In 1966, the Gila River Indian Community (Tribe) leased a portion of its reservation land to Lone Butte Industrial Development Corporation (Lone Butte). Lone Butte then subleased the property to Genstar Corporation, which built a rubber processing plant on the premises. After a complicated buy-out, Bruce Johnson acquired possession of both the processing plant and the rubber processing equipment. In 1991, another corporation, International Rubber, assumed the Genstar lease, but Lone Butte terminated the lease because International Rubber failed to pay rent. In 1993, Lone Butte brought an action in the Gila River Indian Community Tribal Court against Johnson and International Rubber, contesting the ownership of the rubber processing plant and equipment.

Johnson responded both by challenging the tribal court's jurisdiction over him and his property and by filing an answer and counterclaim, in which he claimed to be the rightful owner of the plant and equipment. Lone Butte amended its complaint to include claims against Johnson for trespass and environmental nuisance. In 1995, the tribal court held Johnson liable to Lone Butte for $660,000. Johnson filed a notice of appeal in tribal court and attempted to gather information about the appeal process from the court clerk. Lone Butte filed response briefs and two motions in tribal court. Neither party heard from the appellate court for over a year. In March of 1996, Johnson filed suit in the United States District Court for the District of Arizona seeking to enjoin the enforcement of Lone Butte's judgment.[1] The district court dismissed the action for failure to exhaust tribal remedies.[2] Johnson filed suit in district court again, alleging that the tribal court had violated the Indian Civil Rights Act (ICRA)[3] and that Lone Butte had wrongfully converted his property. A year later, the district court dismissed Johnson's second suit for the same reason,[4] and Johnson appealed to the Ninth Circuit.

The Ninth Circuit decided two issues in this case. The first was whether the Tribe was immune from suit under ICRA. Indian tribes, as sovereign nations, have common law immunity from suit in federal court.[5] The only exception to this rule under ICRA is a habeas corpus action.[6] Because Johnson did not pursue a habeas corpus action, the full effect of the rule was applicable. Thus, the Ninth Circuit concluded that the Tribe was immune from Johnson's claim under ICRA.

The second issue was whether questions of fact existed as to whether Johnson had exhausted all tribal remedies in pursuing his claims. The district court had concurrent jurisdiction with the tribal court over Johnson and Lone Butte under diversity jurisdiction.[7] Considerations of comity dictate that, when there is concurrent jurisdiction in federal and tribal court, tribal remedies must be exhausted before the district court hears the case.[8] This rule has three exceptions: 1) where an assertion of tribal court jurisdiction is made with a desire to harass, 2) where the action violates express jurisdictional prohibitions, and 3) where exhaustion would be futile because of the lack of adequate opportunity to challenge jurisdiction.[9]

Johnson contended that the two-year delay of the tribal appellate court rendered his claim futile. Delay alone does not support a finding of futility, but delay in conjunction with the absence of a functioning tribal court makes exhaustion per se futile.[10] The Ninth Circuit found that the tribal appellate court's failure to respond to any of Johnson's correspondence for a long period of time introduced questions of fact as to whether the court was functional. As a result, the Ninth Circuit reversed the district court's dismissal of the claim and remanded the case for determination of whether the exhaustion rule should be applied.