## Facts

- Edward M. LaPlante, a Blackfeet Tribe member, worked for an Indian-owned ranch located on the Blackfeet Indian Reservation.
- LaPlante was injured on the reservation when the cattle truck he was driving jackknifed.
- LaPlante sued in Blackfeet Tribal Court, seeking damages from the ranch for personal injuries and from Iowa Mutual Insurance Company (a non-Indian insurer) for alleged bad-faith refusal to settle.
- Iowa Mutual moved to dismiss in Tribal Court for lack of subject-matter jurisdiction; the Tribal Court denied the motion, concluding it could regulate non-Indians engaged in commercial relations with tribal members on the reservation.
- Iowa Mutual did not seek review in the Blackfeet Court of Appeals and instead filed a federal diversity action seeking a declaration that it had no duty to defend under the policies.
- The federal district court dismissed, and the Ninth Circuit affirmed, requiring Iowa Mutual to exhaust tribal court remedies before federal intervention.

## Issues

1. Whether a federal court may exercise diversity jurisdiction over a dispute while a parallel case is pending in tribal court before the tribal court system has fully addressed its own jurisdiction.
2. Whether the exhaustion-of-tribal-remedies rule applies in diversity cases as well as federal-question cases.
3. Whether 28 U.S.C. § 1332 reflects congressional intent to bypass tribal-court exhaustion and permit immediate federal adjudication.

## Decision

- The Supreme Court affirmed the Ninth Circuit.
- Federal courts should not proceed in a diversity action challenging tribal-court jurisdiction until the tribal court system has had a full opportunity to determine its jurisdiction.
- The exhaustion requirement applies regardless of whether the federal court’s asserted basis for jurisdiction is federal question or diversity.
- Exhaustion requires, at a minimum, an opportunity for tribal appellate review of the tribal trial court’s jurisdictional ruling.
- Nothing in § 1332 or its history shows congressional intent to displace federal policy favoring tribal self-government and deference to tribal courts.
- The Court noted limited exceptions to exhaustion (such as bad faith, harassment, futility, or plainly absent tribal jurisdiction) but found none applicable.

## Legal Principles

- As a matter of comity, federal courts generally must allow tribal courts to determine their own jurisdiction in the first instance.
- The exhaustion-of-tribal-remedies doctrine applies even when a federal court has diversity jurisdiction.
- Exhaustion ordinarily includes review by tribal appellate courts, not merely a tribal trial court ruling.
- Absent contrary congressional direction, civil jurisdiction over non-Indians’ activities on reservation lands presumptively lies in tribal courts, especially where the non-Indian has a consensual commercial relationship with the tribe or its members.
- The exhaustion requirement is not a permanent bar to federal review; after exhaustion, federal courts may review tribal-court jurisdiction in an appropriate case.

## Conclusion

The Court held that a federal court should not use diversity jurisdiction to bypass tribal adjudication where a tribal court is addressing a reservation-based dispute involving a non-Indian in commercial dealings with tribal members; the party must first exhaust tribal remedies, including tribal appellate review, before seeking federal-court intervention.


Iowa Mut. Ins. Co. v. LaPlante, 480 U.S. 9 (1987)