The District Court denied the tribe's motion for summary judgment and following a trial, held that the tribe's sales to tribal members was immune from state taxation, but that sales to non-tribal members could be taxed.

[1] Rehnquist first stated that the tribe does not waive immunity by instituting an action in the district court, noting that the court had previously determined that tribes were immune from counter-claims or cross-suits, absent Congressional authorization to the contrary.

Tribal land, whether held in trust or as part of a reservation, is set apart for the use of the tribe, and as such qualifies for immunity.

The court then held that the Tenth Circuit erred in holding that tribe did not have to collect sales taxes on cigarettes sold to non-members.

[1] Justice Stevens issued a concurring opinion that mainly discussed the question of immunity as applied to the facts of the case.