Facts of the Case

Provided by Oyez

In July 2019, Brian W. Coughlin took out a $1,100 payday loan from Lendgreen, a wholly owned subsidiary of the Lac Du Flambeau Band of Lake Superior Chippewa Indians (“Band”). Later that year, he filed a Chapter 13 bankruptcy petition in the District of Massachusetts and listed his debt to Lendgreen as a nonpriority unsecured claim. When he filed his petition, the Bankruptcy Code imposed an automatic stay enjoining “debt-collection efforts outside the umbrella of the bankruptcy case.”

 

Despite the stay, Lendgreen repeatedly contacted Coughlin seeking repayment of his debt. Coughlin moved to enforce the automatic stay against Lendgreen, and in response, the Band asserted tribal sovereign immunity and moved to dismiss the enforcement proceeding. The bankruptcy court granted the motion to dismiss, and the U.S. Court of Appeals for the First Circuit reversed.

Questions

  1. Does the Bankruptcy Code unequivocally abrogate tribal sovereign immunity?

Conclusions

  1. The Bankruptcy Code unequivocally abrogates the sovereign immunity of all governments, including federally recognized Indian tribes. Justice Ketanji Brown Jackson authored the majority opinion of the Court.

    To abrogate sovereign immunity, Congress must make its intent to abrogate “unmistakably clear in the language of the statute.” The statute at issue here contains such unmistakably clear language.

    First, 11 U.S.C. § 106(a) expressly abrogates the sovereign immunity of “governmental unit[s]” for certain enumerated purposes. Section 101(27), defines “governmental unit” as “United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States . . . , a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.” This definition “exudes comprehensiveness from beginning to end,” and other provisions of the Bankruptcy Code support this understanding as well. Federally recognized tribes are “indisputably” governments, so the § 106(a) unequivocally abrogates their sovereign immunity.

    Justice Clarence Thomas authored an opinion concurring in the judgment. Justice Thomas reiterated an argument he has made before that to the extent that tribes possess sovereign immunity at all, that immunity does not extend to “suits arising out of a tribe’s commercial activities conducted beyond its territory.”

    Justice Neil Gorsuch authored a dissenting opinion arguing that the Court’s clear-statement rule requires the statute to expressly mention Indian tribes in order to abrogate their sovereign immunity. Because the Bankruptcy Code does not, he would hold that it does not abrogate federally recognized Indian tribes’ sovereign immunity.