On April 25, 2017, the U.S. Supreme Court issued a much anticipated ruling, which may impact the ability of Tribes to rely on sovereign immunity in certain types of tort claims alleged against their employees.

In Lewis v. Clarke, the driver of a limousine owned by the Mohegan Tribe was sued in Connecticut state court relating to an off-reservation car crash. The Tribe indemnified the driver. At the time of the accident, the driver was transporting patrons of the Tribe's Mohegan Sun Casino to their homes. The driver moved to dismiss the case, arguing that it was barred by tribal sovereign immunity. The trial court denied the driver's motion, but the Connecticut Supreme Court reversed, holding that the Tribe's sovereign immunity extended to the driver because "he was acting within the scope of his employment for the [Tribe]." The Connecticut Supreme Court also noted that plaintiffs should not be allowed to circumvent tribal immunity by suing tribal employees rather than the tribes themselves when the employee was not "act[ing] outside the scope of [their] authority," and that to allow otherwise would "eviscerate" tribal immunity.

The U.S. Supreme Court accepted the petition for review from the plaintiffs, and framed the issues as follows:

  1. Whether the sovereign immunity of an Indian tribe bars individual-capacity damages against tribal employees for torts committed within the scope of their employment
  2. What role, if any, a Tribe’s decision to indemnify its employees plays in this analysis

As to the first issue, Justice Sonia Sotomayor, writing for a six-justice majority, focused on the distinction between official capacity suits – where "the relief sought is only nominally against the official and in fact is against the official's office and thus the sovereign itself" – versus individual capacity suits – suits where plaintiffs "seek to impose individual liability upon a government officer for actions taken under color of state law." Justice Sotomayor stated that tribal immunity may be asserted in official capacity suits, but not personal capacity suits, further holding that the plaintiff's suit against the driver was "simply a suit against [the driver] to recover for his personal actions, which 'will not require action by the sovereign or disturb the sovereign's property.'"

As to the second issue, Justice Sotomayor held that the Tribe's decision to indemnify the driver "cannot, as a matter of law, extend sovereign immunity to individual employees who would otherwise not fall under its protective cloak," and that "the critical inquiry is who may be legally bound by the court's adverse judgment, not who will ultimately pick up the tab."

Although the full impact of the case will be borne out in future litigation, tribes should, at minimum, reevaluate their insurance coverage to account for the possibility that sovereign immunity might no longer bar certain suits against tribal employees.