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

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Supreme Court of the United States
Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC
Term: 2023
Important Dates
Argued: January 9, 2024
Decided: June 14, 2024
Outcome
Reversed and remanded
Vote
6-3
Majority
Ketanji Brown Jackson • Chief Justice John Roberts • Samuel Alito • Sonia Sotomayor • Elena Kagan • Brett Kavanaugh
Dissenting
Neil Gorsuch • Clarence Thomas • Amy Coney Barrett

Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC is a case that was decided by the Supreme Court of the United States on June 14, 2024, during the court's October 2023-2024 term. The case was argued before the Supreme Court of the United States on January 9, 2024.

In a 6-3 ruling, the court reversed the U.S. Court of Appeals for the Tenth Circuit decision and remanded the case for further proceedings consistent with the opinion, holding, "Prospective parity is the appropriate remedy for the short-lived and small disparity created by the fee statute held unconstitutional in Siegel."[1] Justice Ketanji Brown Jackson delivered the court's majority opinion. Justice Neil Gorsuch filed a dissenting opinion, joined by Justices Clarence Thomas and Amy Coney Barrett. Click here for more information about the ruling.

HIGHLIGHTS
  • The issue: The case concerned the remedy for discrepancies in Chapter 11 bankruptcy quarterly fees. Click here to learn more about the case's background.
  • The question presented: "Whether the appropriate remedy for the constitutional uniformity violation found by this Court in Siegel (2021), supra, is to require the United States Trustee to grant retrospective refunds of the increased fees paid by debtors in United States Trustee districts during the period of disuniformity, or is instead either to deem sufficient the prospective remedy adopted by Congress or to require the collection of additional fees from a much smaller number of debtors in Bankruptcy Administrator districts."[2]
  • The outcome: The U.S. Supreme Court reversed the 10th Circuit opinion and remanded the case for further proceedings.


    • The case came on a writ of certiorari to the United States Court of Appeals for the 10th Circuit. To review the lower court's opinion, click here.

    Timeline

    The following timeline details key events in this case:

    • June 14, 2024: The U.S. Supreme Court reversed the 10th Circuit opinion and remanded the case for further proceedings.
    • January 9, 2024: The U.S. Supreme Court heard oral argument.
    • September 29, 2023: The U.S. Supreme Court agreed to hear the case.
    • June 23, 2023: Office of the United States Trustee appealed to the U.S. Supreme Court.
    • August 15, 2022: The United States Court of Appeals for the 10th Circuit reversed the United States Bankruptcy Court for the District of Kansas' ruling and remanded the case for further proceedings for a determination of the appellants' quarterly Chapter 11 fees and a refund of overpayment consistent with the 10th Circuit's original opinion.

    Background

    In 1978, Congress created a pilot federal bankruptcy trustee program to delegate administrative tasks from bankruptcy judges, to mitigate any appearance of judicial bias, and to establish oversight of bankruptcy courts. In 1986, the program was made permanent, and in 1992, Alabama and North Carolina joined. But with the Federal Courts Improvement Act of 2000, Congress allowed Alabama and North Carolina to be permanently exempt from joining the national trustee program. Consequently, there were two separate national bankruptcy-administration programs, each with a different source of funding. In the two exempt states' program, the general judicial budget funds bankruptcy administrators.[3][4][5]

    With these two systems in place—one with federal judicial trustee districts and the other with bankruptcy administrators—the courts and Congress have established a variety of laws and rulings to handle how courts collect Chapter 11 quarterly disbursement fees from debtors in order to make the bankruptcy law uniform. In 2017, Congress increased the fees in trustee districts in order to fund the program in light of decreased bankruptcy filings.[3][4][5]

    In 2019, a group of debtors challenged the fee change in the United States Bankruptcy Court for the District of Kansas as unconstitutional because it was not equally applied to debtors in Alabama or North Carolina. The bankruptcy court held that the fee increases were constitutional and did not redetermine the debtors' fees. On appeal, the United States Court of Appeals for the 10th Circuit reversed the bankruptcy court's judgment and remanded the case for further proceedings in order to redetermine the fees.[3][4][5]

    Upon the U.S. Supreme Court vacating their judgment and remanding the case for further proceedings, the 10th Circuit considered supplemental briefs from the appellant and appellee, along with SCOTUS' Siegel v. Fitzgerald (2022) ruling. The court reinstated its original opinion, In re: John Q. Hammons Fall 2006, LLC (2021), and reversed the United States Bankruptcy Court for the District of Kansas' ruling and remanded the case for further proceedings for a determination of the appellants' quarterly Chapter 11 fees and a refund of overpayment.[4][5]

    The U.S. government, by way of the Office of the United States Trustee, petitioned SCOTUS to review the case and determine how the fees should be reassessed, and if the debtors should be granted retroactive relief if they were charged higher fees than others in the past.[5][6] On September 29, 2023, SCOTUS accepted the case to its merits docket.


    Siegel v. Fitzgerald

    Siegel v. Fitzgerald is a case that was decided by the Supreme Court of the United States on June 6, 2022, during the court's October 2021-2022 term. The case was argued before the court on April 18, 2022. The case concerned the constitutionality of a law imposing different fees on Chapter 11 debtors based on the district in which the bankruptcy is filed.

    The court reversed and remanded the decision of the U.S. Court of Appeals for the 4th Circuit in a 9-0 ruling, holding Congress' enactment of a fee increase for the Trustee Program violated the Bankruptcy Clause. Justice Sonia Sotomayor delivered the majority opinion of the court. Click here for more information about the ruling.


    Question presented

    The petitioner presented the following question to the court:[2]

    Question presented:
    “ Whether the appropriate remedy for the constitutional uniformity violation found by this Court in Siegel, supra, is to require the United States Trustee to grant retrospective refunds of the increased fees paid by debtors in United States Trustee districts during the period of disuniformity, or is instead either to deem sufficient the prospective remedy adopted by Congress or to require the collection of additional fees from a much smaller number of debtors in Bankruptcy Administrator districts.[7] ”

    Oral argument

    Audio

    Audio of oral argument:[8]




    Transcript

    Transcript of oral argument:[9]

    Outcome

    In a 6-3 ruling, the court reversed the U.S. Court of Appeals for the Tenth Circuit decision and remanded the case for further proceedings consistent with the opinion, holding, "Prospective parity is the appropriate remedy for the short-lived and small disparity created by the fee statute held unconstitutional in Siegel."[1] Justice Ketanji Brown Jackson delivered the court's majority opinion. Justice Neil Gorsuch filed a dissenting opinion, joined by Justices Clarence Thomas and Amy Coney Barrett.


    Opinion

    In the court's majority opinion, Justice Ketanji Brown Jackson wrote:[1]

    “ Two Terms ago, in Siegel v. Fitzgerald, 596 U. S. 464 (2022), we held that a statute violated the Bankruptcy Clause’s uniformity requirement because it permitted different fees for Chapter 11 debtors depending on the district where their case was filed. See id., at 479–480, and n. 2. Today, we are asked to determine the remedy for that constitutional violation. We agree with the Government that the appropriate remedy is prospective parity. Requiring equal fees for otherwise identical Chapter 11 debtors going forward comports with congressional intent, corrects the constitutional wrong, and complies with due process.


    Resisting this conclusion, respondents, a group of Chapter 11 debtors, argue that they are entitled to a refund. But, as respondents forthrightly concede, adopting their preferred remedy would require us to undercut congressional intent and transform, by judicial fiat, a program that Congress designed to be self-funding into an estimated $326 million bill for taxpayers. Neither remedial principles nor due process requires that incongruous result. We reverse.[7]

    		”
    —Justice Ketanji Brown Jackson

    Dissenting opinion

    Justice Neil Gorsuch filed a dissenting opinion, joined by Justices Clarence Thomas and Amy Coney Barrett.

    In his dissent, Justice Gorsuch wrote:[1]

    “ What’s a constitutional wrong worth these days? The Court’s answer today seems to be: not much. Between 2018 and 2020, the government charged fees to bankruptcy debtors that varied arbitrarily from region to region, leaving some debtors millions of dollars worse off than others. Two years ago, we held that this geographically discriminatory treatment violated the Constitution’s Bankruptcy Clause—a provision that, we stressed, was not “toothless.” Siegel v. Fitzgerald, 596 U. S. 464, 468 (2022). Today, however, the Court performs a remedial root canal, permitting the government to keep the cash it extracted from its unconstitutional fee regime.


    The path the Court follows is as striking as its destination. Never mind that a refund is the traditional remedy for unlawfully imposed fees. Never mind that the government promised to supply precisely that relief if the debtors in this case prevailed, as they have, in their constitutional challenge. Never mind that backtracking on that promise raises separate due process concerns. As the majority sees it, supplying meaningful relief is simply not worth the effort. Respectfully, that alien approach to remedies has no place in our jurisprudence.[7]

    		”
    —Justice Neil Gorsuch

    Text of the opinion

    Read the full opinion here.


    October term 2023-2024

    See also: Supreme Court cases, October term 2023-2024

    The Supreme Court began hearing cases for the term on October 2, 2023. The court's yearly term begins on the first Monday in October and lasts until the first Monday in October the following year. The court generally releases the majority of its decisions in mid-June.[10]


    See also

    External links

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 Supreme Court of the United States, Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC, decided June 14, 2024
    2. ↑ 2.0 2.1 U.S. Supreme Court, "Office of the United States Trustee, Petitioner v. John Q. Hammons Fall 2006, LLC, et al. On Petition for Writ of Certiorari," filed June 23, 2023
    3. ↑ 3.0 3.1 3.2 U.S. Court of Appeals for the 10th Circuit, John Q. Hammons Fall 2006, LLC v. Office of the U.S. Tr. (In re John Q. Hammons Fall 2006, LLC) decided October 5, 2021
    4. ↑ 4.0 4.1 4.2 4.3 U.S. Court of Appeals for the 10th Circuit, John Q. Hammons Fall 2006, LLC v. Office of the United States Tr. (In re John Q. Hammons Fall 2006), decided August 15, 2022
    5. ↑ 5.0 5.1 5.2 5.3 5.4 U.S. Supreme Court, "Office of the United States Trustee v. John Q. Hammons Fall 2006, LLC ON PETITION FOR A WRIT OF CERTIORARI," filed June 23, 2023
    6. ↑ SCOTUSblog, "Government seeks clarity on remedy after recent bankruptcy decision," July 21, 2023
    7. ↑ 7.0 7.1 7.2 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    8. ↑ Supreme Court of the United States, "Oral Argument - Audio," argued January 9, 2024
    9. ↑ Supreme Court of the United States, "Oral Argument - Transcript," argued January 9, 2024
    10. ↑ SupremeCourt.gov, "The Supreme Court at Work: The Term and Caseload," accessed January 24, 2022
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