Subranni v. Navajo Times Publishing Co. (In re Group Communications, Inc.)
568 B.R. 616
Bankr. D.N.J.2016Background
- Chapter 7 Trustee sued Navajo Times to avoid and recover alleged preferential transfers under 11 U.S.C. §§ 547 and 550. Navajo Times moved to dismiss raising tribal sovereign immunity.
- Navajo Times was created after a Navajo Nation Council resolution to privatize the Navajo Times program as a wholly owned Navajo Nation corporation organized under the Navajo Nation Corporation Code.
- Articles/bylaws state the Navajo Nation owns all shares, shareholder votes are exercised by 11 committee representatives, directors are industry professionals, and the corporation is entitled to tribal privileges and immunities; bylaws provide a procedure for any waiver.
- Navajo Times asserts it serves tribal interests (primary news source for Navajo people), was capitalized by the Nation, and may be covered by the Nation’s retained-limit liability policy.
- The court conducted an “arm-of-the-tribe” / subordinate economic entity analysis (Johnson/Uniband factors) and considered whether § 106 abrogates tribal immunity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 106 of the Bankruptcy Code abrogates tribal sovereign immunity | §106(a) abrogates immunity because tribes are "governmental units" under §101(27) (relying on Krystal) | §106(a) does not unequivocally abrogate tribal immunity because Congress did not expressly name Indian tribes | Court held §106 does not unequivocally abrogate tribal sovereign immunity; abrogation must be explicit |
| Whether Navajo Times is entitled to tribal sovereign immunity as an arm/subordinate economic entity | Trustee: Navajo Times operates independently and lacks sufficient tribal control/connection to be protected | Navajo Times: formed under tribal law, wholly owned by Navajo Nation, serves tribal welfare and economic development, has financial ties to the Nation | Court held Navajo Times is a subordinate economic entity entitled to tribal sovereign immunity |
| Whether the court has subject-matter jurisdiction to hear preference/avoidance claims against Navajo Times | Trustee: jurisdiction exists unless immunity was validly asserted/waived | Navajo Times: immunity is jurisdictional and bars the suit unless abrogated or waived | Court dismissed for lack of jurisdiction under sovereign immunity analysis |
| Whether any waiver of immunity exists or was authorized | Trustee: points to tribal resolutions and corporate formation; asserts potential policy arguments | Navajo Times: bylaws preserve immunity and set a specific waiver procedure; no voluntary, effective waiver shown | Court found no effective waiver and relied on bylaws/resolution; immunity stands |
Key Cases Cited
- Santa Clara Pueblo v. Martinez, 436 U.S. 49 (Sup. Ct.) (tribal sovereign immunity is a common-law doctrine requiring clear congressional abrogation to be displaced)
- Kiowa Tribe of Oklahoma v. Manufacturing Technologies, 523 U.S. 751 (Sup. Ct.) (tribal immunity applies to both governmental and commercial activities)
- Krystal Energy Co. v. Navajo Nation, 357 F.3d 1055 (9th Cir.) (held tribes are "governmental units" within §106 for bankruptcy purposes)
- In re Whitaker, 474 B.R. 687 (8th Cir. B.A.P.) (concluded §106 does not unequivocally abrogate tribal immunity)
- Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F.3d 1173 (10th Cir.) (articulated multi-factor test for arm-of-the-tribe/subordinate economic entity analysis)
- Uniband, Inc. v. Commissioner, 140 T.C. 230 (Tax Ct.) (applied factors to determine when a corporation is an arm of a tribe)
- Mortensen v. First Federal Savings & Loan Ass’n, 549 F.2d 884 (3d Cir.) (distinguishes facial vs factual 12(b)(1) challenges and evidentiary standard)
- In re Greektown Holdings, LLC, 532 B.R. 680 (E.D. Mich.) (concluded §106 does not clearly abrogate tribal immunity in bankruptcy context)