Wednesday, June 29 2022

Deepening a circuit divide, the First Circuit Court of Appeals held that the Bankruptcy Code waived the sovereign immunity of Native American Tribes. Judge Sandra L. Lynch’s May 6, 2022 opinion sided with the Ninth Circuit Court of Appeals, which held in 2004 that Section 106(a) of the Bankruptcy Code struck down the sovereign immunity of tribes. Judge Lynch disagreed with the Sixth Circuit Court of Appeals, which found no waiver in its 2019 decision. While the certification petition to the Supreme Court of the United States was pending in the 6th Circuit greek city case, the matter was resolved and the petition was dismissed.

In In re CoughlinThe First Circuit ruled that Native American tribes are not exempt from the federal law that prohibits lawsuits against debtors once they file for bankruptcy, holding that “the Bankruptcy Code unequivocally strips tribes of their [sovereign] immunity.” For the majority, Justice Lynch began by setting forth the general principle that Congress must unequivocally express an intent to repeal tribal sovereign immunity.

Section 106(a) says that “sovereign immunity is waived 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.” In turn, “governmental unit” is defined in Section 101(27) to mean:

USA; Express; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States (but not a United States trustee while serving as trustee in a case under this title), a state, commonwealth, district, territory, municipality, or foreign state; or other foreign or National government.

Most viewed the question as if “national government” includes tribes. In response, the Court stated that “there is no real disagreement that a tribe is a government” and that “it is also clear that the tribes are national and not foreign.” “Therefore, a tribe is a household government, and therefore a unit of government.” Justice Lynch “had no doubt that Congress understood the tribes to be internal dependent nations. . . They are a form of domestic government.

Justice Lynch noted that Section 106 was amended in 1994 because the previous version was not considered clear enough to override state and federal sovereign immunity. Having held that, when Congress enacted Sections 101(27) and 106, it “understood that tribes were national governments, and when it repealed the sovereign immunity of national governments in § 106, it unequivocally repealed the sovereign immunity of tribes” .

Noting that the Supreme Court does not require “magic words” to waive immunity, Justice Lynch rejected the argument that “the Bankruptcy Code cannot waive tribal sovereign immunity because it never uses the word ‘tribe.'” Judge Lynch then dismissed the tribe’s argument. that legislative history led to ambiguity, because “legislative history cannot introduce ambiguity into an unambiguous statute.”

Similarly, Justice Lynch disagreed with the dissent interpreting “the phrase ‘national governments’ to mean only those governments that have their origins in the Constitution.” On the contrary, he opined that “domestic refers to the territory in which the government exists”. Finally, Justice Lynch noted that an “interpretation of the phrase ‘national government’ that excludes Indian tribes with no textual basis for doing so is implausible.”

In the dissent, Chief Justice Barron said that by not using the word “tribes” in the statute, Congress “failed to use the surest means of showing clearly and unequivocally that they are” governmental units. Judge Barron asked: “[w]Why, if Congress wanted to be very clear in repealing tribal immunity through the Code, did it not use the clearest means to repeal that immunity by including ‘Indian Tribe’, or its equivalent, in the list of government types expressly named? What makes up the bulk of § 101(27)?” One possible answer, according to Justice Barron, is that “Congress did not mention Indian tribes in § 101(27) because Congress did not intend to include them as a ‘unit of government.'”[s].’”

Justice 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 language could plausibly be read as not covering them.” “Because I see no reason to allow Congress to waive the sovereign immunity of an Indian tribe in less clear terms than it should use to waive the immunity of other sovereigns who are more likely to consider their interests before that legislative body, I respectfully disagree. “

Given the division in the circuits, the probability of a request for certification is high. Assuming there is a petition, one scholar opined that “he believes[s] that certification will be granted.”


  1. (quoting Professor Jack F. Williams of the Georgia State University School of Law).

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