"Implied Abrogation" - Justice Jackson Rips Through Tribal Sovereign Immunity

“Implied Abrogation” - Justice Jackson Rips Through Tribal Sovereign Immunity: Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin, --- U.S. ---, 2023 WL 4002952 (No. 22-227 June 15, 2023)

Until today, a Federal Indian Law principle stood firm that any abrogation of tribal sovereign immunity “cannot be implied but must be unequivocally expressed.” Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978).  Justice Jackson failed Indian Country when she held the Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian tribes.

This case started when one of the Lac du Flambeau Band of Lake Superior Chippewa Indians (the “Band”) businesses, Lendgreen, extended Brian Coughlin a payday loan.  Shortly after receiving the loan, Coughlin filed for Chapter 13 bankruptcy, triggering an automatic stay under the Bankruptcy Code against further collection efforts by his creditors.  However, Lendgreen allegedly continued attempting to collect Coughlin’s debt.  Coughlin filed a motion in Bankruptcy Court to enforce the automatic stay and recover damages.  The Bankruptcy Court dismissed the suit on tribal sovereign immunity grounds.  The First Circuit reversed, concluding that the Code “unequivocally strips tribes of their immunity.” In re Coughlin, 33 F.4th 600, 603 (1st Cir. 2022).  The Supreme Court granted the Band’s petition for review.

The issue before the Court was whether tribal sovereign immunity protected a tribal lender from the Bankruptcy Code’s automatic stay, or whether section 106 of the Bankruptcy Code expressly abrogated tribal sovereign immunity.  The Court ruled today that, even though section 106 of the Bankruptcy Code lacks any clear intent to abrogate sovereign immunity, it is unambiguously implied.

Typically, Congress may abrogate tribal sovereign immunity only if it is clear and unequivocally expressed.  See Michigan v. Bay Mills Indian Community, 572 U.S. 782, 790 (2014); see Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58 (1978); see also Cohen's Handbook of Federal Indian Law § 7.05[1][b].  Clear and unequivocally means just that: it must be an express and intentional abrogation of tribal sovereign immunity.

Here, two provisions of the Bankruptcy Code were examined for this express abrogation.  The first, 11 U. S. C. § 106(a), clearly abrogates the sovereign immunity of “governmental unit[s].”  It provides:

“Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section.”

The second relevant provision is § 101(27), which defines “governmental unit” for purposes of the Code.  It states that that term “governmental unit” means:

“United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.”

As is clear, neither provision mentions “tribes,” “tribal governments,” “tribal enterprises,” nor “tribal corporations.”  The Court should have stopped here, naturally holding because the Code makes no mention of a tribe in any way, tribal sovereign immunity remained protected.  Instead, the Court uprooted a century of precedent and read between the lines to find an “implied” abrogation of sovereign immunity; this runs in direct contravention of Federal Indian Law principles.  See C & L Enterprises, Inc. v. Citizen Band Potawatomi Tribe of Okla., 532 U. S. 411, 418 (2001).

As Justice Gorsuch notes in his dissent:

Until today, there was “not one example in all of history where [this] Court ha[d] found that Congress intended to abrogate tribal sovereign immunity without expressly mentioning Indian tribes somewhere in the statute.”  In re Greektown Holdings, LLC, 917 F. 3d 451, 460 (CA6 2019) (internal quotation marks    
omitted).

The Court reads the phrase “other foreign or domestic government,” 11 U. S. C. § 101(27), as synonymous with “any and every government,” ante, at 4—all for the purpose of holding that § 106(a) of the Bankruptcy Code abrogates tribal sovereign immunity. It is a plausible interpretation. But plausible is not the standard our tribal immunity jurisprudence demands. Before holding that Congress has vitiated tribal immunity, the Legislature must “unequivocally express” its intent to achieve that result. C & L Enterprises, Inc. v. Citizen Band Potawatomi Tribe of Okla., 532 U. S. 411, 418 (2001) (internal quotation marks omitted).

Pursuant to the Court’s ruling today, if “Tribes” can be read into the meaning of a “governmental unit” even when not expressly listed in the defined term, attorneys should consider what other statutes may now possibly waive the inherent immunity enjoyed by Tribal governments and their enterprises.  Once identified, strategic implementation of sovereign protections should be put into place and re-examined consistently.

The Slip Opinion can be found HERE.