A defaulting borrower told the Supreme Court on April 24 that he should be able to sue an Indian tribe based in Wisconsin for allegedly aggressive collection efforts he claims drove him to attempt to take his own life.
In the case, Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin (court file 22-227), the tribe argues that because it enjoys tribal sovereignty it cannot be sued.
Indian tribes are sovereigns that existed before the U.S. Constitution was adopted. They enjoy the same common-law immunity from lawsuits that sovereign governments possess unless Congress clearly expresses its intention to abrogate, or repeal, that immunity. The U.S. Bankruptcy Code abrogates the sovereign immunity of “governmental units,” but does not specifically refer to Indian tribes in defining that term. Instead, the code provides a list of specific federal, state, local, and foreign entities, and then adds “or other foreign or domestic government” in a residual clause, according to the tribe’s petition.
The Supreme Court has used a “clear statement rule” when Congress intends to waive tribal sovereign immunity but the court has also said that legislation does not have to include specific or “magic” words in order to do so. The justices here were asked to consider if the bankruptcy law’s waiver of immunity for various governments includes tribal governments.
In this case, a payday lending operation owned by the tribe tried to collect from respondent Brian Coughlin who had borrowed $1,100. Coughlin filed for bankruptcy, which is supposed to halt collection efforts. The tribe continued to press Coughlin to pay even when he went into the hospital after attempting suicide, an act he said the allegedly aggressive collection efforts drove him to. Coughlin sued the tribe for almost $173,000 in damages and attorney fees for the collection efforts that he says caused severe emotional distress.
The attorney for the tribe, Pratik Shah, told the justices during oral arguments on April 24 that Congress “has long treated tribes differently than the governmental entities enumerated” in the law, “including under the federal bankruptcy statute preceding the code.”
“Congress gave no indication, let alone an unmistakably clear one, that it newly intended to treat the tribes the same in the current code,” the lawyer said.
For two centuries this court has struggled “to describe Indian tribes in its opinions.”
“It has said they are not clearly foreign because, obviously, they have connections to the United States. They are not purely domestic because they have pre-constitutional residual sovereign power.”
Justice Amy Coney Barrett said Congress appeared to be speaking broadly when discussing which governmental bodies can be sued and here Congress was “attempting to cover the waterfront,” she said.
Barrett told Shah, “It sounds to me like you’re carving out an extra-special super-super clear rule for Indian tribes.”
Similarly, Justice Elena Kagan told Shah, “The difficulty for you is, aren’t you really making it into a magic words requirement?”
Coughlin’s attorney, Gregory Rapawy, said tribes are “governments because they exercise governmental authority and perform governmental functions.”
“They are domestic governments because they are subject to the authority of and within the territory of the United States,” he said.
“The Bankruptcy Code respects tribal self-government. It does not treat tribes like private parties but accords them the same status as federal, state, and foreign sovereigns,” the lawyer said.
“But it also holds them accountable, as it does other governmental units, for violations of the code’s critical features that define and enforce the Bankruptcy Court’s exclusive jurisdiction over the debtor’s estate to protect debtors and to ensure equitable treatment of creditors,” Rapawy said.
Speaking for the Biden administration, U.S. Department of Justice attorney Austin Raynor said, “The Bankruptcy Code unequivocally abrogates the sovereign immunity of the United States, states, districts, territories, foreign states, instrumentalities or agencies of any of those governments, and other foreign or domestic governments.”
“That language unambiguously encompasses all governments, including Indian tribes,” the lawyer said.
Chief Justice John Roberts pushed back, saying that Congress has never waived sovereignty without using the word “tribe.”
“The biggest hurdle I think you have to get over is that … everywhere else they use the word ‘tribe,’ and they didn’t here,” Roberts said. “So is this … the only instance where they haven’t used the word ‘tribe’ or ‘Indian’ when they meant to include them?”
Raynor replied, “This is the only one we’re aware of. That doesn’t mean there aren’t unlitigated statutes out there that might encompass tribes.”
The Supreme Court is expected to render a decision in the case by June or July.
