Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin

Background

The dispute began after a federally recognized tribe’s business, Lendgreen, made a short-term payday loan to Brian Coughlin. Coughlin filed for Chapter 13 bankruptcy, which triggered an automatic stay that should have stopped debt collection. He says Lendgreen kept trying to collect, causing emotional distress, and he moved in Bankruptcy Court to enforce the stay and recover damages. The Bankruptcy Court dismissed the suit because the Band and its subsidiaries asserted tribal immunity. The First Circuit reversed, and the Supreme Court took the case to resolve a split among appeals courts.

Reasoning

The key question was whether two parts of the Bankruptcy Code—§106(a) (which says governments lose immunity for specified bankruptcy purposes) and §101(27) (which defines “governmental unit” and includes an “other foreign or domestic government” catchall)—clearly cover federally recognized tribes. The majority found Congress had expressed its intent clearly. It relied on the broad, inclusive definition of “governmental unit,” the way the Code applies its central bankruptcy protections to all creditors, and long-standing recognition that tribes act as governments. The Court therefore concluded the Code unambiguously removes tribal immunity for the listed bankruptcy provisions. Justice Jackson wrote the opinion; six other Justices joined. Justice Thomas agreed with the judgment on separate reasoning, and Justice Gorsuch dissented.

Real world impact

The ruling means people and courts can bring bankruptcy-related enforcement actions against federally recognized tribes and their tribal businesses under the Code’s listed provisions. That allows debtors to enforce automatic-stay protections and seek damages where a tribal creditor violates those protections. The decision resolves conflicting appeals-court rulings on this statutory question.

Dissents or concurrances

Justice Thomas concurred in the judgment, saying off-reservation commercial activity removes tribal immunity regardless of the Code. Justice Gorsuch dissented, arguing the statute is ambiguous and tribes occupy a unique, neither-foreign-nor-domestic status that Congress did not plainly abrogate.