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Native American Arts, Inc. v. Mangalick Enterprises

June 2, 2009


The opinion of the court was delivered by: Judge Robert M. Dow, Jr.


The Indian Arts and Crafts Act of 1990, as amended by the Indian Arts and Crafts Enforcement Act of 2000 (25 U.S.C. § 305 et seq. (2000)) ("the Act"), authorizes an "Indian arts and craft organization[]" to file suit against "a person who, directly or indirectly, offers or displays for sale or sells a good * * * in a manner that falsely suggests it is Indian produced[ or] an Indian product * * *." 25 U.S.C. §§ 305e(a), (c)(1)(C). In addition to injunctive relief, a successful plaintiff is entitled to the greater of treble damages or statutory damages. 25 U.S.C. §§ 305e(a)(1)-(2). Punitive damages, costs, and attorney' s fees also are recoverable. Id. § 305e(b).

Plaintiff, Native American Arts, Inc. ("NAA"), filed this lawsuit on August 7, 2008. NAA' s complaint comprises a single count and names only Defendant, Mangalick Enterprises, Inc., d/b/a IAC International ("Mangalick"). According to the complaint, Mangalick is violating the Act by selling inauthentic Indian*fn1 goods in a manner that falsely suggests that they are authentic. Currently before the Court is Defendant' s motion to dismiss [15], which seeks to curtail Plaintiff's lawsuit on a number of constitutional and procedural grounds. Pursuant to Federal Rule of Civil Procedure 24 and 28 U.S.C. § 2403(a), the Government intervened to defend the constitutionality of the Act. For the reasons set forth below, Defendant' s motion is denied.

I. Background*fn2

NAA is an Indian arts and crafts organization within the meaning of the Act. (Compl. ¶ 3.) Mangalick' s principal place of business is Minneapolis, Minnesota, although it advertises, markets, promotes, displays, and sells various goods in the Northern District of Illinois. (Id. ¶¶ 2, 4.) Those goods are sold over the Internet, in catalogs, and at trade shows. (Id. ¶¶ 8-10.) NAA, invoking the language of the Act, alleges that the manner in which these goods are sold "falsely suggests" that Mangalick' s wares are "Indian produced, an Indian product, or the product of a particular Indian or particular Indian tribe or Indian arts and crafts organization resident within the United States." Id.; 25 U.S.C. § 305e(a). Among the specifically listed goods are Indian mandelas, dolls, and tomahawks. (Compl. ¶¶ 10-11.) These and other goods are made in a traditional Indian style, using Indian motifs and designs. While promoting the goods, Mangalick has described the goods as "Indian," without using qualifying language. (Id. ¶¶ 16-17.) The absence of qualifying language is important, because the Indian-style goods that Mangalick sells are not Indian produced, made by an Indian, or the product of an Indian arts and crafts organization within the meaning of the Act. (Id. ¶ 22.)

NAA alleges that Mangalick engaged in its unlawful conduct on June 3, 2008, in particular, and also that Mangalick has been violating the Act "for substantial periods of time, possibly since August 8, 2004." (See, e.g., id. ¶ 8-11.) NAA contends that Mangalick's conduct has caused competitive injuries to NAA, which sells similar goods, including loss of sales and goodwill. Moreover, Mangalick's actions have driven down prices for Indian goods. (Id. ¶ 24.) NAA also alleges that it has suffered what it calls "advertising injury," which includes misappropriation of NAA's ideas. (Id. ¶¶ 25-28.)

II. Analysis

Mangalick argues four bases for dismissal: (i) the Act violates the equal protection component of the Fifth Amendment' s due process clause; (ii) NAA lacks standing to sue and thus the Court lacks subject matter jurisdiction; (iii) NAA failed to draft its complaint in accordance with Federal Rule of Civil Procedure 9(b); and (iv) NAA failed to state a claim upon which relief can be granted under Rule 12(b)(6).

A. Defendant's Equal Protection Argument is Orthogonal to the Pertinent Legal Framework

Mangalick, citing the Supreme Court' s decision in Adarand Constructors, Inc. v. Pena (515 U.S. 200 (1995)), argues that the Supreme Court "has expressed increasing skepticism of the constitutionality of race-conscious government action." (Def. Mem. at 4.) Mangalick is correct that recent decisions affirm the suspect nature of racial classifications. See also Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1, 127 S.Ct. 2738, 2758 (2007) ("The principle that racial balancing is not permitted is one of substance, not semantics.").

The flaw in Mangalick' s argument, however, is that it begs the critical question:

Mangalick presupposes, contrary to settled precedent, that the favorable treatment accorded to Indians by the Act constitutes a racial preference. In Morton v. Mancari, the Supreme Court held that a hiring preference for Indians within the Bureau of Indian Affairs was not a racial preference. Rather, it was a political classification. 417 U.S. 535, 554 n.24 (1974). The Court reasoned that because the preference "applie[d] only to members of 'federally recognized' tribes," it "operate[d] to exclude many individual who [were] racially to be classified as ' Indians.'" Id; see also id. at 554-55 (describing the "numerous occasions this Court specifically has upheld legislation that singles out Indians for particular and special treatment"). Similarly, the Indian Arts and Crafts Act, by its terms, applies only to state and federally recognized tribes and their members. See 25 U.S.C. §§ 305e(d)(2), (d)(3).

Since Mancari, the Court has reiterated that "the legislative judgment [of Congress] should not be disturbed as long as the special treatment can be tied rationally to the fulfillment of Congress'unique obligation toward the Indians." Del. Tribal Bus. Comm. v. Weeks, 430 U.S. 73, 85 (1977) (citation and alterations omitted) (upholding on rational basis review a distribution of funds to certain Indians that excluded non-recognized Indians); see also Washington v. Confederated Bands & Tribes of Yakima Indian Nation, 439 U.S. 463, 500-01 (1979). In short, the decisions in this realm "leave no doubt that federal legislation with respect to Indian tribes, although relating to Indians as such, is not based on impermissible racial classifications." Am. Fed'n of Gov't Employees, AFL-CIO v. United States, 330 F.3d 513, 520 (D.C. Cir. 2003). Although commentators have speculated about Mancari's continued viability post-Adarand (see, e.g., L. Scott Gould, Mixing Bodies and Beliefs: The Predicament of Tribes, 101 COLUM. L. REV. 702, 707-08 (2001)), it is the Supreme Court' s prerogative alone to overrule its own precedent.

State Oil Co. v. Khan, 522 U.S. 3, 20 (1997). The broad rule that Mangalick apparently proposes would require the Court to conclude that Mancari and its progeny are overruled. See also Moe v. Confederated Salish and Kootenai Tribes of Flathead Reservation, 425 U.S. 463, 480 (1976) (statutory ...

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