This Report summarizes an opinion issued on January 23 (Part I); and cases granted review on December 27, 2022, and January 13, 2023 (Part II).
Case Granted Review: Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 22-227
Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, 22-227. The Court will decide whether the Bankruptcy Code abrogates the sovereign immunity of Indian tribes. The Code waives the immunity of “governmental unit[s],” a term that Congress has defined to include “other foreign or domestic government[s]” beyond those it specifically enumerates. Federal courts of appeals are split on whether this language unequivocally expresses Congress’s intent to abrogate tribal sovereign immunity.
Petitioner is a federally recognized Indian tribe that owns a business called Lendgreen, which loans money to consumers. Lendgreen loaned money to respondent Brian Coughlin, who later filed for Chapter 13 bankruptcy and listed his Lendgreen debt. Thereafter, Lendgreen repeatedly contacted Coughlin to collect his debt. This prompted Coughlin to pursue an enforcement action against Lendgreen and petitioner, alleging that Lendgreen violated the Bankruptcy Code’s automatic stay on collection efforts for prepetition debts. Along with an order prohibiting collection efforts, Coughlin sought damages, attorney’s fees, and expenses. The bankruptcy court granted petitioner’s motion to dismiss the enforcement action on sovereign immunity grounds, favoring a Sixth Circuit decision on the issue. A divided panel of the First Circuit reversed, siding with the Ninth Circuit’s conclusion that the Bankruptcy Code unmistakably abrogates tribal sovereign immunity. 33 F.4th 600. The court read the Code’s abrogation language as covering all forms of government, both foreign and domestic. Utilizing dictionary definitions of the terms “domestic” and “government,” the court concluded that tribes are domestic governments within the meaning of the Code. The court further examined history and the Code’s structure to support its determination.
Petitioner argues that the Bankruptcy Code does not clearly abrogate tribal sovereign immunity. Petitioner notes that the Court has never found an abrogation of tribal sovereign immunity without some mention of tribes in the statutory text. Here, the Code says nothing about Indian tribes. Petitioner acknowledges that Congress does not have to use “magic words” to abrogate sovereign immunity. But in its view, “domestic government” is not a term clearly understood to cover tribes given their “unique space within our constitutional structure.” Petitioner contends that one plausible reading of the abrogation language is that it speaks only to institutional components of the United States, not to a source of sovereignty that predates our Constitution. That plausible interpretation, petitioner maintains, defeats any argument that Congress unmistakably abrogated tribal sovereign immunity.