United States Trustee v. John Q. Hammons Fall 2006, LLC (22-1238)

argument 22-1238

United States Trustee v. John Q. Hammons Fall 2006, LLC

Supreme Court of the United States 1h 2m 7 speakers 8 chapters transcribed 9 days ago official recording ↗

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What constitutional violation does the Court need to remedy in United States Trustee v. John Q. Hammons Fall 2006, LLC?

John G. Roberts 0:00

We'll hear argument next in Case 22-1238, the Office of the United States Trustee against John Q. Hammond's Fall 2006 LLC. Ms. Hansford?

Ms. Hansford 0:11

Mr. Chief Justice, and may it please the Court, this case presents the question that this Court left open in Siegel, what the appropriate remedy is for the uniformity violation that resulted when debtors in a small sliver of cases, four dozen cases in the two states that use bankruptcy administrators, did not pay the increased quarterly fees mandated by Congress and the U.S. trustee districts. As this Court has recognized time and again, the touchstone of the remedial inquiry is congressional intent. And here, there's unusually strong evidence that Congress would choose to fix the constitutional violation by mandating uniformly higher fees. That means the appropriate remedy in this case is a mandate of higher fees nationwide,

Ms. Hansford 1:00

either standing alone or in combination with a retrospective effort to collect the $3.8 million in fees that the BA debtors collectively underpaid. Now respondents instead urge a refund remedy, which when applied nationwide would require taxpayers to foot the bill for approximately $326 million to fund windfalls for the largest users of the bankruptcy system, like respondents, who paid exactly what Congress intended that they pay. The problem with that approach is that as a practical matter, it will actually make the disparity larger. Worse yet, it goes directly contrary to congressional intent. Congress has for decades sought to make the bankruptcy system self-sustaining at no cost to the taxpayer and enacted the 2017 Act's fee increase for that reason.

Ms. Hansford 1:53

Now, respondents' argument that the due process clause compels this topsy-turvy solution simply don't hold up. Respondents must establish both that the due process clause requires retrospective relief and that that retrospective relief must take the form of refunds. But they cannot make either showing. Respondents had a meaningful opportunity for a pre-deprivation hearing here, and the due process clause requires nothing further, and to the extent retrospective relief is required, that relief should be additional collections. I welcome the Court's questions.

Clarence Thomas 2:27

Do we normally look to legislative intent to determine the appropriate remedy for a constitutional violation?

2:37

Yes.

Ms. Hansford 2:37

Yes, Justice Thomas, I think this court's cases are crystal clear that the question, and in particular the critical question here, which is the leveling up or leveling down question, uniform fees at the higher level or the lower level is a question of congressional

Clarence Thomas 2:51

intent. What's your best example of that?

Ms. Hansford 2:53

I think that Morales-Santana has an extensive discussion of how congressional intent is the guiding

Clarence Thomas 2:59

question. Do you have any cases in which there was a monetary remedy involved?

Ms. Hansford 3:04

Yes, absolutely. So I think the tax cases are classic money cases. And in those cases, Levin versus Department of Commerce, McKesson, all those cases lay out that leveling up or leveling down might be

Clarence Thomas 3:19

appropriate. It seems that both McKesson or Rice, those cases don't support you, though.

Ms. Hansford 3:26

We very much disagree with that, Justice Thomas. I think those cases support us both on the prospective retrospective question, but also the leveling up, leveling down question. So first, I think those cases make clear that when, as here, there's a pre-deprivation remedy, you can have prospective only relief. But more significantly, those cases... make clear that additional collections can be the right remedy. And that's because of the nature of the violation here. The violation here is not that respondents paid a fee that Congress wasn't authorized to impose. There's no question Congress was authorized to impose the fee. The mistake here was that Congress inadvertently let the BA administrators have the option of not charging those fees, so it accidentally under-collected.

Clarence Thomas 4:14

Does Rice help you on the pre-deprivation relief?

Ms. Hansford 4:19

I think that Reich is inapposite here because it's a bait and switch case, but I think even in Reich, a case where there was a bait and switch and there was a state statute that promised a refund, but instead the state courts tried to say no refund was available, even in that case, the court left open a determination of relief consistent with McKesson, which could be leveling up or leveling down.