First Circuit Joins the Ninth Circuit by Holding That Section 106(a) of the Bankruptcy Code Waives Tribes’ Sovereign Immunity
May 19, 2022
By Heidi McNeil Staudenmaier and Jacklyn M. Branby
Deepening a split of circuits, the First Circuit Court of Appeals held that the Bankruptcy Code waived the sovereign immunity of Native American Tribes. The May 6, 2022 opinion by Judge Sandra L. Lynch sided with the Ninth Circuit Court of Appeals, which held in 2004 that Section 106(a) of the Bankruptcy Code abrogated sovereign immunity for tribes.1 Judge Lynch disagreed with the Sixth Circuit Court of Appeals, which found no waiver in its 2019 decision.2 While the certiorari petition to the U.S. Supreme Court was pending in the Sixth Circuit’s Greektown case, the matter settled, and the petition was dismissed.
In In re Coughlin, the First Circuit ruled that Native American tribes are not exempt from federal law barring suits against debtors once they file for bankruptcy, holding “the Bankruptcy Code unequivocally strips tribes of their [sovereign] immunity.”3 For the majority, Judge Lynch began by laying out the general principle that Congress must unequivocally express an intent to abrogate tribal sovereign immunity.4
Section 106(a) says that “sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section with respect to dozens of provisions in the Bankruptcy Code, including Section 362."5 In turn, “governmental unit” is defined in Section 101(27) to mean:
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.6
The majority viewed the question as whether “domestic government” includes tribes.7 In response, the Court stated, “there is no real disagreement that a tribe is a government” and that “it is also clear that tribes are domestic, rather than foreign.”8 “Thus, a tribe is a domestic government and therefore a government unit.”9 Judge Lynch had “no doubt that Congress understood tribes to be domestic dependent nations. . . that are a form of domestic government.”10
Judge Lynch noted that Section 106 was amended in 1994 because the prior version had been held to be insufficiently clear to abrogate state and federal sovereign immunity.11 Having held that, when Congress enacted Sections 101(27) and 106, “it understood tribes to be domestic governments, and when it abrogated the sovereign immunity of domestic governments in § 106, it unmistakably abrogated the sovereign immunity of tribes.”12
Noting that the Supreme Court does not require “magic words” to waive immunity, Judge Lynch rejected the argument that “the Bankruptcy Code cannot abrogate tribal sovereign immunity because it never uses the word ‘tribe.’”13 Next, Judge Lynch dismissed the tribe’s argument that the legislative history led to ambiguity, because “legislative history cannot introduce ambiguity into an unambiguous statute.”14
Similarly, Judge Lynch disagreed with the dissent construing “the phrase ‘domestic governments’ to mean only those governments that trace their origins to the Constitution.”15 To the contrary, she opined that “domestic refers to the territory in which the government exists.”16 Finally, Judge Lynch noted an “interpretation of the phrase ‘domestic government’ that excludes Indian tribes with no textual basis for so doing is implausible.”
In the dissent, Chief Judge Barron said that, by failing to use the word “tribes” in the statute, Congress “did not use the surest means of clearly and unequivocally demonstrating that they are” governmental units.17 Judge Barron asked, “[w]hy, if Congress wanted to be crystal clear in abrogating tribal immunity through the Code, did it not use the clearest means of abrogating that immunity by including ‘Indian Tribe’ -- or its equivalent -- in the list of expressly named governmental types that makes up the bulk of § 101(27)?”18 One possible answer, according to Judge Barron, is that “Congress did not mention Indian tribes in § 101(27) because Congress did not intend to include them as ‘governmental unit[s].’”19
Judge Barron said he had “no choice but to conclude that § 101(27) does not clearly and unequivocally include Indian tribes, because, as I have explained, its text plausibly may be read not to cover them.”20 “Because I see no reason to permit Congress to abrogate an Indian tribe's sovereign immunity in terms less clear than it must use to abrogate the immunity of other sovereigns that are more likely to find their interests accounted for by that legislative body, I respectfully dissent."21
Given the split in the circuits, the likelihood of a petition for certiorari is high. Assuming there is a petition, one scholar opined he “believe[s] that certiorari will be granted.”22
- Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055, 1061 (9th Cir. 2004).
- In re Greektown Holdings, LLC, 917 F.3d 451, 460- 61 (6th Cir. 2019), cert. dismissed sub nom. Buchwald Cap. Advisors LLC v. Sault Ste. Marie Tribe, 140 S. Ct. 2638 (2020).
- Coughlin v. Lac du Flambeau Band of Lake Superior Chippewa Indians (In re Coughlin), No. 21-1153, 2022 WL 1438867, at *1 (1st Cir. May 6, 2022).
- Id. at *2.
11 U.S.C. § 106(a) provides:
(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section with respect to the following:
(1) Sections 105, 106, 107, 108, 303, 346, 362, 363, 364, 365, 366, 502, 503, 505, 506, 510, 522, 523, 524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553, 722, 724, 726, 744, 749, 764, 901, 922, 926, 928, 929, 944, 1107, 1141, 1142, 1143, 1146, 1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303, 1305, and 1327 of this title.
(2) The court may hear and determine any issue arising with respect to the application of such sections to governmental units.
(3) The court may issue against a governmental unit an order, process, or judgment under such sections or the Federal Rules of Bankruptcy Procedure, including an order or judgment awarding a money recovery, but not including an award of punitive damages. Such order or judgment for costs or fees under this title or the Federal Rules of Bankruptcy Procedure against any governmental unit shall be consistent with the provisions and limitations of section 2412(d)(2)(A) of title 28.
(4) The enforcement of any such order, process, or judgment against any governmental unit shall be consistent with appropriate nonbankruptcy law applicable to such governmental unit and, in the case of a money judgment against the United States, shall be paid as if it is a judgment rendered by a district court of the United States.
(5) Nothing in this section shall create any substantive claim for relief or cause of action not otherwise existing under this title, the Federal Rules of Bankruptcy Procedure, or nonbankruptcy law.
- 11 U.S.C. § 101(27) (emphasis added).
- In re Coughlin, at *3.
- Id. at *4.
- Id. at *2.
- Id. at *4.
- Id. at *5 (citing FAA v. Cooper, 566 U.S. 284, 132 S. Ct. 1441 (2012)).
- Id. at *6 (citations omitted).
- Id. at *9.
- Id. at *10.
- Id. (Citing In re Greektown Holdings, LLC, 917 F.3d 451, 462 (6th Cir. 2019)).
- Id. at *19.
- Id. at *20.
- Bill Rochelle, Rochelle’s Daily Wire, American Bankruptcy Institute (May 10, 2022), https://www.abi.org/newsroom/daily-wire/circuits-more-deeply-split-on-waiver-of-sovereign-immunity-for-native-american (quoting Professor Jack F. Williams of Georgia State University College of Law).
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