Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin
599 U.S. 382 (2023)
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Rule of Law:
The Bankruptcy Code, through its definition of 'governmental unit' and its express abrogation provision, unambiguously strips federally recognized Indian tribes of their sovereign immunity for enumerated purposes within the Code.
Facts:
- The Lac du Flambeau Band of Lake Superior Chippewa Indians (the Band) is a federally recognized Indian tribe that owns several business entities.
- One of the Band's businesses, Lendgreen, extended a payday loan to Brian Coughlin.
- Shortly after receiving the loan, Brian Coughlin filed for Chapter 13 bankruptcy, which triggered an automatic stay against further collection efforts by his creditors.
- Lendgreen allegedly continued attempting to collect Coughlin's debt despite the automatic stay.
- Coughlin experienced substantial emotional distress, and at one point, attempted to take his own life due to Lendgreen's aggressive collection efforts.
Procedural Posture:
- Brian Coughlin filed a motion in Bankruptcy Court to enforce the automatic stay against Lendgreen, its parent corporations, and the Lac du Flambeau Band of Lake Superior Chippewa Indians, and sought damages.
- Petitioners (the Band and its subsidiaries) moved to dismiss the motion, arguing that the Bankruptcy Court lacked subject-matter jurisdiction due to tribal sovereign immunity.
- The Bankruptcy Court dismissed the suit, holding that the Bankruptcy Code did not clearly express Congress's intent to abrogate tribal sovereign immunity.
- Coughlin appealed the Bankruptcy Court's decision.
- The United States Court of Appeals for the First Circuit reversed the Bankruptcy Court's decision, concluding that the Bankruptcy Code “unequivocally strips tribes of their immunity.”
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Issue:
Does the Bankruptcy Code, specifically 11 U. S. C. § 106(a) and § 101(27), unequivocally abrogate the sovereign immunity of federally recognized Indian tribes?
Opinions:
Majority - Justice Jackson
Yes, the Bankruptcy Code unequivocally abrogates the sovereign immunity of federally recognized Indian tribes. The Court finds that the Bankruptcy Code unambiguously strips the sovereign immunity of 'any and every government that possesses the power to assert such immunity,' a description that undeniably includes federally recognized tribes. The definition of 'governmental unit' in § 101(27) is comprehensive, beginning with a long list of governments and their subdivisions, and concluding with a broad catchall phrase: 'other foreign or domestic government.' The Court reasons that the pairing of 'foreign' with 'domestic' at the end of an extensive list indicates Congress's unmistakable intent to cover all governments. Furthermore, § 106(a) applies to all 'governmental units' without cherry-picking. The Code's design, which provides for an orderly and centralized debt-resolution process and includes limited exceptions for governmental entities, reinforces the idea that Congress did not intend to categorically exclude any government from these provisions. While petitioners argued that tribes are not explicitly mentioned, the Court reiterates that Congress need not use specific 'magic words' to make its abrogation intent clear, as long as the intent is 'unmistakably clear in the language of the statute.' The Court also dismisses the argument that 'foreign or domestic' creates a rigid division excluding hybrid entities like tribes, citing § 102(5) which states 'or' is not exclusive, and pointing out that Territories (also listed) can have hybrid characteristics.
Concurring in judgment - Justice Thomas
Yes, the Bankruptcy Code abrogates tribal sovereign immunity in this case, but Justice Thomas concurs in the judgment on different grounds. He reiterates his view that tribal immunity, to the extent it exists, is a common-law doctrine and does not extend to 'suits arising out of a tribe’s commercial activities conducted beyond its territory.' Since Coughlin's stay-enforcement motion arose from petitioners’ off-reservation commercial conduct, petitioners should lack sovereign immunity regardless of the Bankruptcy Code’s specific abrogation provision. Justice Thomas argues that common-law immunity, unlike state sovereign immunity, depends on the forum court's law and should not be afforded for commercial acts, which creates de facto deregulation, unfairness, and fractious relations with States. He believes the Court's tribal immunity doctrine is judicially created, out of step with recent decisions regarding state immunity, and should be abandoned.
Dissenting - Justice Gorsuch
No, the Bankruptcy Code does not unequivocally abrogate tribal sovereign immunity. Justice Gorsuch argues that the majority’s interpretation fails the demanding clear-statement rule, which requires Congress to 'unequivocally express' its intent to abrogate immunity and construes any ambiguities in favor of immunity. He contends that the phrase 'other foreign or domestic government' in § 101(27) is not 'unmistakably clear' as synonymous with 'any and every government.' He emphasizes that Tribes occupy a unique legal status, established by constitutional text, history, and precedent, as neither purely 'foreign' nor purely 'domestic' governments. Therefore, the catchall phrase plausibly excludes them. The absence of specific mention of Indian tribes, when other types of governments are extensively listed, suggests a deliberate omission. Policy arguments about the Bankruptcy Code's broad purposes cannot overcome the requirement for clear textual indication of abrogation, nor can the general comprehensiveness of the list substitute for a clear statement concerning tribes, which are significant entities wielding sovereign immunity.
Analysis:
This decision significantly impacts tribal sovereignty by affirming that tribes are subject to the Bankruptcy Code's abrogation of sovereign immunity, potentially increasing their exposure to lawsuits in bankruptcy proceedings, particularly concerning commercial activities. It clarifies the application of the clear-statement rule for abrogation, emphasizing that Congress need not use specific terms to identify tribes if its intent is broadly and unmistakably clear through inclusive language. The ruling will likely streamline the bankruptcy process by ensuring that all governmental creditors, including tribes, are subject to the same rules, preventing tribes from leveraging sovereign immunity to gain an advantage in debt collection. This case underscores the ongoing tension between tribal self-governance and federal regulatory authority, particularly in commercial contexts.
