The Fourth Circuit case Williams v. Big Picture Loans[1] is being hailed as a major victory for Native American sovereign immunity rights. For entities owned by Native American tribes, the case stands as an important ruling for determining arm-of-the-tribe sovereign immunity. The case may be appealed to the Supreme Court.


The Lac Vieux Desert Band of the Lake Superior Chippewa Indians (the Tribe) formed two business entities under tribal law: Big Picture Loans, LLC, to serve as an independent lending entity and Ascension Technologies, LLC, to provide loan-related services (the Entities). Big Picture employed 15 members of the Tribe; Ascension employed 31 individuals, most of whom, including its president, were not tribal members. The Tribe also formed Tribal Economic Development Holdings, LLC (TED) to manage its lending operation, which became Big Picture and Ascension’s parent company. The Tribe was the sole member of TED, which became Big Picture’s and Ascension’s sole member. Eventually the arrangement was that Big Picture would make a distribution to TED of its gross revenues, then TED would reinvest 2% of gross revenues into Big Picture’s loan portfolio. TED also initially distributed 2%, which would later rise to 6%, to the Tribe.

The case was filed in the Eastern District of Virginia, when several Virginia residents claimed that they obtained internet payday loans from Big Picture that carried unlawful interest rates (about 50 times higher than the legal rate). The Entities moved to dismiss for lack of subject matter jurisdiction, claiming that they were entitled to tribal sovereign immunity as “arms of the Tribe.” After concluding that the Entities bore the burden of proof in the arm-of-the-tribe analysis, the district court found that the Entities failed to prove entitlement to immunity. In reaching its decision, the district court determined that the driving force behind the formation of Big Picture and Ascension was to shelter outsiders from the consequences of their otherwise illegal actions. The Entities appealed to the 4th Circuit.

Opinion of the Fourth Circuit Court of Appeals

The 4th Circuit observed in its opinion that the Supreme Court has recognized that tribal immunity may remain intact when a tribe elects to engage in commerce using tribally created entities, i.e., arms of the tribe. The Supreme Court has not, however, articulated a framework for determining whether a particular entity should be considered as an arm of a tribe. In analyzing the district court’s determination of the sovereign immunity issue, the 4th Circuit held that the lower court had correctly applied a test initially articulated by the 10th Circuit in Breakthrough Management Group, Inc. v. Chukchansi Gold Casino & Resort, 629 F. 3d 1173 (10th Cir. 2010).

The court applied five of the six factors from Breakthrough to determine arm-of-the-tribe immunity for the Entities:

  1. the method of creation;
  2. entity purpose;
  3. entity structure, ownership, and management;
  4. the tribe’s intent to share its sovereign immunity; and
  5. the financial relationship between the Tribe and the Entities.

For the first factor, method of creation, the 4th Circuit noted the Entities were both organized through resolutions by the Tribe Council, exercising powers delegated to it by the Tribe’s Constitution, and they operated pursuant to the Tribe’s Business Ordinance. Accordingly, they were created under tribal law, which weighed in favor their entitlement to tribal sovereign immunity.

Regarding entity purpose, the court found that the district court accurately noted that the Tribe stated a purpose for each Entity that related to broader goals of tribal self-governance, separate from the Entities’ commercial activities, i.e., tribal economic development and self-sufficiency. The court concluded that the stated purpose of the Entities, along with the payments that were made to the Tribe, weighed in favor of immunity.

The analysis of entity structure, ownership, and management was a closer call. The court found that Big Picture satisfied the factor because it was entirely controlled by the Tribe. However, since the Tribe had delegated substantial day-to-day management authority of Ascension to its non-tribal president, that factor weighed slightly against a finding of tribal immunity as to Ascension.

The fourth Breakthrough factor was easily met, the 4th Circuit concluded, because “[t]he Tribe unequivocally stated its intention to share its immunity in Big Picture and Ascension’s formation documents.”

In assessing the financial relationship between the Tribe and the Entities, the court considered the financial impact that an adverse judgment would have on the Tribe. It found that, since 10% of the Tribe’s general fund came from Big Picture, a judgment against the Entities could significantly impact the tribal treasury. Thus, the fifth Breakthrough factor turned in favor of sovereign immunity. And, since all the factors as to Big Picture weighed in favor of sovereign immunity and all but one weighed in favor of immunity for Ascension, the Entities were entitled to sovereign immunity from a lawsuit based upon allegedly exorbitant loan interest rates.


It is unclear at this point whether the case will be appealed to the Supreme Court. For now, it stands as an important ruling in favor of asserting arm-of-the-tribe sovereign immunity for entities owned by Native American tribes.

For more information concerning this case and matters relating to Native American Law, please contact a member of PilieroMazza’s Native American Law Group.

Paul Mengel, the author of this blog, is Counsel to the Firm’s Litigation & Dispute Resolutionand Native American Law practice groups.

[1] Williams v. Big Picture Loans, et al., No. 18-1827 (4th Cir. 2019).