Krystal Energy Co. v. Navajo Nation, 02-17047.

• Decision Date: 10 February 2004
• Docket Number: No. 02-17047.,02-17047.
• Citation: 357 F.3d 1055
• Parties: KRYSTAL ENERGY COMPANY, Plaintiff-Appellant, v. NAVAJO NATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

357 F.3d 1055

KRYSTAL ENERGY COMPANY, Plaintiff-Appellant, v. NAVAJO NATION, Defendant-Appellee.

No. 02-17047.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 1, 2003.

Filed February 10, 2004.

As Amended on Denial of Rehearing En Banc April 6, 2004.^*

J. Kent MacKinlay, Warnock, MacKinlay & Associates, Mesa, Arizona, for the plaintiff-appellant.

Marcelino R. Gomez, Navajo Nation Department of Justice, Window Rock, Navajo Nation (Arizona), for the defendant-appellee.

Appeal from the United States District Court for the District of Arizona; Mary H. Murguia, District Judge, Presiding. D.C. No. CV-01-01970-MHM.

Before LEAVY, PAEZ, and BERZON, Circuit Judges.

BERZON, Circuit Judge:

Appellant Krystal Energy Company ("Krystal") appeals the district court's dismissal of its adversary action under the Bankruptcy Code, 11 U.S.C. §§ 505 and 542, against the Navajo Nation, an Indian tribe. The district court based its dismissal on the Navajo Nation's sovereign immunity to suit in the absence of explicit abrogation of that immunity by Congress. Whether Congress has abrogated the sovereign immunity of Indian tribes by statute is a question of statutory interpretation and is reviewed de novo. Demontiney v. United States, 255 F.3d 801, 805 (9th Cir.2001). Because we conclude that Congress did abrogate the sovereign immunity of Indian tribes under 11 U.S.C. §§ 106(a) and 101(27), we reverse.¹

Immunity from suit has been recognized by the courts of this country as integral to the sovereignty and self-governance of Indian tribes. Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 756-58, 118 S.Ct. 1700, 140 L.Ed.2d 981 (1998) ("Kiowa Tribe"). See also Okla. Tax Comm. v. Citizen Band Potawatomi Indian Tribe of Okla., 498 U.S. 505, 509, 111 S.Ct. 905, 112 L.Ed.2d 1112 (1991) ("Potawatomi") (recognizing the sovereign immunity of Indian tribes absent a clear waiver by the tribe or congressional abrogation); Three Affiliated Tribes of the Fort Berthold Reservation v. Wold Eng'g, 476 U.S. 877, 890, 106 S.Ct. 2305, 90 L.Ed.2d 881 (1986) ("The common law sovereign immunity possessed by the Tribe is a necessary corollary to Indian sovereignty and self-governance."); Santa Clara Pueblo v. Martinez, 436 U.S. 49, 58, 98 S.Ct. 1670, 56 L.Ed.2d 106 (1978) ("Indian tribes have long been recognized as possessing the common-law immunity from suit traditionally enjoyed by sovereign powers."). Tribal sovereign immunity is not absolute, however. Congress may abrogate it and thereby authorize suit against Indian tribes. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. 1670 (citing United States v. Testan, 424 U.S. 392, 399, 96 S.Ct. 948, 47 L.Ed.2d 114 (1976)). Such an abrogation must be "unequivocally expressed," id., in "explicit legislation," Kiowa Tribe, 523 U.S. at 759, 118 S.Ct. 1700. Abrogation of tribal sovereign immunity may not be implied. Santa Clara Pueblo, 436 U.S. at 58, 98 S.Ct. 1670 (citing Testan, 424 U.S. at 399, 96 S.Ct. 948).

Identical language is used by courts in determining whether Congress has abrogated the sovereign immunity of states. Seminole Tribe of Fla. v. Fla., 517 U.S. 44, 55, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996) ("In order to determine whether Congress has abrogated the States' sovereign immunity, we ask[,] ... first, whether Congress has `unequivocally expresse[d] its intent to abrogate the immunity'" (citations omitted)); Kimel v. Fla. Bd. of Regents, 528 U.S. 62, 73, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000) (same); see also Osage Tribal Council v. United States Dep't of Labor, 187 F.3d 1174, 1181 (10th Cir.1999) ("Conceding potential differences between tribal and state sovereign immunity, we note that courts have often used similar language in defining the requirements for waiver of [Eleventh Amendment state sovereign immunity]."); Fla. Paraplegic, Ass'n v. Miccosukee Tribe of Indians, 166 F.3d 1126, 1131 (11th Cir.1999) (equating the standards applied in determining whether Congress abrogated "federal and state governments' protection from suit" and tribal sovereign immunity). While there are additional constraints on Congress's power to abrogate state sovereign immunity, we may look to state sovereign immunity precedent to help determine how "explicit" an abrogation must be, and do so in deciding the issue before us.

That issue is whether Congress abrogated the sovereign immunity of Indian tribes when it enacted § 106 of the Bankruptcy Code. To answer this question, we look to the text of the code:²

(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the extent set forth in this section with respect to the following:

(1) Sections ... 505, ... 542....

11 U.S.C. § 106(a) (1995).

"Governmental unit," in turn, is defined as:

United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States ..., a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic governments....

11 U.S.C. § 101(27) (1995). Neither the Supreme Court nor any circuit has determined whether these statutes, which do not include the term "Indian tribes" or any similar language, suffice to abrogate Indian tribes' immunity from suit.³

It is clear from the face of §§ 106(a) and 101(27) that Congress did intend to abrogate the sovereign immunity of all "foreign and domestic governments." Section 106(a) explicitly abrogates the sovereign immunity of all "governmental units." The definition of "governmental unit" first lists a sub-set of all governmental bodies, but then adds a catch-all phrase, "or other foreign or domestic governments." 11 U.S.C. § 101(27). Thus, all foreign and domestic governments, including but not limited to those particularly enumerated in the first part of the definition, are considered "governmental units" for the purpose of the Bankruptcy Code, and, under § 106(a), are subject to suit.

Indian tribes are certainly governments, whether considered foreign or domestic (and, logically, there is no other form of government outside the foreign/domestic dichotomy, unless one entertains the possibility of extra-terrestrial states).

The Supreme Court has recognized that Indian tribes are "`domestic dependent nations' that exercise inherent sovereign authority over their members and territories." Potawatomi, 498 U.S. at 509, 111 S.Ct. 905 (citing Cherokee Nation v. Georgia, 5 Pet. 1, 17, 8 L.Ed. 25 (1831)); see also, Blatchford v. Native Village of Noatak, 501 U.S. 775, 782, 111 S.Ct. 2578, 115 L.Ed.2d 686 (comparing Indian tribes to states and foreign sovereigns, and concluding that both states and Indian tribes are "domestic" sovereigns). So the category "Indian tribes" is simply a specific member of the group of domestic governments, the immunity of which Congress intended to abrogate.

Had Congress simply stated, "sovereign immunity is abrogated as to all parties who otherwise could claim sovereign immunity," there can be no doubt that Indian tribes, as parties who could otherwise claim sovereign immunity, would no longer be able to do so. Similarly here, Congress explicitly abrogated the immunity of any "foreign or domestic government." Indian tribes are domestic governments. Therefore, Congress expressly abrogated the immunity of Indian tribes. See In re Russell, 293 B.R. 34, 44 (D.Ariz.2003) (concluding that § 106(a) abrogates tribal sovereign immunity "unequivocally[] and without implication"); see also In re Davis Chevrolet, Inc., 282 B.R. 674, 683 n. 5 (Bankr.D.Ariz. 2002) ("It seems to this court that `other domestic government' is broad enough to encompass Indian tribes."); In re Mayes, 294 B.R. 145, 157-60 (10th Cir.2003) (McFeeley, J., dissenting) (arguing that § 106(a) does abrogate tribal sovereign immunity); In re Vianese, 195 B.R. 572, 575 (Bankr.N.D.N.Y. 1995) (holding that Tribe had individually waived its sovereign immunity, and stating in dicta that § 106(a) did abrogate the sovereign immunity of Indian tribes under the Bankruptcy Code).

Similar syllogistic reasoning was followed in Kimel, a case concerning the abrogation of state sovereign immunity. Kimel, 528 U.S. at 73-74, 120 S.Ct. 631, 145 L.Ed.2d 522 (2000). In that case, the Supreme Court held that Congress had clearly expressed its intent to abrogate the sovereign immunity of the states when passing certain amendments to the Age Discrimination Enforcement Act (ADEA). Id. At the same time, Kimel recognized that this expression of intent, while explicit, did not appear in terms on the face of the ADEA:

The ADEA states that its provisions "shall be enforced in accordance with the powers, remedies, and procedures provided in section[] ... 216 ... of this title...." 29 U.S.C. § 626(b). Section 216(b), in turn, clearly provides for suits by individuals against States. That provision authorizes employees to maintain actions for backpay "against any employer (including a public agency) in any Federal or State court of competent jurisdiction...." Any doubt concerning the identity of the "public agency" defendant named in § 216(b) is dispelled by looking to § 203(x), which defines the term to include "the government of a State or political subdivision thereof," and "any agency of ... a State, or a political subdivision of a State." Read as a whole the plain language of these provisions clearly demonstrates Congress' intent to subject the States to suit for money damages at the hands of individual employees.

Id. Congress, therefore, need not make its intent to abrogate "unmistakably clear" in a single section of a statute. Id. at 76, 120 S.Ct. 631. See also Osage Tribal Council v. United States Dep't of Labor, 187 F.3d 1174, 1181-82 (10th Cir.1999) (holding that the Safe Drinking Water Act "contains a clear and explicit waiver of tribal immunity" despite the fact that the court had to piece together various...