On April 24, 2023, the First Circuit’s opinion in Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin came up for oral argument before the Supreme Court. At issue in this appeal is whether this provision’s “abrogat[ion]” of sovereign immunity “as to a governmental unit,” defined to include any “other … domestic government” in section 101(27), embodies a congressional intention to revoke the sovereign immunity of a Native American tribe with sufficient and obvious clarity to be construed as such a revocation.
Both sides of the question were articulated below. In finding abrogation, the panel majority had concurred with the Ninth Circuit’s 2004 decision in Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055 (9th Cir. 2004), and rejected the Sixth Circuit’s 2019 ruling in In re Greektown Holdings, LLC, 917 F.3d 451 (6th Cir. 2019). Naturally, the dissenting judge discerned no “clear and unequivocal” evidence that Congress intended to include any Native American constituency, much less the Lac du Flambeau Band of Lake Superior Chippewa Indians, in section 101(27)’s definition of “governmental unit.”
In short, the majority (and the Ninth Circuit) and the dissent (and the Sixth Circuit) split over three overlapping issues:
- (1) the appropriate statutory interpretation of sections 106(a) and 101(27);
- (2) the proper application of, and the propriety of applying, the established federal standard for the abrogation of tribal, as opposed to state, sovereign immunity; and
- (3) the application of the principle of federal Native American law holding that “statutes are to be construed liberally in favor of ... [Native American populations], with ambiguous provisions interpreted to their benefit,’” County of Yakima v. Confederated Tribes and Bands of the Yakima Indian Nation, 502 U.S. 251, 269 (1992),
For bankruptcy purposes, Coughlin's influence may be greater than any specific holding. Depending on how the justices rule, the Supreme Court could henceforth subject Native American tribes to various provisions of the Bankruptcy Code. In addition, it could amplify ambiguity about whether such entities are eligible for relief as debtors under it.
In light of these possible consequences, with briefing and argument (from which some quotes appear below) over, more than just the parties await the Supreme Court's take.