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Justice Manual

Justice Manual
Civil Resource Manual

196. Sovereign Immunity -- Seminole Tribe and State Sovereign Immunity

  1. In Seminole Tribe of Fla. v. Florida, 517 U.S. 44 (1996), the Supreme Court held that Congress does not have the power under Article I Indian Commerce clause to abrogate the States' Eleventh Amendment immunity to permit suits to enforce rights under the Federal Indian Gaming Regulatory Act. (The Act allows an Indian Tribe to conduct gaming activities only pursuant to a valid compact with the State where activities are located. The Act required the State to negotiate in good faith and gave Tribes the right to sue in Federal court to compel performance of this duty.) In dissent, Justice Stevens warned that the "majority's opinion does not simply preclude Congress from establishing the rather curious statutory scheme under which Indian tribes may seek the aid of a federal court. . .. Rather, it prevents congress from providing a federal forum for a broad range of actions against States, from those sounding in copyright and patent law, to those concerning bankruptcy, environmental law, and the regulation of our vast national economy." 116 S. Ct. at 1134 (emphasis added).
  2. Impact of Seminole on § 106(a): see, e.g., Hood v. Tenn. Student Assistance Corp. (In re Hood), 262 B.R. 412 (B.A.P. 6th Cir. 2001); Lankford v. Comptroller of Pub. Accounts (In re Lankford), 261 B.R. 410 (Bankr. N.D. Tex. 2001); Pitts v. Ohio Dep't of Taxation (In re Pitts), 241 B.R. 862 (Bankr. N.D. Ohio 1999). Compare Headrick v. Ga. Dep't of Revenue (In re Headrick), 203 B.R. 805 (S.D. Ga. 1996) (14th Amendment grants Congress authority to subject State to complaints to enforce automatic stay), aff'd sub nom., Ga. Dep't of Revenue v. Burke (In re Burke), 146 F.3d 1313 (11th Cir. 1998), cert. denied, 527 U.S. 1043 (1999), with Schlossberg v. Md. Comptroller of the Treasury (In re Creative Goldsmiths of Wash., D.C.), 119 F.3d 1140 (4th Cir. 1997) (§ 106(a) as applied to States violates Eleventh Amendment), cert. denied, 523 U.S. 1075 (1998), United States Dep't of Treasury v. Gosselin, 252 B.R. 854 (D. Mass. 2000) (no waiver for proceeding to discharge debt to State), Kish v. Verniero (In re Kish), 212 B.R. 808 (D.N.J. 1997) (same), Womack v. Mays (In re Womack), 253 B.R. 247 (Bankr. E.D. Ark. 2000) (no waiver to permit suit against state agency for stay violation), Koehler v. Iowa College Student Aid Comm'n (In re Koehler), 204 B.R. 210 (Bankr. D. Minn. 1997) (proceeding to discharge debt).
  3. Impact on § 106(b): see Arecibo Cmty. Health Care, Inc. v. Puerto Rico, 244 F.3d 241 (1st Cir. 2001). "The validity of Section 106(b), already under serious doubt after Seminole Tribe, see [Creative Goldsmiths], is clearly undermined by the holding in [College Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Board, 527 U.S. 666 (1999)]." 244 F.3d at 245. Held: 106(b) is unconstitutional. Id.; see also Grabscheid v. Mich. Employment Sec. Comm'n (In re C.J. Rogers, Inc.), 212 B.R. 265 (E.D. Mich. 1997) (holding § 106(b) "deemed waiver" for compulsory counterclaims violates Eleventh Amendment). But see Wyo. Dep't of Transp. v. Straight (In re Straight), 143 F.3d 1387, 1390 (10th Cir.), cert. denied, 525 U.S. 982 (1998); In re Barrett Ref. Corp., 221 B.R. 795 (Bankr. W.D. Okla. 1998).
  4. Eleventh Amendment and Seminole do not apply to every proceeding and order which may affect state interests.
    1. The Ex Parte Young doctrine, whereby a suit seeking prospective equitable relief against a state official who has engaged in a continuing violation of Federal law is not deemed to be a suit against the State for purposes of state sovereign immunity, permits enforcement of a discharge order against a state tax official in an action for prospective injunctive and declaratory relief. Goldberg v. Ellett (In re Ellett), 254 F.3d 1135 (9th Cir. 2001); see also Guiding Light Corp. v. La. Dep't of Health & Hosps. (In re Guiding Light Corp.), 213 B.R. 489 (E.D. La. 1997) (Ex Parte Young permits debtor Medicaid provider to sue to enjoin state official from withholding Medicaid payments); Pac. Gas & Elec. Co. v. Cal. Pub. Utils. Comm'n (In re Pac. Gas & Elec. Co.), 263 B.R. 306, 314-15 (Bankr. N.D. Cal. 2001) (Ex Parte Young permits suit against PUC commissioners alleging automatic stay violations); Horwitz v. Zywiczynski (In re Zywiczynski), 210 B.R. 924 (Bankr. W.D.N.Y. 1997) (Ex Parte Young permits turnover order; Eleventh Amendment does not preclude threshold inquiry into whether State's claim of adverse interest is more than colorable).
    2. "[A] bankruptcy discharge is binding on non-consenting States notwithstanding the [Supreme] Court's more recent sovereign immunity jurisprudence." Goldberg v. Ellett (In re Ellett), 254 F.3d 1135, ____ (9th Cir. 2001) (citing In re Collins, 173 F.3d 924, 928-31 (4th Cir. 1999) and Texas v. Walker, 142 F.3d 813, 822-23 (5th Cir. 1998)); see also Maryland v. Antonelli Creditors' Liquidating Trust, 123 F.3d 777, 786-87 (4th Cir. 1997) (order confirming plan which provided for waiver of state transfer tax not a "suit"); Smith v. Psychiatric Hosps. of Fla., Inc. (In re Psychiatric Hosps. of Fla., Inc.), 216 B.R. 660, 661 (M.D. Fla. 1998) (same; motion to determine dischargeability under § 505); In re Sun Healthcare Group, Inc., 245 B.R. 779, 784-87 (Bankr. D. Del. 2000) (same; DIP financing order); Harden v. Gilbert (In re Int'l Heritage, Inc.), 239 B.R. 306, 309-10 (Bankr. E.D.N.C. 1999) (same; proceeding to determine scope of automatic stay, even if a contested matter).
  5. See also Innes v. Kan. State Univ. (In re Innes), 184 F.3d 1275, 1284 (10th Cir. 1999) (KSU waived Eleventh Amendment immunity in adversary proceeding by entering into contract with DOE requiring it to perform certain actions in the event of bankruptcy of student loan borrower), cert. denied, 529 U.S. 1037 (2000); In re Barrett Ref. Corp., 221 B.R. 795, 814 (Bankr. W.D. Okla. 1998) (State's waiver of sovereign immunity cannot be undone by withdrawing proof of claim).