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

602 U.S. 487
CourtSupreme Court of the United States
DecidedJune 14, 2024
Docket22-1238
StatusPublished
Cited by1 cases

This text of 602 U.S. 487 (United States Trustee v. John Q. Hammons Fall 2006, LLC) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Trustee v. John Q. Hammons Fall 2006, LLC, 602 U.S. 487 (2024).

Opinion

(Slip Opinion) OCTOBER TERM, 2023 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE UNITED STATES TRUSTEE v. JOHN Q. HAMMONS FALL 2006, LLC, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

No. 22–1238. Argued January 9, 2024—Decided June 14, 2024 Two Terms ago, in Siegel v. Fitzgerald, 596 U. S. 464, the Court held that a statute violated the Bankruptcy Clause’s uniformity requirement be- cause it permitted different fees for Chapter 11 debtors depending on the district where their case was filed. In this case, the Court is asked to determine the appropriate remedy for that constitutional violation. As noted in Siegel, there are three options: (1) refund fees for the thou- sands of debtors charged higher fees in districts administered by the U. S. Trustee Program, (2) retroactively extract higher fees from the small number of debtors charged lower fees in districts administered by the Bankruptcy Administrator Program, or (3) require only prospec- tive fee parity. See id., at 480. As in Siegel, this case arises from a case filed in a U. S. Trustee dis- trict. In 2016, 76 legal entities filed for Chapter 11 bankruptcy in the District of Kansas. In 2018, under the amended fee statute the Court later found unconstitutional in Siegel, the debtors began paying higher fees than they would have if their case had been filed in a Bankruptcy Administrator district. In 2020, the debtors challenged the constitu- tionality of those fees. The Bankruptcy Court found no constitutional violation, but the Tenth Circuit, anticipating Siegel, reversed. To rem- edy the constitutional violation, the Tenth Circuit ordered a refund of the debtors’ quarterly fees to the extent they exceeded the lower fees paid in the Bankruptcy Administrator districts. This Court vacated that judgment and remanded the case in light of Siegel, and the Tenth Circuit reinstated its original opinion without alteration. Held: Prospective parity is the appropriate remedy for the short-lived and small disparity created by the fee statute held unconstitutional in Siegel. Pp. 5–16. 2 UNITED STATES TRUSTEE v. JOHN Q. HAMMONS FALL 2006, LLC Syllabus

(a) Across remedial contexts, “the nature of the violation determines the scope of the remedy.” Swann v. Charlotte-Mecklenburg Bd. of Ed., 402 U. S. 1, 16. Three aspects of the Court’s holding in Siegel are rel- evant here. First, the violation identified was nonuniformity, not high fees. Second, the fee disparity was short lived, lasting only from 2018 to 2021. Third, the disparity was small: 98% of the relevant class of debtors still paid uniform fees. Pp. 5–7. (b) To determine the appropriate remedy for this short-lived and small disparity, the Court asks “what the legislature would have willed had it been apprised of the constitutional infirmity.” Sessions v. Morales-Santana, 582 U. S. 47, 74. In cases involving unequal treat- ment, the Court focuses on two considerations: Congress’s “intensity of commitment” to the more broadly applicable rule, and “the degree of potential disruption to the statutory scheme that would occur” if the Court were to extend the exception. Id., at 75. Here, faced with the short-lived and small fee disparity created by the constitutional viola- tion identified in Siegel, Congress would have wanted prospective par- ity, not a refund or retrospective raising of fees. To start, Congress has demonstrated intense commitment to the more broadly applicable rule, higher fees in U. S. Trustee districts. That commitment stems from Congress’s desire for the U. S. Trustee program to “be funded in its entirety by user fees.” Siegel, 596 U. S., at 469. In light of this desire, it is not surprising that, in the 2017 fee statute at issue in Siegel, Congress chose to address a funding shortfall for the U. S. Trustee program by raising fees on the largest Chapter 11 debtors. In 2021, when Congress amended the fee statute to require uniform fees, it kept fees at an elevated level “to further the long- standing goal of Congress of ensuring that the bankruptcy system is self-funded.” §2(b), 134 Stat. 5086. Now consider the disruption that would follow from extending the exception, lower fees in Bankruptcy Administrator districts. Retro- spectively lowering fees for all relevant debtors in U. S. Trustee dis- tricts would cost approximately $326 million. Thus, in mandating a refund, this Court would transform a program Congress designed to be self-funding into an enormous bill for taxpayers. On top of that, respondents’ proposed refund would almost certainly exacerbate the existing fee disparity. The only remaining question, then, is whether Congress would have wanted to retrospectively impose higher fees on debtors in Bankruptcy Administrator districts. The best evidence that Congress would not want such a remedy is that Congress itself chose not to pursue that course when amending the fee statute in 2021. Congress’s choice makes sense. Retrospectively raising fees in Bankruptcy Administra- tor districts would do nothing to achieve Congress’s goal of keeping the Cite as: 602 U. S. ____ (2024) 3

U. S. Trustee program self-funding. What is more, there are serious practical challenges to a retrospective imposition of higher fees, includ- ing the logistical problems with locating all the former debtors or their successors who would owe the higher fees. Pp. 7–14. (c) Relying on a series of cases involving unconstitutional state taxes, respondents and the dissent claim that due process requires overriding Congress’s clear intent. See, e.g., McKesson Corp. v. Divi- sion of Alcoholic Beverages and Tobacco, Fla. Dept. of Business Regu- lation, 496 U. S. 18; Harper v. Virginia Dept. of Taxation, 509 U. S. 86. These cases, respondents contend, stand for the proposition that un- less an “exclusive” predeprivation remedy is both “clear and certain,” Newsweek, Inc. v. Florida Dept. of Revenue, 522 U. S. 442, 443–444 (per curiam), due process requires “meaningful backward-looking re- lief,” McKesson, 496 U. S., at 31. And, they claim, the predeprivation remedy here was neither exclusive nor clear and certain. The tax cases, assuming that they are even applicable here, do not entitle respondents to relief. In those cases, the Court held that the existence of a predeprivation hearing would be enough to satisfy the Due Process Clause. See Harper, 509 U. S., at 101. Respondents acknowledge that they had the opportunity to challenge their fees be- fore they paid them, so due process is satisfied. Respondents misread this Court’s later decisions on bait-and-switch schemes as displacing that basic holding. To be sure, due process may sometimes constrain the Court’s remedial options. In this case, though, due process does not mandate any particular remedy. Thus, as the tax cases themselves advise, the Court must “implement what the legislature would have willed.” Levin v. Commerce Energy, Inc., 560 U. S. 413, 427. Pp. 13– 16. 15 F. 4th 1011, reversed and remanded.

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