Ninth Circuit Rejects EEOC's Challenge Of Tribal Hiring Preferences

Tribal hiring preferences based on political classifications are permissible under Title VII of the 1964 Civil Rights Act, the U.S. Court of Appeals for the Ninth Circuit recently held in EEOC v. Peabody W. Coal Co.1 The first federal circuit court of appeals to address the question in such detail, the Ninth Circuit rejected the Equal Employment Opportunity Commission's claim that a mining company's implementation of a tribal hiring preference — based on leases drafted by the U.S. Department of the Interior — violated Title VII's prohibition of national origin discrimination. The case presented an unusual posture, with the EEOC being adverse to the Department of Interior, which itself was represented by the Department of Justice.

Factual Background

Peabody Western Coal Co. ("Peabody") mines coal at the Black Mesa Complex and Kayenta mines on the Navajo and Hopi reservations in northeastern Arizona under leases with the tribes. In 1964 and 1966, a predecessor of Peabody's entered into two leases with the Navajo Nation ("the Nation") that allow Peabody to mine coal on Navajo reservation land; the leases require Peabody to give preference in employment to "Navajo Indians." Both leases were approved by the U.S. Department of the Interior ("Interior") under the Indian Mineral Leasing Act of 19382 ("IMLA"). Since at least as early as the 1940s, Interior-approved mineral leases, including the two with Peabody, generally include provisions for tribal hiring preferences.3

In 1998, two Hopi Indians and one Otoe Indian filed EEOC charges alleging they applied for jobs with Peabody but were not hired because they were not members of the Nation. The EEOC later sued Peabody in 2001 and claimed Peabody's hiring preference constitutes national origin discrimination under Title VII. Following a tortured 13-year procedural history involving joinder and sovereign immunity issues, the Ninth Circuit finally addressed the EEOC's Title VII claim that Peabody's preference for Navajo Indians in particular constituted discrimination on the basis of national origin.

Tribal Preferences Under Title VII

Title VII includes a provision known as the "Indian Preference Exemption":

Nothing contained in this title shall apply to any business or enterprise on or near an Indian reservation with respect to any publicly announced employment practice of such business or enterprise under which a preferential treatment is given to any individual because he is an Indian living on or...