Justices Pass on Case Over State Immunity From Bankruptcy Suits

The U.S. Supreme Court declined an opportunity to clarify when government entities can be sued in bankruptcy cases.

The decision Monday addresses the California State Lands Commission’s challenge to a Third Circuit ruling allowing a trust in Venoco LLC’s bankruptcy to sue the state government agency over an alleged taking of an onshore oil facility.

The liquidating trust said the state government effectively took over the property without compensation when the commission continued to use the rig without making agreed-upon monthly payments.

The states are generally immune from lawsuits. But they waived their right to sovereign immunity when they ratified ...