Defining the Limits of Federal Court Jurisdiction over States in Bankruptcy Court.

Sovereign immunity jurisprudence has always been a confusing jumble of assumptions which seem incomprehensible. Despite the confusion, understanding sovereign immunity has become more important in the wake of the United States Supreme Court’s decision in Seminole Tribe of Florida v. Florida. The constitutional issues raised in Seminole Tribe amount to a reinterpretation of the fundamental balance of power between federal and state governments and the power of Congress to affect that balance. Not all sovereign immunity is sovereign immunity. Many courts use the term to identify both the common-law doctrine and the “immunity” granted to the states through the Eleventh Amendment to the Constitution. The substantive differences between sovereign immunity and Eleventh Amendment immunity affect congressional ability to abrogate or waive the latter, but not the former. Sovereign immunity is a judicially created doctrine of governmental immunity derived from the common-law premise that the king could do no wrong. Both federal and state government enjoy sovereign immunity. Because it is not constitutionally guaranteed, it may be waived by legislative action. Congress’s ability to waive the immunity from suit guaranteed to the states in the Eleventh Amendment is more limited than its ability to waive common-law sovereign immunity. The Eleventh Amendment limits the jurisdiction of the federal courts under Article III of the Constitution. Seminole Tribe is a major shift in constitutional interpretation. The implication of the holding with respect to the balance of power between the state and federal governments is serious. Yet, rather than being the death knell to the bankruptcy system, Seminole Tribe is an anathema only to those counsel which rely on bullying tactics to accomplish their ends. To the extent it forces parties to negotiate fairly with states, Seminole Tribe will ultimately prove to be a benefit to the bankruptcy system