Court Opinion

ID: 9703763
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:07:11.135157+00
Date Added: 2024-06-11T18:21:51.563026
License: Public Domain

MCFEELEY, Chief Judge,
Dissenting.
I respectfully dissent. While I agree with the majority that a lien avoidance proceeding under 11 U.S.C. § 522(f)1 is a suit that implicates sovereign immunity, I disagree with the majority on the issue of whether § 106(a) abrogates the sovereign immunity of an Indian tribe in a bankruptcy proceeding. I believe that, as manifest in the language of the statute and the maxims of statutory construction, as well as the policies that guide the Bankruptcy Code and underlie the Constitution, Congress intended to abrogate the sovereign immunity of Indian tribes and legitimately did so in § 106(a).
As a preliminary matter I observe that I disagree with the majority’s statement that the Appellant waived the issue of whether 106(a) abrogated the sovereign immunity of the Cherokee Nation by not raising it in his briefs. The Appellant’s appeal is focused on whether an Indian tribe can claim sovereign immunity in a § 522(f) proceeding. His argument is constructed as follows: (1) bankruptcy courts have jurisdiction over lien avoidance proceedings under § 522(f); (2) lien avoidance proceedings are not suits; (3) sovereign immunity is not implicated in proceedings that are not suits; therefore, (4) sovereign immunity is not implicated in a § 522(f) proceeding. Whether a lien avoidance procedure is a suit for sovereign immunity purposes necessitates an exploration of what constitutes a suit under the sovereign immunity doctrine and concurrently, the parameters of that doctrine.2 It is an issue that is reviewed de novo.3 In this case, we have the obligation to consider whether the sovereign immunity of an Indian tribe has been abrogated with respect to individual bankruptcy proceedings before we consider whether a lien avoidance action brought pursuant to § 522(f) is a suit under the sovereign immunity doctrine.
“An Indian Tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity.”4 I agree with the majority’s conclusion that the Cherokee Nation did not waive its sovereign immunity in these proceedings. However, I disagree with the majority’s determination that Congress did not explicitly abrogate the sovereign immunity of Indian tribes in § 106(a). The test for abrogation of an Indian tribe’s sovereign immunity is the same as the test applied to *158the States:5 1) the abrogation must be explicit; and 2) Congress must have the power to do so.6
The Supreme Court has held that any abrogation of an Indian tribe’s sovereign immunity must be clear and unequivocal.7 There is little case law delineating what constitutes a clear and unequivocal abrogation of sovereign immunity.8 Some cases in this circuit hinge on whether the phrase “Indian tribe” is used in the examined legislation for determining whether the sovereign immunity of the tribe has been waived.9 Other cases have not required that same specificity.10
Some courts have inferred from this case law that a Congressional waiver of Indian sovereign immunity occurs only when the phrase “Indian tribe” is somewhere within the statute at issue.11 Because the Bankruptcy Code never specifically mentions “Indian tribes” in § 106(a) or in the corresponding definition statute § 101(27), the majority concludes that Congress did not mean to abrogate the sovereign immunity of Indian tribes. In reaching its conclusion, the majority fails to take into consideration statutory maxims of construction as well as the historical status of Indian tribes in this country.
Section 101(27) defines “governmental unit”- and so delineates the parameters of the abrogation established by Congress in § 106(a). At the end of the statute, following a semicolon, is the phrase “or other foreign and domestic government^.]”12 Some courts have found that this phrase is applicable to “Indian tribes.”13 I agree.
The word “domestic” means “pertaining, belonging, or relating to a home, a domi*159cile, or to the place of birth, origin, creation or transaction.”14 A government is “that form of fundamental rules and principles by which a nation or state is governed, or by which individual members of a body politic are to regulate their social actions.”15 So a domestic government would be a group within the lands of the United States that operates through some form of ruhng principles. The main body of § 101(27)16 embraces virtually every form of domestic government including, municipalities, States and their instrumen-talities, and the federal government.17 After exaihining the statute, the question remains: To what does the phrase following the semicolon “other ... domestic government” refer?
An important statutory maxim of interpretation requires a court to give operative effect to every word Congress used.18 Because in § 101(27) all other forms of domestic government prior to the semicolon are enumerated, if the phrase following the semicolon is not read as referring to Indian tribes and other indigenous peoples, the phrase becomes meaningless. There are no other forms of domestic government that have not already been specified.
Reading “other ... domestic government” as referring to Indian tribes is not without precedent. Historically, Indian tribes have also been called “domestic dependent nations” by both the judiciary and the executive branch.19 The Supreme Court has characterized Indian tribes as “domestic dependent nations.”20 And a recent Executive Order interpreting the Indian Self Determination and Education Assistance Act, 25 U.S.C. § 450 et seq., characterized Indian tribes as “domestic dependent nations.”21 The fact that Indian* tribes have been referred to as “domes*160tic dependent nations” incorporates them into § 106(a). If an Indian tribe is a “domestic dependent nation” then it is also an “other ... domestic government.”
Finally, it seems ludicrous that Congress would abrogate virtually every potential claimant to sovereign immunity and not include Indian tribes, when bankruptcy law sets out not only to regulate bankruptcy but to make it uniform. Which brings us to the issue of whether § 106(a) is constitutional with respect to Indian tribes. The majority did not address this question.
Indian tribes do have the common-law immunity from suit traditionally enjoyed by sovereign powers.22 While an Indian tribe retains some measure of sovereign immunity, that immunity is limited and may be divested by Congress.23 Congress’s plenary power with respect to Indians clearly gives Congress the power to abrogate Indian sovereign immunity in the Bankruptcy Code. Even in the absence of the Congressional plenary power over Indian tribes, the Constitutional instruction to establish uniform bankruptcy laws would be enough to give Congress the authority to abrogate Indian sovereign immunity.
Pursuant to the Constitution, Congress is directed to establish “uniform laws on the subject of Bankruptcies throughout the United States.”24 The word “uniform” is of particular importance. A statute will be “uniform in its operation when it operates equally upon all persons who are brought within the relations and circumstances provided for; when all persons under the same conditions and in the same circumstances are treated alike and classification is reasonably and naturally inherent in the subject matter.”25 When the Constitution directs Congress to establish uniform laws, the Constitution commands Congress to establish a set of bankruptcy laws of equal applicability to all parties. If this section were read to permit Congress only to make laws, and not abrogate the sovereign immunity of other governments, such as Indian tribes, Congress could not fulfill its constitutional mandate to make uniform the laws because some entities would be treated differently.
Several appellate courts including a panel of this Court disagree with this premise.26 They have limited the constitutional dictates in art. I, § 8, cl. 4, by interpreting that section as empowering Congress *161only to legislate and not to enforce bankruptcy laws.27 On this basis, these courts have concluded that Congress cannot abrogate the sovereign immunity of the states. By contrast, recently, in Hood v. Tennessee Student Assistance Corp., 319 F.3d 755 (6th Cir.2003), the Sixth Circuit found that § 106(a) was a valid abrogation of state sovereign immunity based on a constitutional compact between the states as expressed through the Constitution’s uniformity requirement.
In Hood, after examining the Federalist Papers and early Supreme Court deei-sions, the Constitution, and the ratification debates, the Sixth Circuit reasoned that the Eleventh Amendment only restored, not changed, the assumption at the Constitutional Convention that the states would have certain immunities and would not have others.28 Thus, because the Eleventh Amendment was the restoration of an already existing agreement, the Sixth Circuit determined that the Eleventh Amendment could not and did not disturb the structure of other compacts entered into during the Constitutional Convention.29 One such compact was that Congress could make “uniform” laws over bankruptcy and *162naturalization.30 The Sixth Circuit concluded that this grant was one of exclusive jurisdiction, and in entering this agreement, the states ceded their sovereign immunity.31
I agree with the Sixth Circuit’s reasoning in Hood. Although, as observed above, the sovereign immunity of an Indian tribe is not coextensive with that of a State, there are similar policy implications at stake. Bankruptcy should provide a single federal forum to ensure uniform procedural treatment for every type of claimant.32 Uniformity cannot be achieved where the laws do not have general applicability.33 Creating a distinction between regulation and legislation with respect to the states creates exactly what bankruptcy laws seek to avoid, preferences.34 If a state does not waive its immunity, it may get paid first and very likely to the exclusion of other creditors.
In the absence of any kind of uniformity requirement, not only are states preferred, but they will have no accountability. For example, when an individual files under one of the chapters in the bankruptcy code, the automatic stay goes into effect.35 With certain exceptions, not relevant here, all actions to “collect, assess, or recover a claim against the property of the debtor” *163are stayed.36 Violations of the automatic stay are subject to the jurisdiction of the bankruptcy court.37 However, what happens if a state violates the automatic stay? If the bankruptcy court has no subject matter jurisdiction over the state because of its sovereign immunity, then no federal court can enforce the law. The state is free to proceed in its own courts. There can be no power to regulate without its twin power to enforce.
Some commentators have suggested that bankruptcy laws can be enforced through the Ex parte Young Doctrine.38 There are courts that have agreed with this theory, reasoning that because bankruptcy courts are courts of equity and their orders are declaratory, that in the absence of the subject matter jurisdiction to proceed against the state, a debtor may proceed against state officers.39 While this theory is attractive, it does not really address the uniformity requirement in the Constitution.40 It merely veils the issue.
The uniformity requirement of the bankruptcy clause arose in a specific historical context. Prior to the Constitution, states regulated bankruptcy. States could and did imprison debtors.41 The laws were different from state to state.42 The bankruptcy clause was meant to address this situation by bringing bankruptcy into the federal realm and creating a national uniform law.43 However, if states or Indian tribes do not have to submit to the federal law, if their liens cannot be avoided, if there is no means of regulating whether states or Indian tribes observe bankruptcy law, then there is no national law. While some states may waive their sovereign immunity, others will not. While some states may honor the federal law, others will not. In the absence of judicial recognition that the uniformity requirement in the Constitution mandates that Congress has the right to abrogate the sovereign immunity of all governments operating within the United States, we will be back at our *164historical starting point. For these reasons, I would reverse the decision of the bankruptcy court and remand with instructions to avoid the lien of the Cherokee Nation if the bankruptcy court found that the other requirements of § 522(f) were, established.

. Future statutory references are to Title 11 of the United States Code unless otherwise noted.

. See Osage Tribal Council v. United States Dep’t of Labor, 187 F.3d 1174, 1180 n. 1 (10th Cir.1999) (stating "[t]he issue of whether immunity is validly asserted arguably precedes the issue of whether Congress has abrogated immunity.”).

. Nelson v. La Crosse County Dist. Atty (In re Nelson), 301 F.3d 820, 825 (7th Cir.2002).

. Kiowa Tribe v. Manufacturing Tech., 523 U.S. 751, 754, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998).

. In Seminole Tribe v. Florida, 517 U.S. 44, 55, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), the Supreme Court stated that a statute attempting to abrogate the States’ sovereign immunity will pass constitutional muster only if Congress has unequivocally expressed its intent to abrogate the immunity and if Congress has acted pursuant to a valid exercise of power.

. Kiowa Tribe, 523 U.S. at 754, 118 S.Ct. 1700.

. Id. at 759, 118 S.Ct. 1700; Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978).

. Osage, 187 F.3d at 1181.

. See, e.g., id. at 1182 (finding that Congress waived tribal sovereign immunity from suit under the whistle blower provision of Safe Drinking Water Act when, in establishing a uniform national scheme of regulation of the universal subject of drinking water, it granted agency jurisdiction over all "persons,” defined "persons” to include "municipality,” and defined "municipality” to include "Indian tribes.”).

. See Jicarilla Apache Tribe v. Andrus, 687 F.2d 1324, 1339 n. 11 (10th Cir.1982) (finding that tribal sovereign immunity did not preclude the application of laches and similar defenses to the tribe's National Environmental Policy Act claims on the grounds that the concerns addressed by NEPA do not relate to the rights of Indians per se, but instead advance substantive goals for the nation as a whole by "essentially procedural” requirements).

. In re National Cattle Congress, 247 B.R. 259, 267 (Bankr.N.D.Iowa 2000).

. 11 U.S.C. § 101(27).

. Turning Stone Casino v. Vianese (In re Vianese), 195 B.R. 572, 576 (Bankr.N.D.N.Y.1995); In re Sandmar Corp., 12 B.R. 910, 916 (Bankr.D.N.M.1981) (finding that an Indian tribe was a governmental unit under the § 101 definition in effect). See also In re Greene, 980 F.2d 590, 597-98 (9th Cir.1992) (assuming without deciding that Indian tribes ' were governmental units for the purposes of the version of § 106 then in effect); Warfield v. Navajo Nation (In re Davis Chevrolet, Inc.), 282 B.R. 674, 683 n. 5 (Bankr.D.Ariz.2002) (stating in a footnote that “[i]t seems to this court that ‘other domestic government’ is broad enough to encompass Indian tribes.”)

. Black’s Law Dictionary 434 (5th ed.1979).

. Id. at 625.

. Section 101(27) defines governmental unit as "United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency or instrumentality of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.” 11 U.S.C. § 101(27).

. Section 101(40) further defines a municipality as "political subdivision or public agency or instrumentality of a State.” 11 U.S.C. § 101(40). State is further defined to include "the District of Columbia and Puerto Rico, except for the purpose of defining who may be a debtor under Chapter 9 of this title.” 11 U.S.C. § 101(52).

. Walters v. Metropolitan Educ. Enters., 519 U.S. 202, 208, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997).

. 41 AmJur.2d Indians § 8 also refers to Native American tribes as domestic dependent nations.

. Oklahoma Tax Comm’n v. Citizen Band Potawatomi Indian Tribe, 498 U.S. 505, 509, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991) (quoting Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 8 L.Ed. 25 (1831)).

. See Executive Order No. 13,175, 65 Fed. Reg. 67,249 (Nov. 6, 2000). Section 2 delineates the fundamental principles of the Executive Order and provides in pertinent part:
In formulating or implementing policies that have tribal implications, agencies shall be guided by the following fundamental principles
(a) The United States has a unique legal relationship with Indian tribal governments as set forth in the Constitution of the United States, treaties, statutes, Executive Orders, and court decisions. Since the formation of the Union, the United States has recognized Indian tribes as domestic dependent nations under its protection. The Federal Government has enacted numerous statutes and promulgated numerous regulations that establish and define a trust relationship with Indian tribes.
(b) Our Nation, under the law of the United States, in accordance with treaties, statutes, Executive Orders, and judicial *160decisions, has recognized the right of Indian tribes to self-government. As domestic dependent nations, Indian tribes exercise inherent sovereign powers over their members and territory. The United States continues to work with Indian tribes on a government-to-government basis to address issues concerning Indian tribal self-government, tribal trust resources, and Indian tribal treaty and other rights.
Id., 65 Fed.Reg. at 67249.

. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. 1670.

. United States v. Wheeler, 435 U.S. 313, 323, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978) ("The sovereignty that the Indian tribes retain is of a unique and limited character. It exists only at the sufferance of Congress and is subject to complete defeasance.").

. U.S. Const, art. I, § 8, cl. 4.

. Black's Law Dictionary 1373 (5th ed.1979).

. See, e.g., Nelson, 301 F.3d at 826-34; Mitchell v. Franchise Tax Board (In re Mitchell), 209 F.3d 1111, 1118-21 (9th Cir.2000); Sacred Heart Hosp. v. Commonwealth of Pa. Department of Pub. Welfare (In re Sacred Heart Hospital), 133 F.3d 237, 243 (3d Cir.1998); Department of Transp. & Dev. v. PNL Asset Mgmt. Co. LLC. (In re Fernandez), 123 F.3d 241, 242-45 (5th Cir.1997), amended by 130 F.3d 1138, 1139 (5th Cir.1997); Schlossberg v. State of Md. Comptroller of Treasury (In re Creative Goldsmiths), 119 F.3d 1140, 1145-46 (4th Cir.1997); see Straight v. Wyoming Dep't of Transp. (In re Straight), 248 B.R. 403, 416-21 (10th Cir. BAP 2000).

. In Seminole the Supreme Court stated:
Even when the Constitution vests in Congress complete law-making authority over a particular area, the Eleventh Amendment prevents congressional authorization of suits by private parties against unconsent-ing States. The Eleventh Amendment restricts the judicial power under Article III, and Article I cannot be used to circumvent the constitutional limitations placed upon federal jurisdiction.
517 U.S. at 72-73, 116 S.Ct. 1114 (footnote omitted). In Alden v. Maine, the Supreme Court admitted that Congress had the authority to directly regulate a state through its Article I powers. Alden v. Maine, 527 U.S. 706, 754, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999). Reasoning from Seminole and Alden, many courts have concluded that Congress cannot waive a State’s sovereign immunity under any of its Article I powers.

. Hood, 319 F.3d at 763-67.

. Id. This reasoning has been called the "plan of the Convention theory.” See Nelson, 301 F.3d at 833 n. 15. The Supreme Court recently used the term "plan of the Convention” in Alden, 527 U.S. at 713, 119 S.Ct. 2240, when it stated that the states had absolute immunity except to the extent that it was "altered by the plan of the Convention....” The phrase is important as it originates from The Federalist No. 81, where Alexander Hamilton explained:
It is inherent in the nature of sovereignty not to be amenable to the suit of an individual WITHOUT ITS CONSENT. This is the general sense, and the general practice of mankind; and the exemption, as one of the attributes of sovereignty, is now enjoyed by the government of every State in the Union. Unless, therefore, there is a surrender of this immunity in the plan of the of the convention, it will remain with the States....
The Federalist No. 81, at 422 (Alexander Hamilton) (George W. Carey & James McClellan eds., 2001) (emphasis in original). Further in the text, Hamilton cross-references The Federalist No. 32 when he states: "The circumstances which are necessary to produce an alienation of State sovereignty were discussed in considering the article of taxation, and need not be repeated here.” Id. Hamilton discusses taxation in The Federalist No. 32. There he states that there are three exemptions to state sovereign immunity. One of those exemptions may be found in Congress’s authority " 'to establish an UNIFORM RULE of naturalization throughout the United States.’ This must necessarily be exclusive; because if each State had power to prescribe a DISTINCT RULE, there could not be a UNIFORM RULE.” The Federalist No. 32, at 155 (Alexander Hamilton) (emphasis in original). However, the reason for the cross-reference is unclear. As several commentators have observed, it is difficult to understand the purpose of the cross-reference because The Federalist No. 81 and the Federalist No. 32 are talking about different aspects of sovereignty. The former refers to a State's sovereign immunity from suit, the latter is discussing the federal government's legislative and regulatory power. It is in the ambiguity between the two cross-references *162that the differences arise between those who subscribe to the plan of the Convention theory or the uniformity theory and those who subscribe to the geographic theory discussed infra.

. Hood, 319 F.3d at 763.

. Id. at 767. The uniformity theory expressed in Hood was first articulated by Leonard H. Gerson in a law review article. See Leonard H. Gerson, A Bankruptcy Exception to Eleventh Amendment Immunity: Limiting the Seminole Tribe Doctrine, 74 Am. Bankr. L.J. 1 (2000). The first bankruptcy court to adopt it was Bliemeister v. Industrial Comm'n (In re Bliemeister), 251 B.R. 383 (Bankr.D.Ariz.2000). But see Nelson, 301 F.3d at 833 (rejecting this argument on the grounds that there is nothing in Article I indicating that the States consented to being sued in the bankruptcy court).

. See Jonathan C. Lipson, Fighting Fiction with Fiction — The New Federalism in (a Tobacco Company) Bankruptcy, 78 Wash. U.L.Q. 1271, 1333-36 (2000). See also Ralph Bru-baker, On the Nature of Federal Bankruptcy Jurisdiction: A General Statutory and Constitutional Theory, 41 Wm. & Mary L.Rev. 743 (2000). Brubaker observes:
[BJankruptcy "law,” for the most part, functions not to create distinct federal grounds for recovery or relief, but to create an alternative means for enforcing existing substantive rights, most of which are grounded in state law. The historical role of bankruptcy has been to provide a centralized mechanism for collection of a debt- or’s assets and distribution of those asserts among all of the debtor's creditors, and in our Anglo-American experience, bankruptcy’s centralized collection-distribution function has been administered as a judicial process. Thus, it is perfectly logical to conclude that congressional power to enact uniform national bankruptcy "laws” necessarily, and even primarily, envisions the power to place adjudication of all disputes incident to administering bankruptcy estates in federal court.
Id. at 807-08 (footnotes omitted).

. In Fernandez the majority noted that the uniformity requirement was one only of geography. 123 F.3d at 244 (quoting Vanston Bondholders Protective Comm. v. Green, 329 U.S. 156, 172, 67 S.Ct. 237, 91 L.Ed. 162 (1946)(Frankfurter, J., concurring)). Hood observes that relying on Justice Franklin's concurrence is inconsistent with the majority opinion in Vanston. Hood, 319 F.3d at 763. Pursuant to the majority opinion in Vanston, "federal courts must do more than treat state laws uniformly; federal courts must enforce federal bankruptcy law.” Id.

. See Begier v. IRS, 496 U.S. 53, 58, 110 S.Ct. 2258, 110 L.Ed.2d 46 (1990) (stating "Equality of distribution among creditors is a central policy of the Bankruptcy Code.”).

. See 11 U.S.C. § 362.

. 11 U.S.C. § 362(a)(6).

. 11 U.S.C. § 362(h).

. Ralph Brubaker, Of State Sovereign Immunity and Prospective Remedies: The Bankruptcy Discharge as Statutory Ex parte Young Relief, 76 Am. Bankr.L.J. 461, 563 (2002). Brubaker argues that a bankruptcy discharge order is a prospective declaratory and injunc-tive decree that fulfills “both the function and form of permissible Ex parte Young relief against state officials.” Id. at 467. He rejects the uniformity theory on the grounds that it suffers from overbreadth and is not consistent with our historical traditions. Id. at 478-83.

. See, e.g., Goldberg v. Ellett (In re Ellett), 254 F.3d 1135, 1146-47 (9th Cir.2001) (finding that the Ex parte Young doctrine gives a bankruptcy court the power to enforce its orders).

. As the Supreme Court has observed, the Ex parte Young Doctrine is a fiction. Idaho v. Coeur d’Alene Tribe, 521 U.S. 261, 269-70, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997); Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 88 L.Ed.2d 371 (1985). Basically the Ex parte Young Doctrine skirts the issue of a state’s sovereign immunity by abrogating it through the back door by implicating state officials.

. Brubaker, supra note 38, at 507.

. Bliemeister, 251 B.R. at 390-91. Bliemeister observes:
Indeed, some states had passpd private acts to relieve individual debtors, which raised sovereignty questions when applied to creditors from other states and undoubtedly led to the concern for uniformity. Consequently bankruptcy law, and particularly the discharge, was very much an issue involved with states’ sovereignty, because it was a limitation on the power of the sovereign to imprison debtors and punish traitors, or to grant individual relief.
Id. (citation omitted).

. Brubaker, supra note 38, at 510 n. 206.