June 26, 2006

Nitpicking Is a Form of Affection

Rehnquist pulled seven votes in Tennessee Student Assistance Corp. v. Hood with a dodge: "Because we conclude that a proceeding initiated by a debtor to determine the dischargeability of a student loan debt is not a suit against the State for purposes of the Eleventh Amendment, we affirm the Court of Appeals' judgment, and we do not reach the question on which certiorari was granted." Souter and Ginsburg concurred with "I join in the Court's opinion, save for any implicit approval of the holding in Seminole Tribe of Fla. v. Florida." (I'm not a big fan of the don't-give-the-state-a-wedgie rationale either -- Seminole's protection of sovereignty is better justified because the state acted in a purely regulatory capacity rather than as an employer, buyer, seller, provider of facilities, etc., and therefore was in its dual-government role* -- but let it go.) Thomas, with Scalia joining his dissent, refused to let Rehnquist sidle by and declared that the suit in question was pursued adversarially rather than by the Bankruptcy Court's in rem jurisdiction, so the state's sovereignty and almighty dignity was implicated and must be defended.

I wonder whether there was a "See, I told you so" moment between the Hood dissenters and Kennedy in conferencing about Katz, as he joined them along with Chief Justice Roberts. O'Connor stuck by the dodgy memory of former Chief Justice Rehnquist in joining Steven's opinion, which said, "The relevant question is not whether Congress has 'abrogated' States’ immunity in proceedings to recover preferential transfers. The question, rather, is whether Congress’ determination that States should be amenable to such proceedings is within the scope of its power to enact 'Laws on the subject of Bankruptcies.'"

Thomas is right to politely call bullshit on this further attempt to avoid the Eleventh Amendment problem, but he is wrong to cast Katz as solely a question of sovereignty and therefore decided by the Seminole precedent. The Court's specific jurisprudence on bankruptcy is relevant as well, and weighs in favor of a policy toward uniform treatment of commercial creditors. In Marshall**, the Court managed unanimous agreement that the history of a "probate exception" to the federal courts' authority was dubious; the majority in Katz got something similar for the provenance of states' being excepted from bankruptcy rules.

* Obviously this is a very fact-specific and O'Connoresque distinction. For example, in Pennsylvania v. Union Gas, the majority made the superficial determination that Congress was just treating the state like any other "owner or operator," cheerfully ignoring that the tar accident occurred while the state was engaged in flood control efforts, not while it was running a coal plant. Hoffman fits here as well, because the state was in its capacity as a taxing authority, something only a sovereign could do. In Katz, by contrast, the state entities were engaged in regular commercial transactions with a bookstore, buying and selling just as a private college would.

** Bleak House got yet another mention in Stevens's Marshall concurrence, footnote 2. And footnote 5 of Stevens's Katz opinion made me smile. "The legislation widely acknowledged to be the first English bankruptcy statute, 34 & 35 Hen. 8, ch. 4, §1 (1542), contained a provision explaining that the statute was needed to deal with the growing number of debtors who, after 'craftily obtaining into their Hands great Substance of other Men’s Goods, do suddenly flee to Parts unknown.'"