US Supreme Court Affirms 1st Circuit in upholding Automatic Stay Violation
| Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin |
| Docket: 22-227
Opinion Date: June 15, 2023 Judge: Ketanji Brown Jackson Areas of Law: Bankruptcy, Government & Administrative Law, Native American Law |
| The Lac du Flambeau Band of Lake Superior Chippewa Indians is a federally recognized Indian tribe. One of its businesses extended Coughlin a payday loan. After receiving the loan, Coughlin filed for Chapter 13 bankruptcy, triggering an automatic stay under the Bankruptcy Code against further collection efforts by creditors. The lender allegedly continued attempting to collect Coughlin’s debt. The First Circuit reversed the Bankruptcy Court’s dismissal of Coughlin’s subsequent suit on tribal sovereign immunity grounds. “A willful violation does not require a specific intent to violate the automatic stay. The standard for a willful violation of the automatic stay under [§ 362(k)(1)] is met if there is knowledge of the stay and the defendant intended the actions which constituted the violation.” Fleet Mortgage Group, Inc. v. Kaneb (In re Kaneb), 196 F.3d 265, 269 (1st Cir. 1999)
The Supreme Court affirmed. The Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian tribes; 11 U.S.C. 106(a), expressly abrogates the sovereign immunity of “governmental unit[s]” for 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.” The sections cannot plausibly be read to preserve sovereign immunity. The definition of “governmental unit” exudes comprehensiveness and includes a broad catchall phrase, sweeping in “other foreign or domestic government[s].” Reading the statute to carve out certain governments from the definition of “governmental unit” would risk upending the Code’s policy choices. Federally recognized tribes are indisputably governments. Congress need not use any particular words to make its abrogation intent clear. |
