Background & Facts
The Lac du Flambeau Band operated a lending entity (Lendgreen) that made payday loans. Brian Coughlin, a borrower who filed for Chapter 13 bankruptcy, alleged that Lendgreen continued collection efforts in violation of the Bankruptcy Code's automatic stay. Coughlin sought to enforce the stay against the tribe.
The tribe argued that tribal sovereign immunity barred the suit because Congress had not clearly abrogated tribal immunity in the Bankruptcy Code. The Bankruptcy Code's enforcement provisions apply to "governmental units," defined as any "foreign or domestic government."
The question was whether "other foreign or domestic government" includes Indian tribes.
The Court's Holding
Justice Jackson, writing for a unanimous Court (8-0, with Gorsuch concurring separately), held that the Bankruptcy Code's definition of "governmental unit" — which includes "other foreign or domestic government" — is sufficiently clear to abrogate tribal sovereign immunity. Indian tribes are governments, and the catchall "other... domestic government" unmistakably includes them.
Key Holding:
The Bankruptcy Code abrogates tribal sovereign immunity because its "other foreign or domestic government" language is sufficiently clear and unambiguous. BUT — the Court emphasized that abrogation requires express, unambiguous statutory text. Most federal statutes do NOT contain such language. P.L. 280, for example, contains no comparable catchall that reaches tribal sovereignty.
Key Language
"Congress must unequivocally express its intent to abrogate tribal sovereign immunity. We hold that it has done so in the Bankruptcy Code, through language that leaves no doubt."
Justice Gorsuch, concurring: "I join the Court's opinion in full but write separately to stress that our decision today should not be understood to authorize courts to lightly infer an abrogation of tribal sovereign immunity. The Bankruptcy Code's language is exceptional in its breadth. Most statutes do not speak so clearly."
How This Case Affects ATN's Strategy
Lac du Flambeau is a cautionary case — but it actually strengthens ATN's immunity arguments under P.L. 280.
- 1. P.L. 280 has no comparable language. The Bankruptcy Code used "other foreign or domestic government" — an all-encompassing catchall. P.L. 280 contains nothing remotely this broad. If anything, Lac du Flambeau confirms that P.L. 280's narrower language does NOT abrogate tribal immunity (as Agua Caliente already held).
- 2. Raises the bar for abrogation. Gorsuch's concurrence explicitly warns against "lightly inferring" abrogation. This makes it harder for California to argue that P.L. 280 impliedly waived tribal immunity.
- 3. Minimize bankruptcy exposure. ATN should structure its lending, financing, and commercial operations to minimize exposure to bankruptcy proceedings. Use tribal courts for debt collection; include arbitration clauses directing disputes to tribal forums.
- 4. Cannabis licensing is not lending. Lac du Flambeau involved payday lending. ATN's cannabis licensing framework is regulatory, not financial — a different universe legally.
Related Cases
- Michigan v. Bay Mills (2014) — Tribal sovereign immunity reaffirmed
- OTC v. Citizen Band Potawatomi (1991) — Immunity bars state tax enforcement
- Agua Caliente v. Superior Court (2006) — P.L. 280 does not abrogate immunity
- Lewis v. Clarke (2017) — Individual vs. tribal immunity distinction
- Upper Skagit v. Lundgren (2018) — Immunity in land disputes