Nos. 18-1165, 18-1166 UNITED STATES COURT OF APPEALS FOR ... · KEWADIN CASINOS GAMING AUTHORITY,...

Nos. 18-1165, 18-1166

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

IN RE: GREEKTOWN HOLDINGS, LLC

Debtor,

_________________________________

BUCHWALD CAPITAL ADVISORS, LLC,LITIGATION TRUSTEE TO THE GREEKTOWN LITIGATION TRUST,

PLAINTIFF-APPELLANT,

V.

SAULT STE. MARIE TRIBE OF CHIPPEWA INDIANS;

KEWADIN CASINOS GAMING AUTHORITY,

APPELLEES.

Appeals from the United States District Court for the Eastern District of Michigan, Southern Division, Case Nos. 14-cv-14103,

16-cv-13643, Hon. Paul D. Borman

BRIEF OF APPELLEES SAULT STE. MARIE TRIBE OF CHIPPEWA INDIANS AND KEWADIN CASINOS GAMING AUTHORITY

Grant S. Cowan FROST BROWN TODD LLC 3300 Great American Tower 301 East Fourth Street Cincinnati, Ohio 45202 (513) 651-6800 (513) 651-6981 (facsimile) [email protected]

Counsel for Appellees Sault Ste. Marie Tribe of Chippewa Indians and Kewadin Casinos Gaming Authority

Case: 18-1165 Document: 23 Filed: 05/24/2018 Page: 1

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CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1 and Sixth Circuit Rule

26.1, Appellees Sault Ste. Marie Tribe of Chippewa Indians and Kewadin Casinos

Gaming Authority make the following disclosure:

1. Is said party a subsidiary or affiliate of a publicly owned corporation?

No.

2. Is there a publicly owned corporation, not a party to the appeal, that has a financial interest in the outcome?

No.

/s/ Grant S. Cowan Grant S. Cowan



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TABLE OF CONTENTS

PAGE

CORPORATE DISCLOSURE STATEMENT ......................................................... i

TABLE OF CONTENTS ......................................................................................... ii

TABLE OF AUTHORITIES .................................................................................... vi

INTRODUCTION ..................................................................................................... 1

STATEMENT OF THE ISSUES............................................................................... 4

STATEMENT OF THE CASE .................................................................................. 5

I. Statement of Facts and Procedural History ........................................... 5

A. Rulings on Congressional Abrogation ............................................ 7

B. Rulings on Alleged Tribe Waiver.................................................. 8

SUMMARY OF ARGUMENT ............................................................................... 10

STANDARD OF REVIEW ..................................................................................... 12

ARGUMENT ........................................................................................................... 13

I. CONGRESS DID NOT ABROGATE TRIBAL SOVEREIGN IMMUNITY IN SECTION 106 OF THE BANRUPTCY CODE ...... 13

A. When Congress Enacted Section 106 of the Bankruptcy Code, It Knew That to Abrogate Tribal Immunity, It Must Unequivocally Express That Intent and It Knew That Indian Tribes Are Considered Different Than Foreign and Domestic Governments ........................................ 13

B. Congress Considers Indian Tribes to be Different than Domestic Governments ............................................................. 17


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C. Congress Knows How to Unequivocally Express Its Intent to Abrogate Tribal Sovereign Immunity ........................ 18

D. Numerous Courts Have Held That Congress Did Not Unequivocally Express Its Intent to Abrogate Tribal Sovereign Immunity in Section 106 of the Bankruptcy Code .......................................................................................... 21

E. The Trustee Tries to Shoehorn Indian Tribes into the Term Domestic Governments ................................................... 24

F. The Trustee’s Statutory Context Argument is Wrong Because the Bankruptcy Code’s Definition of “Entity” Uses the Term “Includes” Rather than “Means” ...................... 26

G. The Term “Indian Tribe” is not a Special or Magic Term ....... 28

II. THE TRIBE DID NOT WAIVE ITS TRIBAL SOVEREIGN IMMUNITY, BY LITIGATION CONDUCT OR OTHERWISE ..... 30

A. The Tribe’s Tribal Code Provides that Tribal Sovereign Immunity Can Only be Waived by Formal Board Resolution ................................................................................. 30

B. Cases Involving Waiver of a State’s Eleventh Amendment Immunity Are Not Applicable to Indian Tribes......................................................................................... 33

C. Even If the Tribe Itself Had Filed for Bankruptcy Protection, Instead of the Debtors, the Tribe Would Not Have Waived its Tribal Immunity as to the Trustee’s Adversary Proceeding ............................................................... 36

D. No Court Has Found Waiver of Tribal Sovereign Immunity by Litigation Conduct Under Facts Even Remotely Similar to Those in This Case .................................. 40

E. The Trustee’s Reliance on Central Virginia Community College v. Katz Is Misplaced .................................................... 41


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F. The Trustee’s Reliance on First National City Bank v. Banco Para is Misplaced ........................................................... 43

CONCLUSION ........................................................................................................ 45

CERTIFICATION OF COMPLIANCE .................................................................. 46

CERTIFICATE OF SERVICE ................................................................................ 47

DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS .............. 48


v

TABLE OF AUTHORITIES

CASES PAGE(S)

Allen v. Gold Country Casino, 464 F.3d 1044 (9th Cir. 2006) ............................... 44

Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 105 S.Ct. 3142, 87 L.Ed.2d 171 (1985) ...................................................................................................... 16, 29, 30

Blatchford v. Native Village of Noatak, 501 U.S. 775, 115 L.Ed.2d 686, 111 S.Ct. 2578 (1991) .............................................................................................. 42

Blue Legs v. U.S. Bureau of Indian Affairs, 867 F.2d 1094 (8th Cir. 1989) .......... 19

Boaz v. FedEx Customer Info. Servs., Inc., 725 F.3d 603 (6th Cir. 2013) ............. 13

Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011 (9th Cir. 2016) .................................................................................................... 34, 35

Bull v. United States, 295 U.S. 247, 55 S.Ct. 695, 79 L.Ed. 1421 (1935) .............. 39

Burgess v. United States, 553 U.S. 124, 128 S.Ct. 1572, 170 L.Ed.2d 478 (2008) ....................................................................................................................... 27

C & L Enterprises v. Potawatomi Indian Tribe (2001) 532 U.S. 411, 121 S.Ct. 1589 ............................................................................................................... 29, 31

Central Virginia Community College v. Katz, 546 U.S. 356 (2006) ................ 41, 42

Cherokee Nation v. Georgia, 5 Pet. 1, 17, L.Ed.25 (1831)...................................... 24

Contour Spa at the Hard Rock, Inc. v. Seminole Tribe of Florida, 692 F.3d 1200 (11th Cir. 2012) ................................................................................................... 35

Danka Funding Company, LLC v. Sky City Casino, 329 N.J. Super. 357, 747 A.2d 837 (1999) ........................................................................................... 33

Dellmuth v. Muth, 491 U.S. 223, 109 S.Ct. 2397 (1989) .................................. 16, 30


vi

DRFP L.L.C. v. Republica Bolivariana de Venezuela, 622 F.3d 513 (6th Cir. 2010) ..................................................................................................... 12

FAA v. Cooper, 132 S.Ct. 1441 (2012) ................................................................... 29

First National City Bank v. Banco Para El Commercio Exterior de Cuba, 462 U.S. 611, 77 L.Ed.2d 46, 103 S.Ct. 2591 (1983) ........................................ 43

Florida Paraplegic Assn. v. Miccosukee Tribe of Indians of Florida, 166 F.3d 1126 (11th Cir. 1999) ............................................................................................. 18, 20

Frederick v. United States, 386 F.2d 481 (5th Cir.1967) .................................. 39, 40

Gardner v. New Jersey, 329 U.S. 566 (1947) .............................................. 33, 35, 36

In re Greektown Holdings, LLC, 532 B.R. 680 (E.D. Mich. 2015) .................. 21, 28

In re Greektown Holdings, LLC, 728 F.3d 567 (6th Cir. 2013) ................................ 7

In re Hood, 319 F.3d 755 (6th Cir. 2003) ................................................................ 42

In re Mayes, 294 B.R. 145 (10th Cir. BAP 2003) ................................................... 21

In re Money Centers of America, Inc. 2018 WL 1535464 (D. Del. March 29, 2018) .................................................................................... 22

In re Nat’l Cattle Cong., 247 B.R. 259 (Bankr. N.D. Iowa 2000) ........................... 21

In re Seay, 244 B.R. 112 (Bankr. E.D. Tenn. 2000) ................................................ 36

In re Star Group Communications, Inc., 568 B.R. 616 (Bankr. D.N.J. 2016) ........ 21

In re Whitaker, 474 B.R. 687 (8th Cir. BAP 2012) ..................................... 21, 22, 23

In re White, 139 F.3d 1268 (9th Cir. 1998) ............................................................. 36

Jicarilla Apache Tribe v. Andrus, 687 F.2d 1324 (10th Cir. 1982) ......................... 38

Kiowa Tribe of Oklahoma v. Mfg. Techs., Inc., 523 U.S. 751, 118 S. Ct. 1700, 140 L. Ed. 2d 981 (1998) ............................................................................ 3-4, 31


vii

Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055 (9th Cir. 2004), cert. denied, 543 U.S. 871, 125 S.Ct. 99, 160 L.Ed.2d 118 (2004)................................... 21, 23

Lapides v. Board of Regents of University System of Georgia, 535 U.S. 613 (2002) ................................................................................................................. 33, 34

Memphis Biofuels, LLC v. Chickasaw Nation Indus., Inc., 585 F.3d 917, (6th Cir. 2009) ............................................................................... 2, 11, 31, 32, 33

Merck & Co. v. Reynolds, 559 U.S. 633, 130 S.Ct. 1784, 176 L.Ed.2d 582 (2010) .................................................................................................................. 13

Meyers v. Oneida Tribe of Indians of Wisconsin, 836 F.3d 818 (7th Cir. 2016) .............................................................................18, 21, 25, 26, 28

Michigan v. Bay Mills Indian Community, ––– U.S. ––––, 134 S.Ct. 2024, 188 L.Ed.2d 1071 (2014) ....................................................................................... 1, 24

Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 105 S. Ct. 2399, 85 L. Ed. 2d 753 (1985) ...................................................................................... 16

Narragansett Indian Tribe v. Rhode Island, 449 F.3d 16 (1st Cir. 2006) .......... 13, 29

Native American Distributing v. Seneca-Cayuga Tobacco Company, 546 F.3d 1288 ..................................................................................................... 32

Northern States Power Co. v. Prairie Island Mdewakanton Sioux Indian Community, 881 F.2d 458 (8th Cir. 1993) ......................................................... 20

Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 111 S. Ct. 905, 112 L. Ed. 2d 1112 (1991)

.......................................................................................... 3, 12, 16, 24, 34, 37, 38

Osage Tribal Council ex rel. Osage Tribe of Indians v. U.S. Dep't of Labor, 187 F.3d 1174 (10th Cir. 1999) ................................................................................. 19

Public Service Co. v. Shoshone-Bannoc Tribes, 30 F.3d 1203 (9th Cir. 1994) ...... 20

Quinault Indian Nation v. Pearson, 868 F.3d 1093 (9th Cir. 2017) ........................ 38


viii

Rosebud Sioux Tribe v. Val-U Construction Co. of South Dakota, Inc., 50 F.3d 560 (8th Cir. 1995) .............................................................................................. 38

Rupp v. Omaha Indian Tribe, 45 F.3d 1241 (8th Cir. 1995) ............................. 40, 41

Sanderlin v. Seminole Tribe of Florida, 243 F.3d 1282 (11th Cir. 2001) ............... 32

Santa Clara Pueblo v. Martinez, 436 U.S. 49, 98 S.Ct. 1670 (1978) ........................................................................................................... 14, 15, 25, 33

Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440, 124 S. Ct. 1905, 158 L. Ed. 2d 764 (2004) .................................................................................... 42

Three Affiliated Tribes of Ft. Berthold v. Wold Engineering, 476 U.S. 877, 90 L.Ed.2d 881, 106 S.Ct. 2305 (1986) .......................................................... 4, 33

United States v. Agnew, 423 F.2d 513 (9th Cir. 1970) ........................................... 39

United States v. Kagama, 118 U.S. 375, 6 S. Ct. 1109, 30 L. Ed. 228 (1886) ........ 24

United State v. Latham, 754 F.2d 747 (7th Cir. 1985) ............................................ 27

United States v. Neyland, No. 97–3044, 1998 WL 381364 (6th Cir. June 25, 1998) ...................................................................................... 39

United States v. Oregon, 657 F.2d 1009 (9th Cir. 1981) ......................................... 41

United States v. United States Fid. & Guar. Co., 309 U.S. 506, 60 S.Ct. 653, 84 L.Ed. 894 (1940) ............................................................................ 3, 12, 14, 37

United States v. Weddell, 12 F. Supp. 2d 999 (D.S.D. 1998), 187 F.3d 645 (8th Cir. 1999) ...................................................................................................... 20

United States v. Whiting, 165 F.3d 631 (8th Cir. 1999) .......................................... 27

Ute Indian Tribe of the Uintah & Ouray Reservation v. Utah, 790 F.3d 1000 (10th Cir. 2015) ............................................................................................................ 39

Wichita and Affiliated Tribes of Okla. v. Hodel, 788 F.2d 765 (D.C. 1986) .......... 41


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World Touch Gaming, Inc. v. Massena Management, LLC, 117 F.Supp.2d 271 (N.D.N.Y. 2009) ................................................................................................. 32

OTHER AUTHORITIES CITED:

Bankruptcy Reform Act of 1978, Public Law 95-598 ............................................. 13

Bankruptcy Reform Act of 1994, Public Law 103-394 ........................................... 16

7 U.S.C. § 8310 ........................................................................................................ 17

11 U.S.C. § 106 ......................................................................... 13, 15, 16, 21, 22, 23

11 U.S.C. § 106(a) ..................................... 1, 2, 3, 4, 8, 10,13, 14, 15, 21, 22, 23, 42

11 U.S.C. § 101(10) ................................................................................................. 27

11 U.S.C. § 101(27) .......................................................................4, 8, 10, 13, 15, 26

11 U.S.C. § 544 .......................................................................................................... 6

15 U.S.C. § 1681a(b) ............................................................................................... 25

25 U.S.C. §§ 1301-1303 .......................................................................................... 14

28 U.S.C. §§ 1602-1611 .......................................................................................... 44

28 U.S.C. § 3002(7) ........................................................................................... 19-20

28 U.S.C. § 3002(10) ......................................................................................... 19-20

42 U.S.C. § 300j-9(i)(2)(a) ...................................................................................... 19

42 U.S.C. § 300f(10) ................................................................................................ 19

42 U.S.C. § 300f(12) ................................................................................................ 19

42 U.S.C. § 6903(13) ............................................................................................... 19


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42 U.S.C. § 6903(15) ............................................................................................... 19

42 U.S.C. § 6972(a)(1)(A) ....................................................................................... 19

42 U.S.C. § 8802(17) ............................................................................................... 18

42 U.S.C. § 9601(16) ............................................................................................... 17

49 U.S.C.App. § 1811(c)(1) ..................................................................................... 20

49 U.S.C.App. § 1811(c)(2) ..................................................................................... 20


1

INTRODUCTION

Indian tribes are immune from suit unless Congress has abrogated tribal

immunity in clear, unequivocal statutory language. The Supreme Court recently

reemphasized that (a) Indian tribes are “domestic dependent nations;” (b) Indian

tribes retain a “special brand of sovereignty;” (c) the “baseline position” for

Congressional abrogation of tribal immunity is that Congress must “unequivocally

express” that purpose; and (d) “courts will not lightly assume that Congress in fact

intends to undermine Indian self-government.” Michigan v. Bay Mills Indian

Community, ––– U.S. ––––, 134 S.Ct. 2024, 188 L.Ed.2d 1071 (2014) (quotations

and citations omitted).

Plaintiff-Appellant Buchwald Capital Advisors LLC, solely in its capacity as

Litigation Trustee for the Greektown Litigation Trust (the “Trustee”), filed suit

against Appellees the Sault Ste. Marie Tribe of Chippewa Indians (“Tribe”) and the

Tribe’s political subdivision, Kewadin Casinos Gaming Authority (“Kewadin”),

seeking to recover $177 million in alleged fraudulent transfers that the Trustee

claims were made to or for the benefit of the Tribe.1 Recognizing that the Tribe

enjoys tribal sovereign immunity, the Trustee contends that Congress abrogated

tribal sovereign immunity in Section 106(a) of the Bankruptcy Code. However,

1For simplicity, this brief generally uses “Tribe” to refer to both the Tribe and Kewadin.


2

the Bankruptcy Code nowhere mentions Indian tribes and thus the Trustee is

forced to argue that Congress intended to include Indian tribes in the term

“domestic government” in Section 106(a). Yet, the Supreme Court has never

found Congressional abrogation of tribal sovereign immunity in a statute that does

not specifically refer to Indian tribes. Thus, accepting the Trustee’s conclusion

requires inferring that Congress intended to abrogate tribal sovereign immunity,

but inferring Congressional abrogation of tribal immunity is not permitted under

Supreme Court jurisprudence. This is especially so given that Congress has

demonstrated in other legislation that it knows how to abrogate tribal sovereign

immunity, by specifically referring to Indian tribes when it intends that result.

In addition to Congressional abrogation, Indian tribes can waive their tribal

immunity, but only if they do so clearly. This Court has held that “a tribe may

choose to expressly waive its tribal-sovereign immunity either in its charter or by

agreement.” Memphis Biofuels, LLC v. Chickasaw Nation Indus., Inc., 585 F.3d

917, 921 (6th Cir. 2009). The Tribe’s tribal code requires a formal board

resolution to waive the Tribe’s immunity from suit. It is undisputed that no such

resolution exists in this case, and under Biofuels, the Tribe has not waived its tribal

sovereign immunity.

Nevertheless, the Trustee contends that the Tribe waived its tribal immunity

by “litigation conduct.” The Trustee contends that the Tribe effectively controlled


3

the debtors in the underlying bankruptcy proceedings and, by causing them to file

for bankruptcy protection, the Tribe waived its tribal immunity as to the adversary

proceeding brought by the Trustee. But, under Supreme Court precedent, even if

the Tribe itself had filed the bankruptcy petition, doing so would not have waived

its tribal immunity as to the fraudulent transfer claims brought by the Tribe. The

Supreme Court has consistently held that even when an Indian tribe files suit, it

does not waive its tribal immunity as to cross-claims and counterclaims seeking

damages. United States v. United States Fid. & Guar. Co., 309 U.S. 506, 511–12,

60 S.Ct. 653, 655–656, 84 L.Ed. 894 (1940); Oklahoma Tax Comm'n v. Citizen

Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 509–10, 111 S. Ct.

905, 909, 112 L. Ed. 2d 1112 (1991).

Thus, because Congress has not abrogated tribal immunity under Section

106(a) of the Bankruptcy Code, and because the Tribe has not waived its tribal

immunity as to the claims brought by the Trustee, the Tribe is immune from suit

and the district court correctly and properly dismissed the Trustee’s claims against

the Tribe.2

2 The Supreme Court appears to use the terms “tribal immunity” and “tribal sovereign immunity” interchangeably. So too will this Brief. See Kiowa Tribe of Oklahoma v. Mfg. Techs., Inc., 523 U.S. 751, 756, 118 S. Ct. 1700, 1703-1074,

(footnote continued on next page)


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STATEMENT OF ISSUES

1. Did Congress unequivocally and unmistakably express its intent to abrogate

the sovereign immunity of Indian tribes in clear language in 11 U.S.C. § 101(27)

and 11 U.S.C. § 106(a), which do not refer to Indian tribes?

2. Did the Tribe clearly express its intent to waive its tribal sovereign immunity

as to the fraudulent transfer claims brought by the Litigation Trustee, thus

consenting to the adversary proceeding and the claims asserted therein?

(footnote continued from previous page) 140 L. Ed. 2d 981 (1998); Three Affiliated Tribes of Ft. Berthold v. Wold Engineering, 476 U.S. 877, 892, 90 L.Ed.2d 881, 106 S.Ct. 2305, 2314 (1986).


5

STATEMENT OF THE CASE

I. Statement of Facts and Procedural History

On May 29, 2008, Greektown Holdings, LLC (“Holdings”), Greektown

Casino, and several other entities (collectively “Debtors”) filed for protection

under Chapter 11 of the Bankruptcy Code. Complaint, RE 5, ¶ 9, Page ID # 523.

The Tribe filed Notices of Appearance in the Debtors’ bankruptcy proceedings and

proofs of claims against two of the Debtors. Id., ¶¶ 27, 30, Page ID # 54. On

January 22, 2010, the bankruptcy court entered an order confirming the Debtors’

joint plans for reorganization (“Confirmation Order”). Id., ¶ 13, Page ID # 52.

The Confirmation Order specifically provides that neither the Tribe nor Kewadin

“shall be deemed or construed to have waived, released or relinquished their right

to defend and attack any [bond avoidance] claim on all possible procedural and/or

substantive grounds.” Order Confirming Second Amended Joint Plans, RE 2046

(No. 08-53104), Page 59 of 61 (this document does not have Page ID #s).

On May 28, 2010, the Trustee filed an adversary proceeding complaint

against the Tribe and others, seeking to avoid certain alleged fraudulent transfers

made by Holdings in 2005 to the Tribe and the other defendants. According to the

Trustee’s complaint, Greektown Casino opened in downtown Detroit, Michigan in

3 Except as otherwise indicated, record citations refer to the record in District Court Case No. 16-cv-13643.


6

November 2000. Complaint, RE 5, ¶ 32, Page ID # 55. Holdings was formed in

September 2005 in connection with the refinancing of the debt of Greektown

Casino and at the time it was formed, Holdings’ sole asset was its membership

interests in Greektown Casino. Id., ¶ 35. On December 2, 2005, Holdings and a

subsidiary issued $185 million of senior notes (the “Notes”). Although the Tribe

only received $6 million of the proceeds of the Notes offering, the Trustee alleged

that another $171 million of the Notes proceeds were transferred to other entities

and individuals to keep the Tribe from losing its interest in the Greektown Casino,

and thus those transfers were made “for the benefit of” the Tribe and are

recoverable from the Tribe. Id., ¶ 43, 51-53, Page ID # 57-59.

The Trustee alleged that when Holdings made the transfers of the Notes

proceeds, it received less than reasonably equivalent value and was rendered

insolvent. Id., ¶¶ 60-61, Page ID #60. The Trustee claimed that the transfers were

avoidable pursuant to Section 544 of the Bankruptcy Code and Michigan’s

Uniform Fraudulent Transfer Act, and recoverable from the Tribe pursuant to

Section 550 of the Bankruptcy Code. Id., ¶ 63 Page ID # 61. The Trustee’s

complaint seeks to recover $177 million from the Tribe.

The Tribe filed a motion to dismiss, seeking dismissal of the Trustee’s

complaint because the claims were barred by the Tribe’s sovereign immunity.

Motion to Dismiss, RE 5, Page ID # 87-116. On December 23, 2010, the


7

bankruptcy court entered an Order, upon the stipulation of the parties, bifurcating

the hearing on the Tribe’s motion to dismiss. Pursuant to that Order, the

bankruptcy court agreed to first consider and rule upon the legal issue of whether

Congress abrogated the Tribe’s sovereign immunity by enacting Section 106 of the

Bankruptcy Code. Order Upon Stipulation, RE 5, Page ID # 189-192 (the

bankruptcy court thus held in abeyance the issue of whether the Tribe and Kewadin

“consensually waived their sovereign immunity.”).

A. Rulings on Congressional Abrogation

On August 13, 20144, the bankruptcy court denied the Tribe’s motion to

dismiss. Opinion Denying Renewed Motion to Dismiss, RE 1 (No. 14-cv-14103),

Page ID ## 29-47. The bankruptcy court held that Congress abrogated sovereign

immunity as to a “governmental unit,” which term is defined to include a

“domestic government,” and because—the court concluded—Indian tribes are both

domestic and governments, Congress expressed its “clear, unequivocal, and

unambiguous intent to abrogate tribal sovereign immunity.” Id., RE 1, Page ID #

43. The Tribe appealed the decision to the district court.

4 Although the parties argued the motion to dismiss in December 2010, the Bankruptcy Court had not ruled on the Tribe’s motion to dismiss as of 2012. In 2012, the Tribe and the Trustee entered into a settlement agreement, but the settlement bar order was overturned by this Court and the adversary proceeding was reopened. See In re Greektown Holdings, LLC, 728 F.3d 567 (6th Cir. 2013).


8

On June 9, 2015, the district court reversed, concluding that it could not “say

‘with perfect confidence’ that Congress intended, by using the generic phrase

‘other domestic governments’ in § 101(27), to clearly, unequivocally,

unmistakably and without ambiguity abrogate tribal sovereign immunity in §

106(a).” Opinion and Order Reversing Bankruptcy Court Order, RE 5, Page ID #

203. The district court noted that “[t]here is not a single example of a Supreme

Court decision finding that Congress intended to abrogate the sovereign immunity

of the Indian tribes without specifically using the words ‘Indians’ or ‘Indian

tribes.’” RE 5, Page ID # 225. The district court remanded the case to the

bankruptcy court to determine if the Tribe had waived its tribal sovereign

immunity.

B. Rulings on Alleged Tribe Waiver

On September 29, 2016, the bankruptcy court granted the Tribe’s motion to

dismiss on the waiver issues, finding that the Tribe had not waived its tribal

sovereign immunity. Opinion on Remanded Sovereign Immunity Waiver Issue,

RE 5, Page ID ## 444-465. Noting that the Tribe had not passed a board resolution

waiving tribal sovereign immunity as to the claims at issue (as required under the

Tribe’s governing tribal code to waive sovereign immunity), nor had the Tribe

entered into any relevant contract waiving sovereign immunity, the bankruptcy

court concluded that any litigation conduct of the Tribe in connection with the


9

bankruptcy proceedings was insufficient to waive the Tribe’s sovereign immunity.

Id., RE 5, Page ID ## 446-447, 449-450. The bankruptcy court further ruled that

(a) even if the Tribe had actually or effectively filed the Debtors’ petition, doing so

would not waive “tribal sovereign immunity as to an adversary proceeding

subsequently filed” against the Tribe; and (b) even if the Debtors had acted as alter

egos and agents of the Tribe, their conduct could not waive tribal immunity

because “any such waiver…must by its nature be considered ‘implied’ and that

would be legally insufficient.” Id., RE 5, Page ID ## 455-456, 463-464.

The Trustee appealed to the district court and on January 23, 2018, the

district court affirmed. Opinion and Order Affirming Bankruptcy Court Opinion

and Order, RE 16, Page ID ## 710-745. The district court rejected the Trustee’s

“novel theory of implied waiver,” which theory was based on doctrines of alter-ego

piercing and/or agency and would “necessarily require a finding of liability by

implication.” Id. RE 16, Page ID # 744.

This appeal followed.


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SUMMARY OF ARGUMENT

I. Indian tribes are “domestic dependent nations” that exercise inherent

sovereign authority over their members and territories. Suits against Indian tribes

are thus barred by sovereign immunity absent a clear waiver by the tribe or

congressional abrogation.

A. Statutes are to be construed liberally in favor of the Indians, with

ambiguous provisions interpreted to their benefit.

B. To abrogate tribal sovereign immunity, Congress must express that

purpose in clear and unequivocal statutory language. A waiver of tribal

sovereign immunity cannot be implied and an inference will not suffice. A

court must be able to say with “perfect confidence” that Congress intended

to abrogate tribal sovereign immunity.

C. Congress did not abrogate tribal sovereign immunity in 11 U.S.C. §

106(a), which purports to abrogate sovereign immunity as to any

“governmental unit,” which term is defined in 11 U.S.C. § 101(27) to

include a “domestic government.” Congress never mentioned Indian tribes

in Section 106(a), Section 101(27), or anywhere else in the Bankruptcy

Code. To conclude that Congress intended to include Indian tribes in the

term “domestic government” would require an inference, which is not


11

permitted in determining whether Congress abrogated tribal sovereign

immunity.

D. Numerous courts have held that where Congress does not mention or

refer to Indian tribes in a statute purporting to abrogate tribal sovereign

immunity, the required clear and unequivocal expression of Congressional

abrogation is absent.

E. Courts have found Congressional abrogation of tribal sovereign

immunity where Congress does specifically refer to Indian tribes in the

statute at issue. But, the Supreme Court has never found Congressional

abrogation of tribal sovereign immunity in a statute that does not specifically

refer to Indian tribes.

II. As with Congressional abrogation of tribal sovereign immunity, a tribe’s

waiver of its tribal immunity must be expressed in clear terms. Thus, “a tribe may

choose to expressly waive its tribal-sovereign immunity either in its charter or by

agreement.” Memphis Biofuels, LLC v. Chickasaw Nation Indus., Inc., 585 F.3d

917, 921 (6th Cir. 2009).

A. It is undisputed that the Tribe’s tribal code requires any purported

waiver of tribal sovereign immunity to be by a formal resolution, approved

by the Tribe’s board of directors. It is further undisputed that no such

resolution was approved waiving the Tribe’s sovereign immunity as to the


12

claims asserted against it by the Trustee. Accordingly, the Tribe did not

waive its tribal sovereign immunity in this case.

B. Even if the Tribe had filed for bankruptcy protection—as opposed to

the Debtors—such “litigation conduct” would not amount to a waiver of

tribal sovereign immunity as to the fraudulent transfer claims filed against

the Tribe in the Trustee’s adversary proceeding. The Supreme Court has

consistently held that an Indian tribe does not waive its sovereign immunity

from actions that could not otherwise be brought against it merely because

those actions were pleaded in a cross-claim or counterclaim to an action

filed by the tribe. United States v. United States Fidelity & Guaranty Co.,

309 U.S. 506, 511–12, 60 S.Ct. 653, 655–56, 84 L.Ed. 894 (1940);

Oklahoma Tax Comm'n v. Citizen Band Potawatomi Indian Tribe of

Oklahoma, 498 U.S. 505, 509–10, 111 S. Ct. 905, 909, 112 L. Ed. 2d 1112

(1991).

STANDARD OF REVIEW

The Court reviews questions of subject matter jurisdiction, including issues

of sovereign immunity, de novo. DRFP L.L.C. v. Republica Bolivariana de

Venezuela, 622 F.3d 513, 515 (6th Cir. 2010).


13

ARGUMENT

I. CONGRESS DID NOT ABROGATE TRIBAL SOVEREIGN IMMUNITY IN SECTION 106 OF THE BANKRUPTCY CODE

A. When Congress Enacted Section 106 of the Bankruptcy Code, It Knew That to Abrogate Tribal Immunity, It Must Unequivocally Express That Intent and It Knew That Indian Tribes Are Considered Different Than Foreign and Domestic Governments

This Court “presume[s] that Congress is aware of the law (including judicial

precedent) relevant to legislation it enacts.” Boaz v. FedEx Customer Info. Servs.,

Inc., 725 F.3d 603, 607 (6th Cir. 2013), citing Merck & Co. v. Reynolds, 559 U.S.

633, 130 S.Ct. 1784, 1795, 176 L.Ed.2d 582 (2010) (“We normally assume that,

when Congress enacts statutes, it is aware of relevant judicial precedent.”);

Narragansett Indian Tribe v. Rhode Island, 449 F.3d 16, 26 (1st Cir. 2006) (“[W]e

must presume that Congress acts with knowledge of relevant Supreme Court

precedent.”). Congress is thus presumed to have acted with knowledge of the

Supreme Court’s pronouncements concerning Congressional abrogation of tribal

sovereign immunity when it passed the Bankruptcy Reform Act of 1978, Public

Law 95-598 (the “Bankruptcy Code”).

The Trustee contends that Congress clearly and unequivocally expressed its

intent to abrogate tribal sovereign immunity in the Bankruptcy Code in Sections

101(27) and 106(a). Thus, the starting point is the Supreme Court pronouncements


14

concerning tribal sovereign immunity as of the time that Congress first passed, and

later amended, Section 106(a).

Prior to Congress’s enactment of the Bankruptcy Code, the Supreme Court

had decided two landmark cases concerning tribal sovereign immunity and Indian

tribes in general. In 1940, in United States v. U. S. Fid. & Guar. Co., 309 U.S.

506, 512–13, 60 S. Ct. 653, 656–57, 84 L. Ed. 894 (1940), the court recognized

that Indian Nations are unique, “with their unusual governmental organization and

peculiar problems,” and that they “are exempt from suit without Congressional

authorization.” Id. (emphasis added). In 1978, just six months before Congress

enacted the Bankruptcy Code, the Supreme Court decided Santa Clara Pueblo v.

Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670 (1978). The court was called upon to

determine whether Title I of the Indian Civil Rights Act of 1968 (ICRA), 25

U.S.C. §§ 1301-1303, may be interpreted to impliedly authorize suits against

Indian tribes for declaratory or injunctive relief to enforce the provisions of the

ICRA. Santa Clara, 436 U.S. at 52-53. In concluding that Congress had not

abrogated tribal immunity in the ICRA, the Santa Clara court said (a) Indian tribes

are “‘distinct, independent political communities, retaining their original natural

rights’ in matters of local self-government;’” (b) “[a]lthough no longer ‘possessed

of the full attributes of sovereignty,’ they remain a ‘separate people, with the

power of regulating their internal and social relations;’” (c) “tribes remain quasi-


15

sovereign nations which, by government structure, culture, and source of

sovereignty are in many ways foreign to the constitutional institutions of the

federal and state governments;” and (d) it is “settled that a waiver of sovereign

immunity ‘cannot be implied but must be unequivocally expressed.’” Santa Clara,

436 U.S. at 55, 58, 71-72 (citations omitted) (emphasis added).

With these Supreme Court pronouncements in mind, Congress enacted

Section 106 of the Bankruptcy Code, the provision by which the Trustee contends

Congress unequivocally and unmistakably expressed its intent to abrogate the

tribal sovereign immunity of Indian tribes in clear statutory language. Section 106

purports to abrogate sovereign immunity for certain claims asserted against a

“governmental unit,” which is defined in Section 101(27) to mean “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), 106(a).

The Bankruptcy Code does not refer to Indian tribes, in Section 101(27) or

Section 106(a) or anywhere else in the Code.

Congress amended the Bankruptcy Code several times after its 1978

enactment, doing so after the Supreme Court issued decisions that further


16

highlighted the need for Congress to make clear its intent to abrogate tribal

immunity in any legislation seeking to do so. In 1985, the Supreme Court held that

to abrogate states’ sovereign immunity, Congress must make its intention

“unmistakably clear in the language of the statute.” Atascadero State Hospital v.

Scanlon, 473 U.S. 234, 242, 105 S.Ct. 3142, 3147, 87 L.Ed.2d 171 (1985)

(emphasis added). That same year, the Supreme Court recognized that “statutes

are to be construed liberally in favor of the Indians, with ambiguous provisions

interpreted to their benefit.” Montana v. Blackfeet Tribe of Indians, 471 U.S. 759,

766, 105 S. Ct. 2399, 2403, 85 L. Ed. 2d 753 (1985). In 1989, the Supreme Court

reminded Congress that, only when it can be said with “perfect confidence” that

Congress intends to abrogate sovereign immunity, will such immunity be

abrogated. Dellmuth v. Muth, 491 U.S. 223, 231, 109 S.Ct. 2397 (1989) (emphasis

added). Two years later, in 1991, the Supreme Court again reminded Congress

that Congressional abrogation of tribal sovereign immunity must be clear and may

not be implied. Okla. Tax Comm’n v. Citizen Band Potawatomi Tribe of Okla.,

498 U.S. 505, 509, 111 S.Ct. 905 (1991) (“Suits against Indian tribes are thus

barred by sovereign immunity absent a clear waiver by the tribe or congressional

abrogation.”). With these Supreme Court pronouncements in mind, in 1994,

Congress amended the Bankruptcy Code, significantly expanding Section 106.

Bankruptcy Reform Act of 1994, PL 103–394, October 22, 1994, 108 Stat 4106.


17

Yet, Congress once again chose not to include the term “Indian tribes” in the

definition of “governmental unit,” nor did it mention Indian tribes anywhere in the

significant amendments made to the Bankruptcy Code.

B. Congress Considers Indian Tribes to be Different than Domestic Governments

In various legislation, Congress has drawn a distinction between Indian

tribes and domestic governments. For example, the provisions of the Animal

Health Protection Act provide that, to “carry out this subtitle, the Secretary may

cooperate with other Federal agencies, States or political subdivisions of States,

national governments of foreign countries, local governments of foreign countries,

domestic or international organizations, domestic or international associations,

Indian tribes, and other persons.” 7 U.S.C. § 8310 (emphasis added). Similarly,

the Comprehensive Environmental Response, Compensation, and Liability Act

(CERCLA) provides that the term "natural resources" means “land, fish, wildlife,

biota, air, water, ground water, drinking water supplies, and other such resources

belonging to, managed by, held in trust by, appertaining to, or otherwise controlled

by the United States …, any State or local government, any foreign government,

any Indian tribe, or, if such resources are subject to a trust restriction on

alienation, any member of an Indian tribe.” 42 U.S.C. § 9601(16) (emphasis

added). Likewise, in the definition section of the Biomass Energy and Alcohol

Fuels Act, Congress defined the term “person” to mean “any individual, company,


18

cooperative, partnership, corporation, association, consortium, unincorporated

organization, trust, estate, or any entity organized for a common business purpose,

any State or local government (including any special purpose district or similar

governmental unit) or any agency or instrumentality thereof, or any Indian tribe

or tribal organization.) 42 U.S.C. § 8802(17) (emphasis added).

What these statutes demonstrate is that (a) Congress considers Indian tribes

different than and separate from state and local governments (i.e., domestic

governments) and (b) when Congress seeks to include Indian tribes in a statute that

also involves federal, state, and local governmental units, it does so by specifically

referring to Indian tribes.

C. Congress Knows How to Unequivocally Express Its Intent to Abrogate Tribal Sovereign Immunity

In various legislation, “Congress has demonstrated that it knows how to

unequivocally abrogate immunity for Indian tribes.” Meyers v. Oneida Tribe of

Indians of Wisconsin, 836 F.3d 818, 827 (7th Cir. 2016); Florida Paraplegic Assn.

v. Miccosukee Tribe of Indians of Florida, 166 F.3d 1126, 1132 (11th Cir. 1999)

(“Congress comprehends the need to address Indian tribes specifically and

individually when it describes the means of enforcing statutorily created rights

through judicial action.”).

For example, in the Resource Conservation and Recovery Act of 1976

(“RCRA”), Congress authorized citizens to bring suits to force compliance with


19

the statute “against any person…who is alleged to be in violation” of the statute’s

substantive provisions. Id.; 42 U.S.C. § 6972(a)(1)(A). The definition of “person”

includes a municipality, which in turn encompasses “an Indian tribe” by express

statutory definition. Id.; 42 U.S.C. § 6903(13), (15) (emphasis added). This

specific inclusion of Indian tribes in the statutory definition “clearly indicates

congressional intent to abrogate the Tribe's sovereign immunity with respect to

violations of the RCRA.” Blue Legs v. U.S. Bureau of Indian Affairs, 867 F.2d

1094, 1097 (8th Cir. 1989).

Likewise, the definitional sections of the Safe Water Drinking Act define the

term “person” to include a “municipality,” and “municipality” in turn is defined to

include “an Indian tribe.” 42 U.S.C. §§ 300j-9(i)(2)(a), 300f(10), 300f(12), 42

U.S.C. § 300f(10) (emphasis added). This was sufficient for the Tenth Circuit to

conclude that, “under the express language of the Act, Indian tribes are included

within the coverage of the whistle blower enforcement provisions.” Osage Tribal

Council ex rel. Osage Tribe of Indians v. U.S. Dep't of Labor, 187 F.3d 1174, 1181

(10th Cir. 1999).

Similarly, the Fair Debt Collection Procedures Act defines “person” to

include “a natural person (including an individual Indian), a corporation, a

partnership, an unincorporated association, a trust, or an estate, or any other public

or private entity, including a State or local government or an Indian tribe.” 28


20

U.S.C. §§ 3002((7), 3002 (10) (emphasis added). “Reading these statutory

provisions together, the clear language supports a conclusion that Congress waived

the sovereign immunity of Indian tribes.” United States v. Weddell, 12 F. Supp. 2d

999, 1000 (D.S.D. 1998), aff'd, 187 F.3d 645 (8th Cir. 1999).

Similarly, the Hazardous Materials Transportation Uniform Safety Act of

1990 (“HMTUSA”), repealed in 1994, provided that “[a]ny person, including a

State or political subdivision thereof or Indian tribe, may apply to the Secretary [of

Energy]… for [an administrative] determination of whether that requirement is

preempted by [federal law]. Florida Paraplegic, 166 F.3d at 1132; 49 U.S.C.App.

§ 1811(c)(1). The statute provided that “[n]othing in [this section] prohibits… [a]

person directly affected by any requirement of a State or political subdivision

thereof or Indian tribe, from seeking a determination of preemption in any court

of competent jurisdiction…” Id.; 49 U.S.C.App. § 1811(c)(2) (emphasis added).

This language was held sufficiently clear to manifest Congress’s intent to abrogate

tribal sovereign immunity from suits seeking a declaration of federal preemption

under the HMTUSA of an Indian tribe’s attempt to regulate the transportation of

hazardous substances. Public Service Co. v. Shoshone-Bannoc Tribes, 30 F.3d

1203 (9th Cir. 1994); Northern States Power Co. v. Prairie Island Mdewakanton

Sioux Indian Community, 991 F.2d 458 (8th Cir. 1993).


21

D. Numerous Courts Have Held That Congress Did Not Unequivocally Express Its Intent to Abrogate Tribal Sovereign Immunity in Section 106 of the Bankruptcy Code

The Trustee relies on the Ninth Circuit’s decision in Krystal Energy Co. v.

Navajo Nation, 357 F.3d 1055 (9th Cir. 2004), cert. denied, 543 U.S. 871, 125

S.Ct. 99, 160 L.Ed.2d 118 (2004). The Krystal court concluded that the category

of “Indian tribes” is simply a specific member of the group of domestic

governments, the immunity of which Congress intended to abrogate in Section

106(a) of the Bankruptcy Code. Id. at 1058.

Numerous other federal courts that have considered the question disagree

with Krystal. “These other courts hold that because Indian tribes are not

specifically named in the Bankruptcy Code, a court would have to infer that

Congress intended the phrase ‘other foreign or domestic government’ to

encompass tribes and that such an inference is inappropriate.” Meyers v. Oneida

Tribe of Indians of Wisconsin, 836 F.3d 818, 825 (7th Cir. 2016) (citing In re

Greektown Holdings, LLC, 532 B.R. 680 (E.D. Mich. 2015), In re Whitaker, 474

B.R. 687, 695 (8th Cir. BAP 2012), and In re Nat’l Cattle Cong., 247 B.R. 259,

267 (Bankr. N.D. Iowa 2000)); see also In re Mayes, 294 B.R. 145, 148 n. 10 (10th

Cir. BAP 2003) (Indian tribes are probably not a “domestic government” and

Section 106 likely could not abrogate tribal sovereign immunity); In re Star Group

Communications, Inc., 568 B.R. 616 (Bankr. D.N.J. 2016) (“If Congress had


22

intended to abrogate sovereign immunity to Indian tribes under [§] 106, it could

easily and expressly have done so, but it did not.”); In re Money Centers of

America, Inc. 2018 WL 1535464 (D. Del. March 29, 2018) (“Absent a specific

mention of ‘Indian tribes’ in the Bankruptcy Code, any finding of abrogation under

§ 106(a) necessarily relies on inference or implication, both of which are

prohibited by the Supreme Court…”).

Whitaker involved four adversary proceedings against the Lower Sioux

Indian Community. The tribe contended sovereign immunity protected it from suit

by the trustee. The bankruptcy court and the appellate panel agreed, concluding

that Congress did not abrogate tribal immunity in 11 U.S.C. § 106. The court

framed the issue much as the Trustee has here: “whether, by enacting § 106(a) of

the Bankruptcy Code, Congress unequivocally expressed its intent to abrogate the

sovereign immunity of Indian tribes, in explicit language, by providing for such

abrogation as to ‘other foreign or domestic governments.” Whitaker, 474 B.R. at

692. The Whitaker court noted that courts have found abrogation of tribal

immunity “where Congress has included ‘Indian tribes’ in definitions of parties

who may be sued under specific statutes.” Id. at 691. However, where the

language of a federal statute does not include “Indian tribes” in the definitions of

parties subject to suit or does not specifically assert jurisdiction over “Indian

tribes,” “courts find the statute insufficient to express an unequivocal abrogation of


23

tribal sovereign immunity.” Id. The Whitaker court noted that, even though Santa

Clara (which reaffirmed that abrogation must be unequivocally expressed in the

statutory text) was decided six months before the 1978 Bankruptcy Code was

enacted, Congress did not mention Indian tribes in the statute, nor did it so when it

amended § 106. Whitaker, 474 B.R. at 693, 695 (rejecting Krystal and adhering to

the general principle that statutes are to be interpreted for the benefit of Indian

tribes and inferences like the one made in Krystal are impermissible). The court’s

reasoning in Whitaker is sound and was followed by the district court. Opinion

and Order, RE 15 (14-cv-14103), Page ID ## 1030-1031.

Given the Supreme Court’s decisions that describe Indian tribes as unique

entities that are in many ways different from domestic governments, given

Congress’s use of the term “Indian tribes” in other statutes which also refer to

state, local and domestic governments, and given Congress’s reference to “Indian

tribes” in other legislation where Congress sought to abrogate tribal immunity, it is

clear that Congress would have used the term “Indian tribe” in Section 106(a) if it

intended to include Indian tribes in the definition of a “governmental unit” and to

abrogate tribal sovereign immunity. It did not do so. Accordingly, one cannot say

with “perfect confidence” that Congress intended to abrogate tribal sovereign

immunity in Section 106(a) and therefore, the Court should affirm the district

court’s decision finding no Congressional abrogation in Section 106(a).


24

E. The Trustee Tries to Shoehorn Indian Tribes into the Term Domestic Governments

The Trustee contends that Congress “would have understood the phrase

‘other foreign or domestic government’ to include Indian tribes” and thus “its

intent to abrogate tribal immunity is unambiguous.” (Trustee Appellate Brief, pg.

27). But why would Congress have understood Indian tribes to be a “domestic

government,” when the Supreme Court consistently refers to them as something

else, i.e. “domestic dependent nations.”? See Michigan v. Bay Mills Indian

Community, ––– U.S. ––––, 134 S.Ct. 2024, 2030, 188 L.Ed.2d 1071 (2014)

(“Indian tribes are ‘domestic dependent nations’ that exercise ‘inherent sovereign

immunity.’”), citing Okla. Tax Comm’n v. Citizen Band Potawatomi Tribe of

Okla., 498 U.S. 505, 509, 111 S.Ct. 905 (1991) which quoted Cherokee Nation v.

Georgia, 5 Pet. 1, 17, L.Ed.25 (1831). In fact, the Supreme Court precedent when

Congress enacted the Bankruptcy Code demonstrates that Indian tribes are

considered unique entities that are quite different from “domestic governments”

(e.g., federal and state governments). See e.g. United States v. Kagama, 118 U.S.

375, 381–82, 6 S. Ct. 1109, 1112–13, 30 L. Ed. 228 (1886) (Indian tribes have

always been “regarded as having a semi-independent position when they preserved

their tribal relations; not as states, not as nations, not as possessed of the full

attributes of sovereignty, but as a separate people, with the power of regulating

their internal and social relations, and thus far not brought under the laws of the


25

Union or of the state within whose limits they resided.”) (emphasis added); Santa

Clara, 436 U.S. at 55, 58, 71-72 (“by government structure, culture, and source of

sovereignty [Indian tribes] are in many ways foreign to the constitutional

institutions of the federal and state governments;”) (emphasis added).

The Trustee is impermissibly attempting to shoehorn Indian tribes into the

term “domestic government.” The Seventh Circuit recently rejected a similar

attempt in connection with a putative class action brought under the Fair and

Accurate Credit Transaction Act (“FACTA”). Meyers v. Oneida Tribe of Indians

of Wisconsin, 836 F.3d 818, 827 (7th Cir. 2016). The issue there was whether

Congress abrogated tribal sovereign immunity pursuant to a provision that purports

to waive sovereign immunity as to “any individual, partnership, corporation, trust,

estate, cooperative association, government, or governmental subdivision or

agency, or other entity. Id. at 820, quoting 15 U.S.C. § 1681a(b) (emphasis

added).

The Meyers court began with a review of the long-standing rules of statutory

interpretation involving alleged tribal immunity abrogation, noting that the

“Supreme Court has instructed time and again that if it is Congress’ intent to

abrogate tribal immunity, it must clearly and unequivocally express that purpose”

and “[a]ny ambiguity must be interpreted in favor of sovereign immunity.” Id. at

824. The court said: “Of course Meyers wants us to focus on whether the Oneida


26

Tribe is a government so that we might shoehorn it into FACTA’s statement that

defines liable parties to include ‘any government.’ But when it comes to sovereign

immunity, shoehorning is precisely what we cannot do. Congress’ words must fit

like a glove in their unequivocality.” Id. at 827, citations omitted.

The Trustee cannot cite a single Supreme Court decision that referred to

Indian tribes as “domestic governments” when the Bankruptcy Code was enacted

or when it was amended. Thus, to accept the Trustee’s argument that Congress

would have understood Indian tribes to be domestic governments, the Court must

necessarily conclude that Congress impliedly intended to include Indian tribes in

the term “governmental unit,” as “domestic governments.” But abrogation of tribal

sovereign immunity cannot be implied—it must be unequivocally expressed.

Inference is insufficient to conclude that Congress abrogated tribal sovereign

immunity. This is especially true where Congress has repeatedly demonstrated in

other legislation “that it knows how to unequivocally abrogate immunity for Indian

tribes,” by specifically referring to Indian tribes. Meyers, 836 F.3d at 827.

F. The Trustee’s Statutory Context Argument is Wrong Because the Bankruptcy Code’s Definition of “Entity” Uses the Term “Includes” Rather than “Means”

The Trustee advances another argument, contending that if Indian tribes are

not “governmental unit[s]” within the meaning of Section 101(27), then tribes

could not be “creditors” under the Bankruptcy Code and therefore could not file a


27

proof of claim or request payment of administrative expenses. (Trustee’s Brief, pg.

28-29). But the Trustee’s argument is based on a patently incorrect interpretation

of who can be a creditor under the Bankruptcy Code. The Trustee correctly notes

that the term “creditor” means an “entity” that has one of several types of claims

against a debtor or the debtor’s estate. 11 U.S.C. § 101(10). The Trustee correctly

notes that the term “entity” includes a person, estate, trust, governmental unit, and

United States trustee. The Trustee then incorrectly concludes that, because an

Indian tribe is not a person (which includes an individual, partnership and

corporation) nor an estate, trust or a United States trustee, it must be a

governmental unit.

The problem with the Trustee’s argument lies in the difference between a

statutory definition that uses the term “means” and one that uses the term

“includes.” “When a statute uses the word ‘includes’ rather than ‘means’ in

defining a term, it does not imply that items not listed fall outside the definition.”

United States v. Whiting, 165 F.3d 631, 633 (8th Cir. 1999); United States v.

Latham, 754 F.2d 747, 750 (7th Cir. 1985) (the word “includes” in a statute “is a

term of enlargement not of limitation, and the reference to certain entities or

categories is not intended to exclude all others.”); Burgess v. United States, 553

U.S. 124, 131, n. 3, 128 S.Ct. 1572, 1578 170 L.Ed.2d 478 (2008) (the word

“includes” is usually a term of enlargement and not of limitation).


28

Thus, the Bankruptcy Code’s definition of “person” and “entity” to include

certain types of entities does not mean that Indian tribes are excluded from such

definitions. Those definitions are terms of enlargement, not limitation.

G. The Term “Indian Tribe” is not a Special or Magic Term

The Trustee argues that Congress is not required to use “special” or “magic”

words to express its unequivocal intent to abrogate tribal immunity, and therefore,

to abrogate tribal immunity, Congress need not “refer to ‘Indian tribes’ in so many

words.” (Trustee’s Brief, pgs. 31-34). But the term “Indian tribe” is not a magic

or special term—it is simply the term used by Congress and the Supreme Court to

refer to Indian tribal communities. As the district court in this case correctly

observed, “there is not one example in all of history where the Supreme Court has

found that Congress intended to abrogate tribal sovereign immunity without

mentioning Indian tribes somewhere in the statute.” Opinion and Order, RE 15

(14-cv-14103), Page ID ## 1029-1030 (emphasis in original); see also Meyers v.

Oneida Tribe of Indians of Wisconsin, 836 F.3d 818, 824 (7th Cir. 2016) (quoting

with approval In re Greektown Holdings, LLC, 532 B.R. 680, 693 (E.D. Mich.

2015)).

The cases cited by the Trustee do not suggest otherwise. They concern the

issue of whether the statutory language or the contractual language evidenced a

clear intent to abrogate sovereign immunity—not whether the language clearly


29

identified the party whose sovereign immunity was argued to be waived. FAA v.

Cooper, 132 S.Ct. 1441 (2012) (determining the scope of “actual damages” against

the United States); Narragansett v. Rhode Island, 449 F.3d 16, 24-25 (1st Cir.

2006) (determining whether a settlement act between an Indian tribe and Rhode

Island permitted the state to execute a search warrant on the tribe); C & L

Enterprises v. Potawatomi Indian Tribe (2001) 532 U.S. 411, 420, 121 S.Ct. 1589

(determining that tribe waived sovereign immunity in contract containing

arbitration clause and rejecting the view that a waiver of tribal immunity “is

implicit rather than explicit only if [the] waiver … use[s] the words ‘sovereign

immunity.’”)5.

The cases relied upon by the Trustee should be contrasted with cases where

the Supreme Court has refused to find that Congress intended to abrogate state

sovereign immunity, where Congress fails to clearly and unequivocally refer to

states in the statutory provision purporting to abrogate sovereign immunity. In

Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 105 S.Ct. 3142, 87 L.Ed.2d 171

(1985), the court found that a provision in the Rehabilitation Act of 1973 that

5The C&L Enterprises court noted that the Tribe also argued that its alleged waiver of tribal immunity was invalid because “the members of the Tribe who executed the contract lacked the authority to do so on the Tribe’s behalf.” Id. at 1597, n. 6. The court declined to address that issue because it was not raised below or in the scope of questions on which the court granted review. Id. That issue was raised by the Tribe in this case (see discussion below).


30

permitted suit to be filed against “any recipient of federal assistance,” was

insufficient to express clearly and unequivocally Congress’s intent to abrogate the

sovereign immunity of states—even though it was undisputed that the State of

California was a recipient of federal aid under the statute. Atascadero, 473 U.S. at

245-46 (“When Congress chooses to subject the States to federal jurisdiction, it

must do so specifically.”).

Similarly, in Dellmuth v. Muth, 491 U.S. 223, 109 S.Ct. 2397, 105 L.Ed.2d

181 (1989), the court found insufficient Congressional intent to abrogate states’

immunity in the Education of Children with Handicaps Act (“EHA”). The court

rejected the suggested inference that because the EHA refers often to “states” and

to their important role in effectuating the purpose of the EHA, Congress must have

intended to subject them to suit. Dellmuth, 491 U.S. at 232. The court said that,

although the statutory structure “lends force to the inference that the States were

intended to be subject to damages actions for violations of the EHA,” such a

“permissible inference, whatever its logical force, would remain just that: a

permissible inference” and “not the unequivocal declaration” necessary to

determine that “Congress intended to exercise its powers of abrogation.” Id.

II. THE TRIBE DID NOT WAIVE ITS TRIBAL SOVEREIGN IMMUNITY, BY LITIGATION CONDUCT OR OTHERWISE

A. The Tribe’s Tribal Code Provides that Tribal Sovereign Immunity Can Only be Waived by Formal Board Resolution


31

As a matter of federal law, an Indian tribe is subject to suit only where

Congress has authorized the suit or the tribe has waived its immunity. Kiowa

Tribe of Oklahoma v. Mfg. Techs., Inc., 523 U.S. 751, 754, 118 S. Ct. 1700, 1702,

140 L. Ed. 2d 981 (1998). As with Congressional abrogation of tribal sovereign

immunity, a tribe’s waiver of its tribal immunity must be expressed in clear terms.

C&L Enterprises, 532 U.S. at 418. Thus, “a tribe may choose to expressly waive

its tribal-sovereign immunity either in its charter or by agreement.” Memphis

Biofuels, LLC v. Chickasaw Nation Indus., Inc., 585 F.3d 917, 921 (6th Cir. 2009).

The parties agree that the Tribe’s governing tribal code requires a resolution

of the Tribe’s board of directors expressly waiving the sovereign immunity of the

Tribe. The parties further agree that no such resolution was passed waiving the

Tribe’s sovereign immunity with respect to the claims at issue nor did the Tribe

enter into a contract purporting to waive tribal immunity. (Trustee’s Brief, pg. 16).

Accordingly, under Biofuels, the Tribe did not waive its tribal sovereign immunity

as to the Trustee’s fraudulent transfer claims.

Biofuels involved a contract between Memphis Biofuels and the Chickasaw

tribe which contained a “waiver provision” by which both parties waived all

immunities. Biofuels, 585 F.3d at 922. Biofuels involved the issue of whether a

tribe official is authorized to waive a tribe’s sovereign immunity. In Biofuels, the

Chickasaw tribe’s charter required board approval by written resolution of any


32

waiver of tribal immunities. No such resolution was adopted by the tribe. Despite

the waiver provision in the contract between the parties, this Court concluded that

there was no waiver of tribal immunity because “board approval was not obtained

and [the tribe’s] charter controls.” Id. The same reasoning applies in this case,

even with more force, because there is no contract in this case by which the Tribe

purportedly waived its sovereign immunity.

The plaintiff in Biofuels also argued that the Chickasaw tribe waived its

sovereign immunity based on equitable doctrines. This Court rejected the

equitable waiver argument, concluding that “[the tribe’s] charter controls, and,

without board approval, the waiver in the agreement is insufficient.” Id. In

reaching this decision, the court noted: “Courts have held that unauthorized acts of

tribal officials are insufficient to waive tribal-sovereign immunity.” Id., discussing

Sanderlin v. Seminole Tribe of Florida, 243 F.3d 1282, 1286 (11th Cir. 2001)

(“waivers of tribal sovereign immunity cannot be implied on the basis of a tribe’s

actions, but must be unequivocally expressed.”); Native American Distributing v.

Seneca-Cayuga Tobacco Company, 546 F.3d 1288, 1295 (10th Cir. 2008) (tribal

officers possess no power through their actions to waive tribal immunity); World

Touch Gaming, Inc. v. Massena Management, LLC, 117 F.Supp. 2d 271

(N.D.N.Y. 2009) (tribe’s civil judicial code provided that tribal sovereign

immunity could only be waived by the tribe’s council, in a clear and explicit


33

writing; contract containing waiver of tribal immunity provision not sufficient);

Danka Funding Company, LLC v. Sky City Casino, 329 N.J. Super. 357, 747 A.2d

837, 843 (1999) (“By failing to avail themselves of the procedures for obtaining a

waiver of immunity under tribal law, [Danka] failed to satisfy the conditions

necessary for an unequivocal waiver identified in Santa Clara Pueblo v. Martinez,

436 U.S. at 58, 98 S. Ct. 1670.”).

Thus, Biofuels stands for the proposition that even if the Tribe—through a

tribe official—had entered into a contract purporting to waive tribal immunity or

directed the bankruptcy filing of an affiliated entity, any such conduct by the Tribe

or its officials would be insufficient to waive the Tribe’s tribal immunity unless the

Tribe’s board had approved a resolution waiving tribal sovereign immunity.

B. Cases Involving Waiver of a State’s Eleventh Amendment Immunity Are Not Applicable to Indian Tribes

Attempting to avoid the impact of Biofuels on its tribal immunity waiver

argument, the Trustee relies upon a number of cases involving a waiver of a State’s

Eleventh Amendment sovereign immunity, including Gardner v. New Jersey, 329

U.S. 566 (1947), and Lapides v. Board of Regents of University System of

Georgia, 535 U.S. 613 (2002). Those cases do not apply to Indian tribes because

an Indian tribe’s immunity “is not congruent with that which the Federal

Government, or the States, enjoy.” Three Affiliated Tribes of Ft. Berthold v. Wold

Engineering, 476 U.S. 877, 891, 90 L.Ed.2d 881, 106 S.Ct. 2305, 2313 (1986)


34

Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1020 (9th Cir.

2016) (“Tribal immunity is not synonymous with a State’s Eleventh Amendment

immunity, and parallels between the two are of limited utility.”).

In Lapides, the Supreme Court determined that a State that removes a case

from state court to federal court voluntarily invokes the federal court’s jurisdiction.

The actual holding in Lapides is quite narrow, as the court specifically limited its

ruling to cases involving “state law claims, in respect to which the State has

explicitly waived immunity from state-court proceedings.” Lapides, 535 U.S. at

617. Importantly, the Lapides court recognized the distinction between the

protections afforded an Indian tribe and those afforded a State under the Eleventh

Amendment. The State in Lapides sought to support its argument that participation

in litigation does not waive a sovereign’s immunity, relying upon Oklahoma Tax

Comm’n v. Citizen Band Potawatomi Tribe of Okla., 498 U.S. 505, 111 S.Ct. 905

(1991). The Lapides court refused to apply Potawatomi to the State, concluding

that Potawatomi “involves special circumstances not at issue here,” i.e., “an effort

to protect an Indian tribe.” Lapides, 535 U.S. at 623.

Two Circuit Courts addressing Lapides have concluded that, unlike a State,

an Indian tribe does not waive its tribal immunity by removing a case to federal

court. In Bodi, supra, the Ninth Circuit noted that “States can waive their Eleventh

Amendment immunity through litigation conduct that would not effect a waiver of


35

tribal sovereign immunity.” Bodi, 832 F.3d at 1020 (emphasis added) (by filing a

claim a State may waive its Eleventh Amendment immunity to counterclaims that

arise from the same transaction or occurrence, at least in the bankruptcy context,

but a “tribe, in contrast, does not waive its immunity to a compulsory counterclaim

by voluntarily filing suit.”). In Contour Spa at the Hard Rock, Inc. v. Seminole

Tribe of Florida, 692 F.3d 1200, 1206, 1208 (11th Cir. 2012), the court said: “The

Supreme Court squarely recognized that waiver rules applicable to states may not

apply in the same way to Indian tribes” and noted that “there are powerful reasons

to treat an Indian tribe’s sovereign immunity differently from a state’s Eleventh

Amendment immunity.”

Gardner does not support the Trustee’s contention that the Tribe’s “litigation

conduct” operated as its consent to the Trustee’s fraudulent transfer adversary

proceeding. In Gardner, New Jersey filed a proof of claim for unpaid taxes in

Gardner’s reorganization. Gardner objected to the claim and filed a petition for

adjudication of New Jersey’s tax claims in accordance with his objection. New

Jersey claimed that the court could not entertain the petition because it would be a

prohibited suit against the state. The Supreme Court disagreed, holding it was the

State that was seeking something from the debtor, and “[n]o judgment is sought

against the State.” Id. (emphasis added). Unlike Gardner, in this case, the Trustee

is seeking a judgment against the Tribe—for $177 million in damages.


36

Courts applying the Gardner rule have consistently held that, where the

sovereign is authorized to file a proof of claim, such filing does not waive the

sovereign’s immunity from a clam or suit seeking damages. For example, in In re

White, 139 F.3d 1268 (9th Cir. 1998), a tribal entity participated in the bankruptcy

of a tribe member, by filing a proof of claim, objecting to the confirmation plan,

and by filing an adversary proceeding contesting the dischargeability of its claim.

The court held that in doing so, the tribe had “waived its immunity respecting the

adjudication of its claim to recover [tribe member’s] debts,” but doing so did not

extend the tribe’s waiver “beyond adjudication of the claim itself…” Id. at 1271-

72;6 see also In re Seay, 244 B.R. 112, 118 (Bankr. E.D. Tenn. 2000) (the filing of

a proof of claim by a state waives its sovereign immunity as to matters connected

with the claims allowance process but not as to an adversary proceeding against the

state).

C. Even If the Tribe Itself Had Filed for Bankruptcy Protection, Instead of the Debtors, the Tribe Would Not Have Waived its Tribal Immunity as to the Trustee’s Adversary Proceeding

6 The White court noted that the issue of whether the tribe entity was authorized to waive its sovereign immunity was not raised below and that there was “nothing in the record…that suggests what tribal approvals are necessary, or that indicates whether any approval in fact is required.” Id. at 1271. Unlike the tribe in White, the Tribe here has demonstrated that formal approval by the Tribe board of directors is required for any waiver of tribal immunity.


37

The Trustee contends that the Tribe “comprehensively dominated and

controlled the Debtors” and “used that control to cause them to invoke federal

bankruptcy jurisdiction by filing Chapter 11 petitions.” (Trustee’s Brief, pg. 38).

The Trustee then takes a tortured path—unsupported by a single case from any

court anywhere—to suggest that the filing of the Debtors’ bankruptcy petitions

served as a clear expression of the Tribe’s intent to waive its sovereign immunity

as to the $177 million fraudulent transfer claims asserted by the Trustee in the

adversary proceeding filed against the Tribe, arising out of the 2005 Note offering

by Holdings.

The Supreme Court has consistently held that an Indian tribe does not waive

its sovereign immunity from actions that could not otherwise be brought against it

merely because those actions were pleaded in a cross-claim or counterclaim to an

action filed by the tribe. United States v. United States Fid. & Guar. Co., 309 U.S.

506, 511–12, 60 S.Ct. 653, 655–656, 84 L.Ed. 894 (1940); Oklahoma Tax Comm'n

v. Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 U.S. 505, 509–10, 111

S. Ct. 905, 909, 112 L. Ed. 2d 1112 (1991). In U.S. F&G, the court concluded:

“Possessing ... immunity from direct suit, we are of the opinion [the Indian nations]

possess a similar immunity from cross-suits.” U.S. F&G, at 513, 60 S.Ct., at 656.

Similarly, in Potawatomi, the court held that “the Tribe did not waive its sovereign

immunity merely by filing an action for injunctive relief.” Potawatomi, 498 U.S.


38

at 510, 111 S. Ct. at 909. These cases confirm that when an Indian tribe files suit,

it does not waive its sovereign immunity as to direct actions or cross-claims or

counterclaims seeking an affirmative judgment for money damages against the

tribe.

The cases relied upon by the Trustee are no different. For example, Jicarilla

Apache Tribe v. Andrus, 687 F.2d 1324, 1346 (10th Cir. 1982), relied upon by the

Trustee, held that the counterclaims asserted in that case were barred by the tribe’s

sovereign immunity. The Jicarilla court noted that when a tribe files suit it may

waive sovereign immunity as to a counterclaim sounding in equitable recoupment,

but such claims must arise out of the same transaction or occurrence, which the

counterclaims there did not. Since Jicarilla, several other courts have held that

when a tribe initiates an action, it waives its sovereign immunity only as to

counterclaims sounding in equitable recoupment. Rosebud Sioux Tribe v. Val-U

Construction Co. of South Dakota, Inc., 50 F.3d 560, 562 (8th Cir. 1995)

(“Recoupment is a defensive action that operates to diminish the plaintiff’s

recovery rather than assert affirmative relief.”); Quinault Indian Nation v. Pearson,

868 F.3d 1093 (9th Cir. 2017).

The Trustee does not contend that its adversary proceeding complaint,

seeking damages of $177 million against the Tribe, is an equitable recoupment

counterclaim or a claim sounding in equitable recoupment. Nor could it.


39

Recoupment “is in the nature of a defense to defeat a plaintiff’s claims, not a

vehicle for pursuing an affirmative judgment.” Ute Indian Tribe of the Uintah &

Ouray Reservation v. Utah, 790 F.3d 1000, 1011 (10th Cir. 2015), quoting Bull v.

United States, 295 U.S. 247, 262, 55 S.Ct. 695, 79 L.Ed. 1421 (1935); United

States v. Agnew, 423 F.2d 513, 514 (9th Cir. 1970) (“Although a counterclaim

may be asserted against a sovereign by way of set off or recoupment to defeat or

diminish the sovereign's recovery, no affirmative relief may be given against a

sovereign in the absence of consent.”) (emphasis added).

This Court has not addressed the equitable recoupment doctrine in a

published opinion. However, in United States v. Neyland, No. 97–3044, 1998 WL

381364, at *7 (6th Cir. June 25, 1998), a panel of this Court approvingly quoted

Frederick v. United States, 386 F.2d 481, 488 (5th Cir. 1967), setting forth the

relationship between sovereign immunity and recoupment. In Frederick, the Fifth

Circuit explained that when a sovereign files suit, it waives its sovereign immunity

as to claims in recoupment—claims which arise out of the same transaction or

occurrence which is the subject matter of the government's suit and which are

interposed to defeat the government’s claims—but such a waiver does not extend

to “the extent of a judgment against the government which is affirmative in the

sense of involving relief different in kind or nature to that sought by the


40

government or in the sense of exceeding the amount of the government's claims....”

Id.

D. No Court Has Found Waiver of Tribal Sovereign Immunity by Litigation Conduct Under Facts Even Remotely Similar to Those in This Case

The Trustee contends that the “doctrine of waiver by litigation conduct

‘equally applies to Indian tribes’” and “[c]ourts have found a waiver of tribal

immunity with respect to a variety of tribal litigation conduct.” (Trustee’s Brief,

pgs. 41-42). The Trustee’s assertion is wrong—tribal waiver by litigation conduct

is extremely limited and none of the cases cited by the Trustee even remotely

suggest that the Tribe has waived its tribal immunity as to the fraudulent transfer

adversary proceeding brought against the Tribe by the Trustee.

For example, in Rupp v. Omaha Indian Tribe, 45 F.3d 1241 (8th Cir. 1995),

the tribe filed an action to quiet title to certain lands, and during the pendency of

the suit, the tribe “affirmatively requested the district court to order the defendants

to assert any claims in the disputed lands they possessed against the Tribe and

exercise its equitable powers to, among other things, quiet title in the Tribe’s

name.” The defendants acted accordingly and filed a counterclaim against the

tribe, and the court—not surprisingly—held that the tribe’s explicit request that the

defendants assert such claims was “an unequivocal consent to any counterclaims”


41

asserted by the defendants. Id. at 1244-45. Rupp is so factually unlike this case

that it is hard to understand why the Trustee relies on it.

Similarly, in Wichita and Affiliated Tribes of Okla. v. Hodel, 788 F.2d 765

(D.C. 1986), the court held that a tribe that voluntarily intervenes as a defendant in

a lawsuit submits itself to the jurisdiction of the court, but a tribe does not lose its

immunity by initiating an action, even as to a compulsory counterclaim sought to

be brought against it. Id. at 773-74. The same is true for United States v. Oregon,

657 F.2d 1009, 1014 (9th Cir. 1981) (“By successfully intervening, a party ‘makes

himself vulnerable to complete adjudication by the federal court of the issues in

litigation between intervenor and adverse party.’”).

The Tribe did not seek to intervene as a defendant in the Trustee’s adversary

proceeding, and thus the cases cited by the Trustee do not support the contention

that the Tribe’s “litigation conduct” opened it up to being sued in a fraudulent

transfer action for $177 million.

E. The Trustee’s Reliance on Central Virginia Community College v. Katz Is Misplaced

The Trustee argues that the Tribe, through its Debtor alter egos, “voluntarily

invoked the jurisdiction of this particular bankruptcy court over this particular

bankruptcy case.” (Trustee’s Brief, pg. 49). The Trustee then argues that “Katz

[Central Virginia Community College v. Katz, 546 U.S. 356 (2006)] stands for the

proposition that a sovereign’s consent to bankruptcy jurisdiction includes consent


42

to the exercise of jurisdiction over fraudulent-transfer claims, even when those

claims seek to recover from the sovereign itself.” (Trustee’s Brief, pgs. 49-50).

Katz does not stand for that proposition.

Katz addressed the question of whether a proceeding initiated by a

bankruptcy trustee to set aside preferential transfers by the debtors to state agencies

is barred by sovereign immunity. Katz, 546 U.S. at 359. The court concluded that

such a claim would be permissible against a state, because the “States agreed in the

plan of the Convention not to assert any sovereign immunity defense they might

have had in proceedings brought pursuant to ‘Laws on the subject of

Bankruptcies.’” Id. at 377. The same, however, is not true for Indian tribes, “as it

would be absurd to suggest that the tribes surrendered immunity in a convention to

which they were not even parties.” Blatchford v. Native Village of Noatak, 501

U.S. 775, 782, 115 L.Ed.2d 686, 111 S.Ct. 2578, 2583 (1991); In re Hood, 319

F.3d 755, 768 (6th Cir. 2003), aff'd and remanded sub nom. Tennessee Student

Assistance Corp. v. Hood, 541 U.S. 440, 124 S. Ct. 1905, 158 L. Ed. 2d 764 (2004)

(“At the Constitutional Convention, the states granted Congress the power to

abrogate their sovereign immunity under Article I, section 8. In 11 U.S.C. §

106(a), Congress used that power to grant states a benefit they had sought.”).

Katz simply cannot be read to support the notion that if an entity allegedly

controlled by an Indian tribe files a petition in bankruptcy, the Tribe is deemed to


43

have clearly expressed its waiver of tribal sovereign immunity as to fraudulent

transfer claims that might be brought against it by the trustee in the bankruptcy

proceedings. Not surprisingly, the Trustee fails to cite a single case that holds that

an Indian tribe expressly waives its sovereign immunity as to fraudulent transfer

claims or other claims asserted in an adversary proceeding, when an entity

allegedly controlled by the tribe files for bankruptcy protection.

F. The Trustee’s Reliance on First National City Bank v. Banco Para is Misplaced

The Trustee relies on First National City Bank v. Banco Para El Commercio

Exterior de Cuba, 462 U.S. 611, 77 L.Ed.2d 46, 103 S.Ct. 2591 (1983), a case

involving an instrumentality of a foreign sovereign, to support its novel theory that

the Tribe’s alleged control of the Debtors and their filing of petitions in bankruptcy

served to waive the Tribe’s sovereign immunity as to the Trustee’s affirmative

fraudulent transfer claims.

Banco Para is not relevant to this case for several reasons. First, factually

and procedurally, it is entirely different from this case. There, Bancec, an

instrumentality of Cuba, sued Citibank in federal court on a letter of credit, and

Citibank sought through a counterclaim to set off the value of certain assets that

had been seized by the Cuban government. In other words, the claim was a

counterclaim sounding in recoupment—not an affirmative claim brought against a


44

sovereign entity to recover damages such as the fraudulent transfer claims brought

against the Tribe by the Trustee.

More importantly, although the court said that the Foreign Sovereign

Immunities Act of 1976, 28 U.S.C. §§ 1602-1611 (FSIA) did not control the issue,

the court’s “resolution of that question is guided by the policies articulated by

Congress in enacting the FSIA.” Id. at 2597. The court explained that the FSIA

specifically provides that an instrumentality of a foreign state that brings suit in a

United States court is not entitled to immunity “with respect to any

counterclaim…to the extent that the counterclaim does not seek relief exceeding in

amount or differing in kind from that sought by the [instrumentality].” Id. at 2596-

97.

The FSIA does not apply to Indian tribes. As a result, the district court

correctly concluded that “the FSIA expressly allows for that which the Supreme

Court forbids in the case of Indian tribes—waiver by implication” and, therefore,

the “FSIA cases [relied upon by the Trustee] are inapt to the issue before this Court

regarding the very unique brand of sovereign immunity enjoyed by Indian Tribes.”

Opinion and Order, RE 16, Page ID #743, citing Allen v. Gold Country Casino,

464 F.3d 1044, 1047–48 (9th Cir. 2006) (refusing to apply the FSIA by analogy to

an Indian tribe, noting that to do so would contravene Supreme Court precedent

allowing no implied waiver in the case of Indian tribes).


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CONCLUSION

The district court’s orders granting the Tribe’s motions to dismiss on the

grounds of sovereign immunity were correctly decided and should be affirmed.

Respectfully submitted,

/s/ Grant S. Cowan Grant S. Cowan FROST BROWN TODD LLC 3300 Great American Tower 301 East Fourth Street Cincinnati, Ohio 45202 (513) 651-6800 (513) 651-6981 (facsimile) [email protected]



46

CERTIFICATION OF COMPLIANCE

I hereby certify that this Brief of Appellees the Sault Ste. Marie Tribe of

Chippewa Indians and Kewadin Casinos Gaming Authority complies with the

type-volume limitation of Fed. R. App. P. 32(a)(7). Excluding the corporate

disclosure statement, table of contents, table of authorities, certification of

compliance, and certification of service, this brief contains 10,254 words.

/s/ Grant S. Cowan


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CERTIFICATE OF SERVICE

I hereby certify that on this 24th day of May, 2018, I electronically filed the

Brief for Appellees the Sault Ste. Marie Tribe of Chippewa Indians and Kewadin

Casinos Gaming Authority with the Clerk of the Court using the CM/ECF system,

which will send notification of such filing to all registered counsel of record.

/s/Grant S. Cowan


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DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS

Pursuant to Sixth Circuit Rule 30(b), Defendants/Appellees The Sault Ste.

Marie Tribe of Chippewa Indians and Kewadin Casinos Gaming Authority

designate the following relevant district court documents:

DESCRIPTION OF ENTRY DATE RECORD ENTRY

NO.

PAGE ID #

United States Bankruptcy Court Eastern District of Michigan

Southern Division Case No. 08-53104

Order Confirming Second Amended Joint Plans

1-22-10 2046 1-61

United States District Court for the Eastern District of Michigan

Southern Division Case No. 14-cv-14103

Notice of Appeal and Designated Bankruptcy Record:

1 1-720

Opinion Denying Renewed and Supplemented Motion To Dismiss of Defendants Sault Ste. Marie Tribe of Chippewa Indians and Kewadin Casinos Gaming Authority (Dkt. 453)

8-13-14 29-47

Opinion and Order Reversing the Bankruptcy Court’s August 13, 2014 Order Denying the Tribe’s Renewed Motion to Dismiss on the Grounds of Sovereign Immunity and Remanding for Further Proceedings

6-9-15 15 1011-1042


49

DESCRIPTION OF ENTRY DATE RECORD ENTRY

NO.

PAGE ID #

United States District Court for the Eastern District of Michigan

Southern Division Case No. 16-cv-13643

Designated Bankruptcy Record: 5 33-522Complaint 5-27-10 50-86Motion to Dismiss of Defs. Sault Ste. Marie Tribe of Chippewa Indians & Kewadin Casinos Gaming Authority and Memorandum in Support

6-25-10 87-122

Opinion and Order Reversing the Bankruptcy Court’s August 13, 2014 Order Denying the Tribe’s Renewed Motion to Dismiss

6-9-15 198-229

Opinion on Remanded Sovereign Immunity Waiver Issue (Dkt. 649)

9-29-16 444-465

Opinion and Order Affirming Bankruptcy Court’s Sept. 26, 2016 Opinion and Order Granting the Tribe Defendants’ Motion To Dismiss and Dismissing Them with Prejudice from the Adversary Proceeding

1-23-18 16 710-745

0116144.0576016 4811-7776-1636v3


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