K2 America Corp. v. Roland Oil & Gas

Federal courts lack subject matter jurisdiction over cases involving lands held in trust by the United States for Indian allottees where the Indian allottees are not party to the case and the precise dispute at issue does not arise under federal law.

After being hired as a contract operator for K2 America Corporation, John Harper “solicited capital and other assistance from K2's competitor” and formed Roland Oil & Gas “for the very purpose of acquiring the . . . leases” K2 had hired him to pursue. K2 brought suit in federal district court as the oil and gas leases at issue lie in “allotted land, wherein title is held by the United States in trust for various Indian allottees.” The claim was dismissed for lack of subject matter jurisdiction and K2 appealed. K2 claimed that “the 'complete preemption' exception applies to disputes involving Indian trust lands, such that its case arises under 28 U.S.C. § 1331.” The Court disagreed, citing Oneida Indian Nation v. County of Oneida (Oneida I), 414 U.S. 661 (1974), as clarification that such preemption applies only to cases to which Indians are party to the possession claim of the trust land. Further, “arising under” jurisdiction does not apply despite “the specific federal statutory and regulatory scheme governing the lease,” that is ”25 U.S.C. § 396 . . . and 25 C.F.R. pt. 212,” because the dispute does not regard the lease itself, leaving “the requirement of an actual dispute about federal law” unsatisfied in this case. AFFIRMED.