Supreme Court Ducks Sovereign Immunity Question A Recap of the Remaining Circuit Conflicts

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Jul/Aug 2004

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Under the Eleventh Amendment to the U.S. Constitution, no individual may sue a state without its consent. Using
its powers granted under the Bankruptcy Clause in Article I of the Constitution, Congress enacted §106 of the
Bankruptcy Code, under which sovereign immunity is expressly abrogated. The circuit courts have split on whether
or not Congress exceeded its powers in enacting §106 of the Bankruptcy Code. The Supreme Court recently had an
opportunity to rule on the issue in connection with the dischargeability of a student loan guaranteed by a state
agency. Despite granting certiorari on the issue, the Court avoided ruling directly. Instead, the Court held that the
Eleventh Amendment was not implicated because the bankruptcy court was exercising its in rem jurisdiction and
was not attempting to adjudicate claims outside of that jurisdiction.<a href="#1" name="1a">1</a>

<h4>The Eleventh Amendment</h4>

The Eleventh Amendment provides: "The judicial power of the United States shall not be construed to extend to
any suit in law or equity, commenced or prosecuted against one of the United States by citizens of another state, or
by citizens or subjects of any foreign state."<a href="#2" name="2a">2</a> The Supreme Court has construed the amendment to contain two
parts; first, that each state is a sovereign entity within the federal system, and second, that the nature of sovereignty
precludes a suit by an individual without the state's consent.<a href="#3" name="3a">3</a> The Court has commented that for more than a
century, it has recognized that the Constitution did not contemplate suits against unconsenting states.<a href="#4" name="4a">4</a>

Over the years, the Supreme Court has upheld a state's sovereign immunity many times in various contexts. In a
landmark case, Seminole Tribe of Florida v. Florida,<a href="#5" name="5a">5</a> the Court dismissed the petitioner's suit on the basis of the
Eleventh Amendment sovereign immunity afforded to states. The case dealt with the Indian Gaming Regulatory
Act, which provides that an Indian tribe may conduct certain gaming activities only in conformance with a pact with
the state.<a href="#6" name="6a">6</a> States are obligated to negotiate in good faith and can be sued in federal court to compel performance of
their good-faith duty.<a href="#7" name="7a">7</a> The Court focused on whether the Indian Commerce Clause is a grant of authority to the
federal government at the states' expense.<a href="#8" name="8a">8</a> The Court agreed that Congress clearly intended to abrogate the states'
sovereign immunity through the enactment of Title 25, §2710(d)(7).<a href="#9" name="9a">9</a> However, the Court determined that the
regulation of Indian commerce, even though it is under the exclusive control of the federal government, is protected
by the Eleventh Amendment.<a href="#10" name="10a">10</a>

<h4>Section 106 of the Bankruptcy Code</h4>

Article I, §8, clause 4 of the Constitution provides that Congress shall have the power to "establish...uniform laws
on the subject of bankruptcies throughout the United States." In 1994, Congress enacted §106 of the Bankruptcy Code.<a href="#11" name="11a">11</a> Under §106(a), sovereign immunity is abrogated as to a governmental unit with respect to many actions arising
under the Bankruptcy Code, including, for example, §§362, 365, 547, 548 and 1141.<a href="#12" name="12a">12</a>

While §106(a) of the Bankruptcy Code expressly abrogates sovereign immunity to the extent necessary to permit
bankruptcy courts to deal with issues arising in connection with certain provisions of the Bankruptcy Code, the
Supreme Court's Seminole opinion has cast doubt on the constitutionality of §106. Subsequent to Seminole, several
appeals courts have issued decisions regarding sovereign immunity in the bankruptcy context.

<h4>No Power to Abrogate, Says the Fourth Circuit</h4>

In July 1998, the Fourth Circuit Court of Appeals held that Congress does not have the power to abrogate the
state's sovereign immunity.<a href="#13" name="13a">13</a> Roger Schlossberg (as chapter 7 trustee) sued the Maryland state comptroller to avoid
as a preference the debtor's $4,382 income tax payment.<a href="#14" name="14a">14</a> The state prevailed on its defense that the payment was
made in the ordinary course.<a href="#15" name="15a">15</a> Responding to the trustee's appeal, the state raised the sovereign immunity defense
for the first time in the Fourth Circuit.<a href="#16" name="16a">16</a> Schlossberg responded that the state had waived its sovereign immunity
by filing a proof of claim for sales and withholding taxes.<a href="#17" name="17a">17</a>

The bankruptcy court ruled that the payments were ordinary course and not avoidable as preferences, and the district
court affirmed.<a href="#18" name="18a">18</a> On appeal, the trustee argued that §106 of the Bankruptcy Code abrogates sovereign immunity.<a href="#19" name="19a">19</a>
He also argued that the state had waived any sovereign immunity by filing a proof of claim.<a href="#20" name="20a">20</a>

The Fourth Circuit noted that in light of Seminole, any Eleventh Amendment analysis had to take into account an
inquiry as to whether Congress had the power to abrogate a state's sovereign immunity.<a href="#21" name="21a">21</a> The Fourth Circuit
concluded that Congress had no power under the Bankruptcy Clause to abrogate state sovereign immunity.<a href="#22" name="22a">22</a>

Accordingly, the appeals court held that Congress's effort to abrogate the states' Eleventh Amendment immunity
through the enactment of §106 was unconstitutional and ineffective.<a href="#23" name="23a">23</a> The Fourth Circuit acknowledged
Seminole's analysis of §5 of the Fourteenth Amendment, but concluded that it did not apply in the bankruptcy
context.<a href="#24" name="24a">24</a>

One month after the Schlossberg decision, the Fourth Circuit again addressed sovereign immunity in Antonelli.<a href="#25" name="25a">25</a>
The state and two counties sued a liquidating trust and the purchasers of the debtors' real estate interests to recover
state and county transfer taxes.<a href="#26" name="26a">26</a> The district court entered judgment for the trust and the purchasers.<a href="#27" name="27a">27</a> The Fourth
Circuit held, inter alia, that the Eleventh Amendment did not bar enforcement against the state and counties of the
order confirming the debtors' plan.<a href="#28" name="28a">28</a>

Antonelli and his wife converted involuntary chapter 7 petitions to voluntary chapter 11 petitions and filed a
reorganization plan.<a href="#29" name="29a">29</a> Under the confirmed plan, a liquidating trust was formed to dispose of assets, including real
property, and §1146(c) was invoked to exempt plan transfers.<a href="#30" name="30a">30</a> The state of Maryland and the plaintiff counties
were served with copies of the plan, but they did not appear at the confirmation hearing or appeal the confirmation
order.<a href="#31" name="31a">31</a> At the time the transfers were recorded, there was no attempt to impose a transfer or recordation tax.<a href="#32" name="32a">32</a>
Almost a year later, the state and counties filed suit, seeking to recover more than $95,000 in recordation and
transfer taxes.<a href="#33" name="33a">33</a> On summary judgment, the district court ruled in favor of the trust and the counties, noting that
the state and Montgomery County had sufficient notice of the plan and failed to take action.<a href="#34" name="34a">34</a> As to the other
counties, the district court held that both the language of §1146(c) and public policy support the application of that
section under the debtors' plan.<a href="#35" name="35a">35</a>

The Fourth Circuit noted initially that to the extent the plan incorporated §1146(c), the state and counties were
bound by the plan provisions.<a href="#36" name="36a">36</a> Under the Bankruptcy Clause of the Constitution, Congress had the power to enact
§1146(c), and by virtue of the Supremacy Clause, such enactment takes precedence over any conflicting state
provisions.<a href="#37" name="37a">37</a>

The taxing authorities also asserted the Eleventh Amendment for the first time on appeal and argued they had not
waived immunity.<a href="#38" name="38a">38</a> The Fourth Circuit allowed that the state could raise the Eleventh Amendment for the first
time on appeal because of jurisdictional aspects.<a href="#39" name="39a">39</a> However, the counties could not because case law holds that the
Eleventh Amendment does not bar federal lawsuits against political subdivisions of the state.<a href="#40" name="40a">40</a>

The appeals court reviewed the Eleventh Amendment language, which denies courts authority to entertain a suit
brought by a private party against a state without its consent.<a href="#41" name="41a">41</a> However, the court held that the confirmation order
was not entered in a suit against a state filed by a private party.<a href="#42" name="42a">42</a> The state was not named as a defendant or served
with process requiring its attendance in federal court.<a href="#43" name="43a">43</a>

According to the Fourth Circuit, this is different from an individual commencing an adversary proceeding against a
state in bankruptcy court.<a href="#44" name="44a">44</a> A court's jurisdiction to confirm a plan derives from its jurisdiction over the debtor and
its estate‹not jurisdiction over particular creditors.<a href="#45" name="45a">45</a> The Fourth Circuit acknowledged that if the state had
challenged the plan, it would have had to submit to federal jurisdiction.<a href="#46" name="46a">46</a> Alternatively, the state could choose not to appear in federal court.<a href="#47" name="47a">47</a> The court admitted this wasn't an ideal
choice, but concluded this did not amount to exercise of federal power to hale a state into federal court against its
will in violation of the Eleventh Amendment.<a href="#48" name="48a">48</a>

<h4>Congress Has the Power, Says the Sixth Circuit</h4>

The Sixth Circuit weighed in on the sovereign immunity and Bankruptcy Code debate in In re Hood.<a href="#49" name="49a">49</a> The
Tennessee Student Association Corp. (TSAC) appealed from the Sixth Circuit BAP's denial of a motion to dismiss
for lack of jurisdiction.<a href="#50" name="50a">50</a> After receiving a discharge in her chapter 7 case, the debtor filed a complaint against
TSAC, seeking a hardship discharge.<a href="#51" name="51a">51</a> The bankruptcy court denied TSAC's motion to dismiss on grounds of
sovereign immunity, and the BAP affirmed.<a href="#52" name="52a">52</a>

In the 1976 Education Amendments to the Bankruptcy Code, Congress prohibited the discharge of student loans in
ordinary non-adversary proceedings unless the loan had been in repayment for more than five years.<a href="#53" name="53a">53</a> For other
loans, Congress required that the debtor institute an adversary proceeding and demonstrate undue hardship to obtain
a discharge.<a href="#54" name="54a">54</a> TSAC argued that sovereign immunity protected it from being sued as a defendant in a hardship
dischargeability suit.<a href="#55" name="55a">55</a>

The Sixth Circuit disagreed, concluding that TSAC could not have its cake and eat it too.<a href="#56" name="56a">56</a> The court reviewed the
conclusions of the various circuit courts that had ruled against Congress's power to abrogate sovereign immunity
under the Bankruptcy Code after the Supreme Court's ruling in Seminole.<a href="#57" name="57a">57</a> However, the Sixth Circuit concluded
that under the Bankruptcy Clause, Congress does have the power to abrogate sovereign immunity.<a href="#58" name="58a">58</a>

First, the Sixth Circuit concluded that the language of §106 of the Bankruptcy Code indicates a clear legislative
statement as to Congress's intent,<a href="#59" name="59a">59</a> and that Congress had sufficient power to abrogate sovereign immunity.<a href="#60" name="60a">60</a> The
Sixth Circuit noted that Article I gives Congress the power to make uniform laws on only two issues: bankruptcy
and naturalization.<a href="#61" name="61a">61</a> The grant of power to Congress to pass bankruptcy laws was exclusive.<a href="#62" name="62a">62</a> The Sixth Circuit
also concluded that when the states agreed to the Bankruptcy Clause's uniformity provision, the states shed their
immunity from suit along with their power to legislate.<a href="#63" name="63a">63</a>

In conclusion, the Sixth Circuit determined that the text of the Constitution and the Federalist papers reveal that
the states granted Congress the power to abrogate sovereign immunity.<a href="#64" name="64a">64</a> Congress exercised the power to abrogate
in §106(a) of the Bankruptcy Code, and therefore TSAC was not immune from suit.<a href="#65" name="65a">65</a>

<h4>The Ninth Circuit and Indian Tribes</h4>

On April 6, 2004, in Krystal Energy Co. v. Navajo Nation,<a href="#66" name="66a">66</a> the U.S. Court of Appeals concluded that Congress
abrogated the sovereign immunity of Indian tribes through the enactment of §106 of the Code.<a href="#67" name="67a">67</a> The debtor
commenced an adversary action against the Navajo Nation, seeking turnover.<a href="#68" name="68a">68</a> The district court dismissed the
adversary based on the Navajo Nation's sovereign immunity, absent explicit abrogation by Congress.<a href="#69" name="69a">69</a>

Interestingly, the Ninth Circuit focused solely on whether Congress abrogated the sovereign immunity of Indian
tribes when it enacted §106, but did not discuss whether the enactment of §106 was a legitimate exercise of power.

The Ninth Circuit reversed because it concluded that "Congress did abrogate the sovereign immunity of Indian
tribes under 11 U.S.C. §§106(a) and 101(27)."<a href="#70" name="70a">70</a> First, the court acknowledged that the concept of sovereign
immunity extends to Indian tribes.<a href="#71" name="71a">71</a> The court then noted that any abrogation of sovereign immunity must be
express and cannot be implied.<a href="#72" name="72a">72</a> The issue was then formed as a determination of whether Congress abrogated the immunity of Indian tribes in
enacting §106 of the Code.<a href="#73" name="73a">73</a> The court concluded that Indian nations are governmental units, as defined in
§101(27) of the Code.<a href="#74" name="74a">74</a> Accordingly, Congress expressly abrogated the immunity of Indian tribes.<a href="#75" name="75a">75</a>

<h4>The U.S. Supreme Court</h4>

The U.S. Supreme Court had a chance to clarify the sovereign immunity issue under the Code when it granted
certiorari in Tennessee Student Assistance Corp. v. Hood.<a href="#76" name="76a">76</a> As mentioned previously in this article, the Sixth
Circuit affirmed the Sixth Circuit BAP's holding that §106 of the Code was a valid abrogation of sovereign
immunity. TSAC had asserted sovereign immunity in response to Hood's attempt to discharge a student loan.<a href="#77" name="77a">77</a>

Hood received a discharge and then reopened her bankruptcy case, seeking a determination that she was entitled to a
hardship discharge for her $4,169.31 student loan.<a href="#78" name="78a">78</a> As required by the Bankruptcy Rules, Hood filed an adversary
proceeding and served TSAC with a summons and a complaint.<a href="#79" name="79a">79</a> On May 17, 2004, the Supreme Court affirmed,
but did not reach the abrogation issue, holding that the discharge of a student loan debt does not implicate the
Eleventh Amendment immunity.<a href="#80" name="80a">80</a>

The basis for the Supreme Court's holding was the conclusion that the bankruptcy court was exercising its in rem
jurisdiction, rather than ruling against a particular creditor.<a href="#81" name="81a">81</a> The Supreme Court discussed and analogized to in
rem admiralty proceedings, which are not barred by the Eleventh Amendment.<a href="#82" name="82a">82</a> According to the Court, the
discharge of a debt in bankruptcy is also an in rem proceeding.<a href="#83" name="83a">83</a> Bankruptcy courts have exclusive jurisdiction over
a debtor's property and over the estate.<a href="#84" name="84a">84</a> Whether or not states choose to participate in a bankruptcy proceeding,
they are bound by a debtor's discharge no less than other creditors.<a href="#85" name="85a">85</a> The Supreme Court reiterated its position that
the exercise of the bankruptcy court's in rem jurisdiction does not infringe state sovereignty.<a href="#86" name="86a">86</a> The Court found no
authority that the bankruptcy court's exercise of in rem jurisdiction to discharge a student loan debt would infringe
state sovereignty.<a href="#87" name="87a">87</a> Accordingly, the Supreme Court concluded that the suit to discharge a student loan debt was
not a suit against a state for Eleventh Amendment purposes.<a href="#88" name="88a">88</a>

<h4>Conclusion</h4>

Congress enacted §106 expressly abrogating the states' sovereign immunity. Some circuit courts have held that in
doing so, Congress exceeded its powers, and therefore consider §106 unconstitutional. Other circuits have deemed
§106 a valid exercise of the power granted to Congress under the Constitution. The Supreme Court recently had an
opportunity to settle the debate, but chose not to address the issue. Instead, the Supreme Court held that
bankruptcy courts have exclusive in rem jurisdiction over debtors and their estates.

<hr>
<h3>Footnotes</h3>

<a name="1">1</a> Tennessee Student Assistance Corp. v. Hood, 124 S.Ct. 1905 (decided May 17, 2004). <a href="#1a">Return to article</a>

<a name="2">2</a> U.S. Constitution, Eleventh Amendment. <a href="#2a">Return to article</a>

<a name="3">3</a> Seminole Tribe of Florida v. Florida, 517 U.S. 44, 54 (1996) (citations omitted). The Supreme Court noted that previously authority to abrogate had been found only in two
provisions of the Constitution. Id. at 59. See Fitzpatrick v. Bitzer, 427 U.S. 445, 452-56 (1976) (finding that §5 of the Fourteenth Amendment allowed Congress to abrogate
sovereign immunity). See, also, Pennsylvania v. Union Gas Co., 491 U.S. 1 (1989) (concluding that the Interstate Commerce Clause granted Congress power to abrogate state
sovereign immunity). <a href="#3a">Return to article</a>

<a name="4">4</a> Seminole Tribe of Florida v. Florida, 517 U.S. at 54. <a href="#4a">Return to article</a>

<a name="5">5</a> 517 U.S. at 75. <a href="#5a">Return to article</a>

<a name="6">6</a> 25 U.S.C. §2710(d)(1)(C). <a href="#6a">Return to article</a>

<a name="7">7</a> 25 U.S.C. §§2710(d)(3)(A) and 2710(d)(7). <a href="#7a">Return to article</a>

<a name="8">8</a> Seminole Tribe of Florida v. Florida, 517 U.S. at 62. <a href="#8a">Return to article</a>

<a name="9">9</a> Id. at 56. <a href="#9a">Return to article</a>

<a name="10">10</a> Id. at 72. <a href="#10a">Return to article</a>

<a name="11">11</a> 11 U.S.C. §106. <a href="#11a">Return to article</a>

<a name="12">12</a> 11 U.S.C. §106(a). Under subsection (b), a governmental unit that has filed a proof of claim is deemed to have waived sovereign immunity with respect to a claim against such
governmental unit that is property of the estate and arose out of the same transaction. 11 U.S.C. §106(b). <a href="#12a">Return to article</a>

<a name="13">13</a> Schlossberg v. State of Maryland, 119 F.3d 1140 (4th Cir. 1997), cert. denied, 523 U.S. 1075 (1998). The Fourth Circuit noted that sovereign immunity raises a jurisdictional
issue that cannot be waived and therefore could be considered for the first time on appeal. <a href="#13a">Return to article</a>

<a name="14">14</a> Id. at 1142. <a href="#14a">Return to article</a>

<a name="15">15</a> Id. <a href="#15a">Return to article</a>

<a name="16">16</a> Id. at 1143. <a href="#16a">Return to article</a>

<a name="17">17</a> Id. <a href="#17a">Return to article</a>

<a name="18">18</a> Id. <a href="#18a">Return to article</a>

<a name="19">19</a> Id. <a href="#19a">Return to article</a>

<a name="20">20</a> Id. The state of Maryland filed a proof of claim for sales and withholding taxes, but did not file a claim for the taxes at issue in the case. <a href="#20a">Return to article</a>

<a name="21">21</a> Id. at 1145. <a href="#21a">Return to article</a>

<a name="22">22</a> Id. <a href="#22a">Return to article</a>

<a name="23">23</a> Id. at 1147. See, also, Nelson v. LeCrosse County District Attorney, 301 F.3d 820, 838 (7th Cir.) (Congress lacked authority to abrogate sovereign immunity by exacting §106(a)
of the Bankruptcy Code); Gosselin v. Massachusetts Dept. of Revenue, 276 F.3d 70, 72 (1st Cir. 2002) (limited holding that debtor's action against state on dischargeability of
taxes barred by sovereign immunity); In re Sacred Heart Hosp., 133 F.3d 237, 245 (3d Cir. 1998) (§106(a) unconstitutionally abrogates states' sovereign immunity). <a href="#23a">Return to article</a>

<a name="24">24</a> Id. The Fourth Circuit noted: "Furthermore, reliance on §5 of the Fourteenth Amendment as a post hoc justification for Congress's attempted abrogation in 11 U.S.C. §106 would
require us to ignore the result in Seminole." Id. <a href="#24a">Return to article</a>

<a name="25">25</a> State of Maryland v. Antonelli Creditors' Liquidating Trust, 123 F.3d 777 (4th Cir. 1997). <a href="#25a">Return to article</a>

<a name="26">26</a> Id. at 778. <a href="#26a">Return to article</a>

<a name="27">27</a> Id. <a href="#27a">Return to article</a>

<a name="28">28</a> Id. at 787. <a href="#28a">Return to article</a>

<a name="29">29</a> Id. at 779-80. <a href="#29a">Return to article</a>

<a name="30">30</a> Id. at 780. Section 1146(c) exempts certain transfers from taxes under a confirmed plan. 11 U.S.C. §1146(c). <a href="#30a">Return to article</a>

<a name="31">31</a> Id. at 781. <a href="#31a">Return to article</a>

<a name="32">32</a> Id. <a href="#32a">Return to article</a>

<a name="33">33</a> Id. <a href="#33a">Return to article</a>

<a name="34">34</a> Id. <a href="#34a">Return to article</a>

<a name="35">35</a> Id. <a href="#35a">Return to article</a>

<a name="36">36</a> Id. <a href="#36a">Return to article</a>

<a name="37">37</a> Id. <a href="#37a">Return to article</a>

<a name="38">38</a> Id. at 786. <a href="#38a">Return to article</a>

<a name="39">39</a> Id. <a href="#39a">Return to article</a>

<a name="40">40</a> Id. See, also, In re Urban, 1998 U.S. Dist. LEXIS 229 (S.D.N.Y. 1998) (Eleventh Amendment does not bar suits against counties); Carlin v. Rogers District Court, 274 B.R. 821,
823 (Bankr. W.D. Ark. 2002) (counties and cities are not entitled to assert sovereign immunity). <a href="#40a">Return to article</a>

<a name="41">41</a> Id. <a href="#41a">Return to article</a>

<a name="42">42</a> Id. <a href="#42a">Return to article</a>

<a name="43">43</a> Id. <a href="#43a">Return to article</a>

<a name="44">44</a> Id. at 786-87. <a href="#44a">Return to article</a>

<a name="45">45</a> Id. at 787. <a href="#45a">Return to article</a>

<a name="46">46</a> Id. <a href="#46a">Return to article</a>

<a name="47">47</a> Id. <a href="#47a">Return to article</a>

<a name="48">48</a> Id. See, also, In re Collins, 173 F.3d 924 (4th Cir. 1999) (sovereign immunity was not implicated because motion to reopen case was not a suit against one of the states). <a href="#48a">Return to article</a>

<a name="49">49</a> 319 F.3d 755. (6th Cir. 2003). <a href="#49a">Return to article</a>

<a name="50">50</a> Id. at 758. <a href="#50a">Return to article</a>

<a name="51">51</a> Id. <a href="#51a">Return to article</a>

<a name="52">52</a> Id. <a href="#52a">Return to article</a>

<a name="53">53</a> Id. at 759. <a href="#53a">Return to article</a>

<a name="54">54</a> Id. <a href="#54a">Return to article</a>

<a name="55">55</a> Id. <a href="#55a">Return to article</a>

<a name="56">56</a> Id. <a href="#56a">Return to article</a>

<a name="57">57</a> Id. at 761. See, e.g., In re Nelson, 301 F. 3d 820, 832 (7th Cir. 2002); In re Mitchell, 209 F. 3d 1111, 1121 (9th Cir. 2000); In re Fernandez, 123 F. 3d 241, 243, amended by 130
F. 3d 138, 1139 (5th Cir. 1997). <a href="#57a">Return to article</a>

<a name="58">58</a> Id. at 762. See, also, In re Roberts, 2003 WL 22439869 * 2 (Bankr. M.D. Ga., Sept. 15, 2003) (states surrendered sovereign immunity with respect to bankruptcy, so the state of
Georgia had no immunity). <a href="#58a">Return to article</a>

<a name="59">59</a> Id. <a href="#59a">Return to article</a>

<a name="60">60</a> Id. <a href="#60a">Return to article</a>

<a name="61">61</a> Id. at 763. <a href="#61a">Return to article</a>

<a name="62">62</a> Id. at 765. <a href="#62a">Return to article</a>

<a name="63">63</a> Id. <a href="#63a">Return to article</a>

<a name="64">64</a> Id. at 767. <a href="#64a">Return to article</a>

<a name="65">65</a> Id. The Sixth Circuit recognized that the state could decline to assert its interest in the res in the bankruptcy court, in which case the debtor would still need to convince the
court that repayment of the loan would constitute undue hardship. <a href="#65a">Return to article</a>

<a name="66">66</a> 357 F.3d 1055 (9th Cir. 2004). See, also, In re Mayes, 294 B.R. 145, 157-60 (10th Cir. 2003 (McFeeley, J., dissenting)) (§106 abrogates tribal sovereign immunity); In re Vianese,
195 B.R. 572, 575 (Bankr. N.D.N.Y. 1995) (stating in dicta that §106 abrogated sovereign immunity of Indian tribes). <a href="#66a">Return to article</a>

<a name="67">67</a> 357 F.3d at 1061. <a href="#67a">Return to article</a>

<a name="68">68</a> Id. at 1056. <a href="#68a">Return to article</a>

<a name="69">69</a> Id. <a href="#69a">Return to article</a>

<a name="70">70</a> Id. But, see In re Mitchell, 209 F.3d at 1121 (Congress did not act within scope of abrogation power in enacting §106). <a href="#70a">Return to article</a>

<a name="71">71</a> Krystal Energy Co. v. Navajo Nation, 357 F. 3d at 1056. <a href="#71a">Return to article</a>

<a name="72">72</a> Id. <a href="#72a">Return to article</a>

<a name="73">73</a> Id. <a href="#73a">Return to article</a>

<a name="74">74</a> Id. at 1057. The Ninth Circuit noted that as a governmental unit, Indian tribes are afforded special protection under the Bankruptcy Code. <a href="#74a">Return to article</a>

<a name="75">75</a> Id. at 1058. <a href="#75a">Return to article</a>

<a name="76">76</a> 124 S. Ct. 1905 (2004). In his dissent, Justice Thomas notes that the Supreme Court granted certiorari "to decide whether Congress has the authority to abrogate state sovereign
immunity under the Bankruptcy Clause." Id. at 1915. <a href="#76a">Return to article</a>

<a name="77">77</a> Id. at 1908. <a href="#77a">Return to article</a>

<a name="78">78</a> Id. at 1908-09. <a href="#78a">Return to article</a>

<a name="79">79</a> Id. at 1909. <a href="#79a">Return to article</a>

<a name="80">80</a> Id. <a href="#80a">Return to article</a>

<a name="81">81</a> Id. at 1910. <a href="#81a">Return to article</a>

<a name="82">82</a> Id. <a href="#82a">Return to article</a>

<a name="83">83</a> Id. <a href="#83a">Return to article</a>

<a name="84">84</a> Id. <a href="#84a">Return to article</a>

<a name="85">85</a> Id. at 1911. <a href="#85a">Return to article</a>

<a name="86">86</a> Id. The Supreme Court also dismissed TSAC's procedural argument that an adversary proceeding was an impermissible suit against the state. Id. at 1914. The Supreme Court
concluded that the complaint and summons could easily have been a motion but for Bankruptcy Rule 7001(b), and therefore there was no reason to give dispositive effect to the
service of a summons. Id. at 1915. <a href="#86a">Return to article</a>

<a name="87">87</a> Id. at 1912. <a href="#87a">Return to article</a>

<a name="88">88</a> Id. at 1913. <a href="#88a">Return to article</a>

Journal Authors

Michael J. Lichtenstein

Journal Date

Thursday, July 1, 2004 - 12:00

Bankruptcy Rule

2004