WASHINGTON (CN) — The Supreme Court gave poor odds Monday to a Chippewa tribe being sued by a man who says he tried to kill himself after being hounded over an unpaid loan with a 108% annual interest rate.
Arguing for the Lac du Flambeau Band of Lake Superior Chippewa tribe’s attorney, attorney Pratik Shah with Akin Gump says tribes retain sovereign immunity under U.S. bankruptcy law because they are not enumerated when the law describes foreign or domestic governments as having waived immunity.
“The code provision specifying the governmental units whose immunity is abrogated section names individually the United States, states and foreign states as well as the departments, agencies and instrumentalities thereof, followed by a residual clause ‘or other foreign or domestic government.’ That definition, like the bankruptcy code more broadly, does not refer to Indian tribes, specifically,” Shah emphasized this morning in Washington.
Justice Elena Kagan squinted at Shah's distinction.
“I think that the difficulty for you is, aren't you really making it into a magic words requirement?” she prodded.
Justice Clarence Thomas likewise pushed the attorney on whether he thinks Congress needed to specify “tribe” in the text.
“Can you think of any other governmental unit that would be required to be named specifically as you seem to suggest to tribes would have to be?” Thomas asked the lawyer.
Shah's Chippewa clients were sued by a man who took out a loan for $1,100 from the tribe's payday-loan operation Lendgreen in July 2019.
Because the annual interest rate on he loan was 107.9%, Brian Coughlin’s debt had grown to $1,600 by the end of the year and he filed for bankruptcy. For most creditors, this move would trigger an automatic stay that requires them to petition a bankruptcy court for the amount of the debt. The Chippewa never filed a claim, however, and proceeded to bombard Coughlin with collection calls and emails nearly every day.
Coughlin, who suffers from clinical depression, tried to kill himself and was hospitalized. After he recovered, he sued the tribe for violating the bankruptcy court's automatic stay, demanding that it pay his medical bills, his lost sick leave and vacation time, and $87,000 in emotional damages.
Kellogg Hansen attorney Gregory Rapawy spoke for the consumer Monday, arguing that the law's reference to domestic governments encompasses tribes “because they are subject to the authority of and within the territory of the United States.”
“You have heard from the band that, if Congress had meant tribes it would have used the particular word tribes, but Congress can speak clearly in more than one way,” Rapawy told the justices.
Justice Samuel Alito asked Lendgreen’s attorney about the stress Coughlin described in his opposition brief.
“Do you dispute the facts that are set out in respondent’s brief ... that even after he filed the bankruptcy petition, and notified Lendgreen that he had done so, they continued to contact him, and he attempted to commit suicide," Alito pressed. "And even when he was in the hospital after this unsuccessful attempt, they were calling him at the hospital to collect this loan?”
Shah said the tribe had not responded to this as the case has not made it past the motion-to-dismiss stage.
Justice Neil Gorsuch meanwhile posed what he called “a silly hypothetical," analogous to the bankruptcy rule.
“Let's say I invite you to go to my refrigerator and take out either vanilla or chocolate ice cream and help yourself," Gorsuch said. "Does that license you to take the last scoop of the chocolate-vanilla swirl ice cream in a separate container? Maybe one with a note on it that says ‘reserved for a later birthday?’”
Rapawy replied that a swirl ice cream would be off the menu since it's both vanilla and chocolate.
“I would understand as your guest I would be bound to read that 'or' as exclusive, one or the other, but not something with characteristics of both," he said. "But in the bankruptcy code, ‘or’ is not exclusive. And so if it has characteristics of both, it's still included."
Justice Jackson presented tough questions for both sides, telling Shah that he seemed to be "asking for a special separate rule that preserves the sovereign immunity of tribes in a circumstance in which Congress has clearly indicated that it wants to abrogate the sovereign immunity of governments."
Later, she asked Rapawy: “Why shouldn't we require a clear indication that Congress actually considered the tribes? They clearly considered other entities and having not considered supposedly, or maybe, tribes, why isn't that just dispositive of the clear statement issue?”
Justice Amy Coney Barrett asked Shah if Congress wasn’t intentionally vague in the clause.
“It looks to me like an effort to cover the waterfront,” Barrett said Monday. “We have to have a clear statement rule, but if you if you have a description at the end, that's a catchall. That seems to me like to you have to say that domestic and foreign means neither here nor there.”
While a federal judge in Massachusetts initially granted the tribe's motion to dismiss, the First Circuit reinstated Coughlin's case after oral arguments in fall 2021.
Lendgreen petitioned the high court the following year.
“‘Domestic government’ is not a phrase clearly understood to encompass tribes, and, as the Seventh Circuit has explained (in holding that an analogous abrogation provision lacks the requisite clarity), this Court has never upheld an abrogation of tribal sovereign immunity absent at least some mention of Indian tribes in the statutory text,” Shah and co-counsel wrote.
The U.S. Department of Justice backed Coughlin at arguments Monday.
“Congress chose those words to stress the breadth and comprehensiveness of its chosen definition,” Assistant to the U.S. Solicitor General Austin Raynor told the court of the Bankruptcy Code’s wording.
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