 2, § 18 ("The
Legislature shall direct by law in what manner and in what
courts suits may be brought against the state."). Defendants
argued that the so-called "immunity clause" of the State
Constitution permitted the legislature to limit the liability
of public employees. 16 P.3d at 763-64. The court held that the
"immunity clause" "confers upon the legislature a power to
control actions against the state that it does not possess with
regard to actions against or between private parties." Id. at
764. Therefore, the court concluded, the legislature was acting
within its authority when it enacted a law limiting the
liability of public employees acting within the scope of their
employment. Id. However, the court limited its holding to the
scope of the contested legislative enactment, noting that it did
"not address the liability of public entities for proprietary
activity." Id. at 765. Nevertheless, in a recent decision of
the Court of Appeals of Arizona, Clouse was cited for the
broad proposition that the Arizona Constitution grants the
legislature authority to define instances in which public
entities and employees are entitled to immunity. See Flood
Control Dist. of Maricopa County v. Gaines, 202 Ariz. 248,
43 P.3d 196, 201 (App. 2002).
Ultimately, the Navajo Nation's argument rests on its
mischaracterization of the notice of claims statute as an
immunity statute. Navajo Nation would have this Court read
Clouse to mean that the Arizona Supreme Court has expressed
doubt that any regulation of liability arising from a public
entity's proprietary activities would be constitutional.
However, Clouse concerned the scope of a public entity's
immunity from liability. 16 P.3d at 764. Here, the issue facing
the Court is compliance with Arizona's notice of claims statute.
This statute is more akin to a statute of limitations on claims
against public entities than it is analogous to a law immunizing
public entities from suit. Plaintiffs have cited no authority
for the proposition that a requirement that public entities be
given notice within a certain period of time may be
unconstitutional under the Arizona Constitution. It is
undisputed that SRP did not receive notice within the meaning of
the statute. Consequently, the Court finds no reason to revisit
its decision to grant SRP's motions to dismiss.
Navajo Nation argues, in the alternative, that the Court
should certify these "unsettled questions" of Arizona state law
to the Arizona Supreme Court. The Court is not convinced that
this matter presents an unsettled question of Arizona law.
Navajo Nation's argument is based on the premise that the
Arizona Supreme Court has "demonstrated reluctance to decide
whether the Arizona Legislature may enact statutes limiting the
circumstances under which municipal corporations may be liable
for torts arising out of their proprietary activities." Pl.'s
Mot. for Restoration at 2. However, the Nation points only to
the Arizona Supreme Court's decision in Clouse to support this
proposition. For the reasons stated above, the Court does not
believe that Clouse raises significant doubts as to the
constitutionality of Arizona's notice of claims statute.
SRP asks the Court to enter final judgment as to plaintiffs'
claims against it. Pursuant to Fed.R.Civ.P. 54(b), the Court may
enter final judgment as to an individual defendant when claims
against other defendants are still pending. However, the entry
of final judgment is appropriate as to "one or more but fewer
than all of the claims or parties only upon an express
determination that there is no just reason for delay and upon an
express direction for the entry of judgment." Fed.R.Civ.P.
SRP argues that, because the basis for the Court's dismissal
of claims against SRP is inapplicable to the other defendants,
the Court should enter final judgment for SRP on all claims.
However, an entry of final judgment is inappropriate where, as
here, issues may be raised on appeal that are common to the
remaining parties and claims, See Curtiss-Wright Corp. v.
General Elec. Co., 446 U.S. 1, 8, 100 S.Ct. 1460, 64 L.Ed.2d 1
(noting as factors for considering whether final judgment on one
of multiple claims is appropriate "judicial administrative
interests" and "whether the nature of the claims already
determined was such that no appellate court would have to decide
the same issues more than once even if there were subsequent
appeals"). While this Court has dismissed the claims against SRP
on the grounds that SRP is a public entity and the plaintiffs
were therefore required to comply with Arizona's notice of
claims statute, SRP admits that it would not be limited to
defending the dismissal on this basis. Indeed, SRP might be
deemed to waive other defenses, such as those asserted in
defendants' joint motion to dismiss, if it were not to raise
them on appeal. Thus, while this Court has dismissed SRP from
the instant litigation on grounds separate and apart from the
joint defenses raised by SRP together with Peabody and CSE, SRP
is likely to defend an appeal, at least in part, with arguments
that are common to the remaining defendants. Consequently, the
Court denies SRP's motion to enter final judgment.
III. Motion to Transfer or Stay
The Peabody defendants request that the Court transfer this
case to the District Court for the District of Arizona or, in
the alternative, stay proceedings in the instant matter until
the Arizona court has resolved litigation pending before it.
The lawsuit filed in the Arizona District Court concerns an
arbitration clause contained in Coal Lease No. 8580 between
Navajo Nation and Peabody. In 1984, an Area Director of the
Bureau of Indian Affairs ("BIA"), Donald Dodge, unilaterally
adjusted the royalty rate on Lease No. 8580 to a 20% rate, which
was in excess of the 12.5% and lesser rates applied in other
coal leases during the period of 1985 to 1996. Peabody and the
operators of the two power plants, SCE and SRP, challenged the
Dodge decision before the Interior Department. The rate dispute
was resolved by way of negotiations that led to the amendment of
the 8580 lease in 1987. The Navajo Nation Lease No. 9910 and the
Hopi Tribe Lease No. 5743 were also amended in 1987.
The 1987 amendments to the three leases, No. 8580, No. 9910
and No. 5743, raised the royalty rates to 12.5%. The 1987
amendments to No. 8580 also addressed the Dodge rate
determination, and the parties agreed to petition the Interior
Secretary to vacate the Dodge determination and render that
royalty adjustment decision to be without legal force or effect.
Article IV and VI, as amended by the 1987 Lease Amendments,
set out the method for readjustment of royalty rates under Lease
No. 8580 for periods beginning on and after February 1, 1984 and
require that the parties engage in negotiation and then
arbitration of disputes regarding the proper royalty rates.
Article XXXVII, created by the 1987 amendments, describes the
arbitration procedures. A three-member arbitration panel is to
be created, with one member selected by each of the parties and
a third member to be jointly selected by the parties. If the
parties are unable to agree on a third member, they may request
the Chief Judge of the Arizona District Court to appoint the
third member and, if the Chief Judge is unable or unwilling to
do so, the article provides that the Regional Vice-President of
the American Arbitration Association for Arizona will select the
third panel member.
On February 21, 2002, Peabody filed a lawsuit in the Arizona
District Court seeking to enforce the prior award or to compel
further arbitration. Peabody Coal Co. v. The Navajo Nation,
Civ. Action No. 020318 PCT RCB. Judge Broomfield has scheduled
oral argument on a motion to dismiss filed by Navajo Nation.
Peabody suggests that the Court should transfer this case to
the District Court for the District of Arizona for the following
reasons: (1) that both Navajo Nation and Hopi have binding
agreements with Peabody to arbitrate and litigate royalty rate
disputes in the District of Arizona; (2) the pendency of royalty
rate litigation before the Arizona District Court; (3) the
applicability of Arizona law to "material issues"; and (4) "the
predominance of Arizona connections, witnesses, and evidence in
this case, including the ancestral home of plaintiffs." Reply at
Defendants concede that venue in this District is proper.
Accordingly, a transfer is appropriate only if it is more
convenient for the parties and the witnesses and otherwise in
the interests of justice. See 28 U.S.C. § 1404(a). The party
seeking a transfer bears the burden of persuasion. SEC v. Savoy
Indus., Inc., 587 F.2d 1149, 1154 (D.C.Cir. 1978).
1. Effect of Forum Selection Clause
Peabody defendants argue that this Court must enforce valid
forum selection clauses. Marra v. Papandreou, 216 F.3d 1119,
1123 (D.C.Cir. 2000). In arguing that this case is within the
purview of Article XXXVII — the lease agreements' arbitration
clause — Peabody defendants essentially contend that the issues
presented by this litigation were resolved by the 1998
arbitration award. See Defs.' Reply at 18 ("during the 1998
arbitration proceedings, the Navajo Nation raised all of the
facts and allegations that it would later sweep into the June
1999 amended complaint in this Court against Peabody").
Nevertheless, defendants concede that venue is proper in this
Court, and, moreover, have not asserted the defense of
arbitration and award in this matter. Indeed, pursuant to
Fed.R.Civ.P. 8(c), a defendant must set forth affirmatively the
defense of "arbitration and award." Neither Peabody nor SCE
asserted this defense. Thus, while the Peabody defendants do not
assert the arbitration award as a defense to this litigation,
they essentially argue that the arbitration award concerns the
matters before this Court, warranting a transfer or a stay of
Most significantly, defendants are not arguing that the Court
is required to enforce the purported forum selection clause by
transferring this case to the District of Arizona. See Defs.'
Mot. to Transfer at 6 (citing Stewart Org., Inc., 487 U.S. at
29, 108 S.Ct. 2239 for proposition that forum selection clause
is "significant factor" in district court's consideration of
motion to transfer). Yet, a choice of forum clause that governs
the subject matter being litigated is a heavy factor in favor of
transfer. See, e.g., In re Ricoh Corp., 870 F.2d 570, 573
(11th Cir. 1989); National Micrographics Sys., ...