This week, the Sixth Circuit Court of Appeals issued a decision in a case relating to the Greektown Casino bankruptcy, which was originally filed over a decade ago.  Buchwald Capital Advisors, LLC v. Sault Ste Marie Tribe of Chippewa Indians; Kewadin Gaming Authority,Nos. 18-1165/1166 (February 26, 2019).  The split decision of the Court affirmed a lower court ruling holding that sovereign immunity applies to the Sault Ste. Marie Tribe of Chippewa Indians and the Kewadin Tribal Gaming Authority with respect to an attempt by a bankruptcy litigation trustee who was seeking avoidance and recovery related to conveyances made by the Tribe and Kewadin in 2005 totaling $177 Million. Greektown Casino subsequently filed for bankruptcy in April of 2008.

The bankruptcy court initially denied the Tribe’s motion to dismiss, finding that Congress had abrogated tribal sovereign immunity in the Bankruptcy Code.  The Tribe appealed to the District Court which reversed, holding that Congress had not abrogated tribal sovereign immunity.   The District Court remanded the case to the bankruptcy court to decide whether the tribe had waived its sovereign immunity.  The bankruptcy court granted the Tribe’s motion to dismiss finding that the Tribe’s conduct had been insufficient to waive sovereign immunity, since the tribal law required an express board resolution, since there had been no implied waiver, and since filing of a bankruptcy petition is not a waiver.   The Trustee appealed the decision to the District Court which affirmed it.  The Sixth Circuit decision affirmed the District Court, thus finding that sovereign immunity applied.

A key issue in the case was the interpretation of Section 106 of the Bankruptcy Code, which states that “sovereign immunity is abrogated as to a governmental unit. . .”  Section 101(27) of the Code defines “governmental unit” to include a long list of governmental entities “or other foreign or domestic government”.   The Trustee claimed that these provisions abrogated sovereign immunity for a tribe.  The Court analyzed the case and noted that “The real question is whether Congress --- when it employed the phrase ‘other foreign or domestic government’ ---unequivocally expressed an intent to abrogate tribal sovereign immunity”.  The Court found that merely finding that Tribes are “domestic” and “governments” is not enough to say that Congress clearly, unequivocally, and unmistakably expressed its intent to include Indian tribes.   “While it is true that Congress need not use ‘magic words’ to abrogate tribal sovereign immunity, it still must unequivocally express that purpose,” citing FAA v. Cooper, 566 U.S. 284, 290-91 (2012).


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