Opposition Brief — Thelma G. McCoy, Petitioner v. United States

No. 20-886

In the Supreme Court of the United States

THELMA G. MCCOY, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

ELIZABETH B. PRELOGAR

Acting Solicitor General

Counsel of Record

BRIAN M. BOYNTON

Acting Assistant Attorney

General

MICHAEL S. RAAB

MICHAEL SHIH

Attorneys

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTION PRESENTED

Under the Bankruptcy Code, certain student loans

cannot be discharged “unless excepting such debt from

discharge * * * would impose an undue hardship on the

debtor and the debtor’s dependents.” 11 U.S.C.

523(a)(8).

The question presented is whether the court of appeals applied an incorrect standard in upholding the

lower courts’ determination that petitioner failed to

demonstrate that requiring repayment of her student

loans would impose an undue hardship on her.

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 1

Statement ...................................................................................... 2

Argument....................................................................................... 7

Conclusion ................................................................................... 21

TABLE OF AUTHORITIES

Cases:

Armstrong, In re, No. 10-82092, 2011 WL 6779326

(Bankr. C.D. Ill. 2011) ........................................................ 19

Bronsdon v. Educational Credit Mgmt. Corp.

(In re Bronsdon), 435 B.R. 791 (B.A.P. 1st Cir.

2010) ..................................................................................... 19

Brunner v. New York State Higher Educ. Services

Corp., 831 F.2d 396 (2d Cir. 1987) ..................... 3, 4, 6, 8, 14

Denittis, In re, 362 B.R. 57 (Bankr. D. Mass. 2007) .......... 19

Educational Credit Mgmt. Corp. v. Frushour

(In re Frushour), 433 F.3d 393 (4th Cir. 2005) .................. 8

Educational Credit Mgmt. Corp. v. Jesperson,

571 F.3d 775 (8th Cir. 2009) ................................... 13, 18, 19

Educational Credit Mgmt. Corp. v. Kelly

(In re Kelly), 312 B.R. 200 (B.A.P. 1st Cir. 2004) ............ 20

Educational Credit Mgmt. Corp. v. Polleys,

356 F.3d 1302 (10th Cir. 2004) ................................. 9, 15, 19

Grimes v. ECMC, No. BK06-81303, 2013 WL

5592913 (Bankr. D. Neb. Oct. 10, 2013) ............................ 12

Grogan v. Garner, 498 U.S. 279 (1991) .................................. 2

Halo Electronics, Inc. v. Pulse Electronics, Inc.,

136 S. Ct. 1923 (2016) ......................................................... 17

(III)

IV

Cases—Continued:

Page

Hemar Ins. Corp. of Am. v. Cox (In re Cox),

338 F.3d 1238 (11th Cir. 2003), cert. denied,

541 U.S. 991 (2004)................................................................ 9

Long v. Educational Credit Mgmt. Corp.

(In re Long), 322 F.3d 549 (8th Cir. 2003) ............ 10, 17, 18

Lorenz v. American Educ. Servs. (In re Lorenz), 337

B.R. 423 (B.A.P. 1st Cir. 2006) .......................................... 19

Nash v. Connecticut Student Loan Found.

(In re Nash), 446 F.3d 188 (1st Cir. 2006) .................. 10, 18

Nielson v. ACS, Inc. (In re Nielson), 473 B.R. 755

(B.A.P. 8th Cir. 2012) ......................................................... 12

Octane Fitness, LLC v. ICON Health & Fitness,

Inc., 572 U.S. 545 (2014) ..................................................... 17

Oyler v. Educational Credit Mgmt. Corp.

(In re Oyler), 397 F.3d 382 (6th Cir. 2005) ......................... 9

Pelkowski, In re, 990 F.2d 737 (3d Cir. 1993) ..................... 15

Pennsylvania Higher Educ. Assistance Agency v.

Faish (In re Faish), 72 F.3d 298 (3d Cir. 1995),

cert. denied, 518 U.S. 1047 (1996) ....................................... 8

Peterson v. Akrabawi (In re Stotler & Co.),

166 B.R. 114 (N.D. Ill. 1994) ................................................ 5

Piccinino v. U.S. Dep’t of Educ. (In re Piccinino),

577 B.R. 560 (B.A.P. 8th Cir. 2017) ................................... 12

Roberson, In re, 999 F.2d 1132 (7th Cir. 1993) ..................... 9

Sandifer v. United States Steel Corp.,

571 U.S. 220 (2014).............................................................. 13

Stellwagen v. Clum, 245 U.S. 605 (1918) ............................... 2

Thoms v. Educational Credit Mgmt. Corp.

(In re Thoms), 257 B.R. 144 (Bankr. S.D.N.Y. 2001) .... 6, 9

United States Dep’t of Educ. v. Gerhardt

(In re Gerhardt), 348 F.3d 89 (5th Cir. 2003) ............. 4, 6, 9

United Student Aid Funds, Inc. v. Pena (In re

Pena), 155 F.3d 1108 (9th Cir. 1998)............................. 9, 14

V

Statutes, regulations, and rule:

Page

Bankruptcy Abuse Prevention and Consumer

Protection Act of 2005, Pub. L. No. 109-8, § 220,

119 Stat. 59 .......................................................................... 16

Bankruptcy Code, 11 U.S.C. 101 et seq.:

Ch. 5, 11 U.S.C. 501 et seq.:

11 U.S.C. 523(a)(8) ............................................ passim

Ch. 7, 11 U.S.C. 701 et seq. ............................................... 2

Ch. 11, 11 U.S.C. 1101 et seq. ........................................... 2

Ch. 12, 11 U.S.C. 1201 et seq. ........................................... 2

Ch. 13, 11 U.S.C. 1301 et seq. ........................................... 2

Federal Debt Collection Procedures Act of 1990,

Pub. L. No. 101-647, Tit. XXXVI, § 3621,

104 Stat. 4964 ...................................................................... 16

Higher Education Amendments of 1998,

Pub. L. No. 105-244, § 971(a), 112 Stat. 1837 ................... 16

Student Loan Default Prevention Initiative Act of

1990, Pub. L. No. 101-508, Tit. III, § 3007,

104 Stat. 1388-28 ................................................................. 16

35 U.S.C. 284 .......................................................................... 17

35 U.S.C. 285 .......................................................................... 17

34 C.F.R.:

Section 674.49(c) .............................................................. 20

Section 682.402(i)(1) ........................................................ 20

Section 685.212(c) ............................................................ 20

Section 685.221(a)(5) ......................................................... 3

Section 685.221(b)(1) ......................................................... 3

Section 685.221(b)(2)(iii) ................................................... 3

Section 685.221(e)(9) ......................................................... 3

Section 685.221(f )(2) ......................................................... 3

Fed. R. Bankr. P. 8014(a)(8) ............................................. 5, 11

VI

Miscellaneous:

Page

Report of the Commission on the Bankruptcy Laws

of the United States, H.R. Doc. No. 137, 98th Cong.,

1st Sess. Pt. II (1973) ......................................................... 15

Request for Information on Evaluating Undue

Hardship Claims, 83 Fed. Reg. 7460 (Feb. 21, 2018)....... 20

The American Heritage Dictionary of the English

Language (3d ed. 1996) ................................................ 13, 14

18 The Oxford English Dictionary (2d ed. 1989) ......... 13, 14

Webster’s Third New International Dictionary

(1968) .................................................................................... 13

In the Supreme Court of the United States

No. 20-886

THELMA G. MCCOY, PETITIONER,

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 1a-7a) is

not published in the Federal Reporter but is reprinted

at 810 Fed. Appx. 315. The opinion of the district court

(Pet. App. 8a-17a) is not published in the Federal Supplement but is available at 2019 WL 1084211. The oral

decision of the bankruptcy court (Pet. App. 18a-22a) is

unreported.

JURISDICTION

The judgment of the court of appeals was entered on

June 5, 2020. A petition for rehearing was denied on

August 3, 2020 (Pet. App. 23a-24a). The petition for a

writ of certiorari was filed on December 30, 2020. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

(1)

2

STATEMENT

1. The federal bankruptcy system is intended to give

the “honest but unfortunate debtor” a “fresh start”

while ensuring the maximum possible equitable distribution to creditors. Grogan v. Garner, 498 U.S. 279,

286-287 (1991) (citation omitted); see, e.g., Stellwagen v.

Clum, 245 U.S. 605, 617 (1918). In balancing these

sometimes competing goals, Congress has enacted various provisions that prevent or limit the discharge of

certain debts. See Grogan, 498 U.S. at 287.

This case concerns Section 523(a)(8) of the Bankruptcy Code. Under that provision, a discharge of debts

in a Chapter 7, 11, 12, or 13 bankruptcy proceeding

“does not discharge an individual debtor from any debt”

for certain educational loans “unless excepting such

debt from discharge * * * would impose an undue hardship on the debtor and the debtor’s dependents.”

11 U.S.C. 523(a)(8). The Bankruptcy Code does not define the phrase “undue hardship” for purposes of Section 523(a)(8).

2. a. Petitioner “incurred a large amount of student

loan debt * * * in pursuit of advanced degrees, beginning when she was in her forties.” Pet. App. 2a. Between 2000 and 2014, petitioner obtained a bachelor’s

degree in general studies, a master’s degree in social

work, and a Ph.D. in social work. Id. at 8a-9a. While

pursuing her studies, petitioner suffered injuries from

a car accident in 2007 and a “ ‘facial burning incident at

a spa’ in 2010.” Id. at 15a (citation omitted). Petitioner

obtained the bulk of her loans in the final years of her

Ph.D. program, after suffering those injuries. Id. at

16a.

3

Following graduation, petitioner consolidated her

student loans and enrolled in the income-based repayment plan, which is a specific type of what are known as

income-driven repayment plans. Pet. App. 2a. The

income-based repayment plan is available to borrowers

experiencing “a partial financial hardship.” 34 C.F.R.

685.221(b)(1); see 34 C.F.R. 685.221(a)(5) (defining

“[p]artial financial hardship”) (emphasis omitted). Under the income-based repayment plan, a borrower’s

monthly payment is capped at 15% of the amount by

which her adjusted gross income exceeds 150% of the

federal poverty line for the borrower’s family size

and state of residence. Ibid. The monthly payment obligation may be as low as $0.00. See 34 C.F.R.

685.221(b)(2)(iii) and (e)(9)(i). Under the version of the

plan applicable to petitioner, once a borrower has been

enrolled for 25 years and made any required payments,

her remaining principal and interest are cancelled.

34 C.F.R. 685.221(f )(2).

Although petitioner worked at several part-time

jobs, her income remained low. Pet. App. 10a; see id. at

15a-16a. Accordingly, petitioner’s monthly repayment

obligation under the income-based repayment plan was

$0.00. Id. at 2a, 5a.

b. Less than 18 months after obtaining her Ph.D.,

petitioner filed a Chapter 7 bankruptcy petition. Pet.

App. 9a. Petitioner then filed an adversary complaint

in the bankruptcy proceeding, seeking a judgment discharging her student loans. Ibid.

Following a trial, the bankruptcy court entered judgment against petitioner. Pet. App. 18a-22a (entering

judgment from the bench). Consistent with governing

circuit precedent, the bankruptcy court applied a threepart test, first articulated in Brunner v. New York State

4

Higher Education Services Corp., 831 F.2d 395 (2d Cir.

1987) (per curiam), to determine whether “excepting”

petitioner’s student debt “from discharge * * * would

impose an undue hardship” under Section 523(a)(8).

11 U.S.C. 523(a)(8); see United States Dep’t of Educ. v.

Gerhardt (In re Gerhardt), 348 F.3d 89, 91 (5th Cir.

2003) (adopting the Brunner framework). The Brunner

framework requires a debtor seeking an exception from

the general nondischargeability of certain kinds of

student-loan debts to show, by a preponderance of the

evidence,

(1) that the debtor cannot maintain, based on current

income and expenses, a “minimal” standard of living

for herself and her dependents if forced to repay the

loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a

significant portion of the repayment period of the

student loans; and (3) that the debtor has made good

faith efforts to repay the loans.

831 F.2d at 396.

The bankruptcy court focused on the second prong

of that framework. Pet. App. 20a-22a. The court determined that petitioner had failed to introduce any evidence indicating that she would be unable to maintain a

minimal standard of living while repaying her loans in

the future. Id. at 21a. The court observed that petitioner’s payments were currently set at $0.00, and that

if petitioner failed to secure a higher-paying job, she

would not be required to make payments in the future.

Ibid. If, by contrast, petitioner obtained better employment, her monthly payment might increase, but so too

would her capacity to repay her loans. Ibid.

3. The district court affirmed the bankruptcy court’s

judgment. Pet. App. 8a-17a.

5

The district court first observed that petitioner’s

opening brief did not “include[] a single citation to the

record,” in “clear violation” of Bankruptcy Rule

8014(a)(8). Pet. App. 14a. The court determined, “[f ]or

that reason alone,” that petitioner’s “appeal fail[ed].”

Ibid. (quoting Peterson v. Akrabawi, (In re Stotler &

Co.), 166 B.R. 114, 116 (N.D. Ill. 1994)).

The district court nevertheless proceeded to address

the merits of petitioner’s appeal “for the sake of completeness.” Pet. App. 15a (citation omitted). Petitioner

did not challenge the Brunner framework in the district

court, but contended instead that the bankruptcy court

abused its discretion by declining to discharge her

loans. D. Ct. Doc. 14, at 7-12 (Mar. 26, 2018). After “independently review[ing] the record,” the district court

rejected that contention, determining that the bankruptcy court’s decision was “ampl[y] support[ed]” by

the evidence. Pet. App. 15a. In particular, the district

court rejected petitioner’s argument that her medical

conditions—the “bulk” of which petitioner had characterized as resulting from the 2007 and 2010 accidents,

see p. 2, supra—would prevent her from maintaining a

minimal standard of living while repaying her loans.

Pet. App. 15a. The court determined that petitioner

“overcame those traumas to get her doctorate in 2014

and has diligently sought, and often obtained, employment as a professor, a teaching assistant, a research assistant, and a social worker since, at the latest, 2009.”

Ibid. In addition, the court observed that petitioner’s

testimony indicated that she applied for “at least a significant portion of her loans after suffering the injuries.” Id. at 16a. The court declined to allow petitioner

to rely on those circumstances as proof of undue hardship because she had already known about them at the

6

time of borrowing and the record contained no evidence

that they had since been “exacerbated.” Id. at 16a-17a.

4. The court of appeals affirmed in an unpublished,

per curiam opinion. Pet. App. 1a-7a. Like the bankruptcy and district courts, the court of appeals focused

on the second prong of the Brunner framework, i.e.,

whether petitioner had demonstrated that “additional

circumstances exist indicating that” she would be unable to maintain a “minimal” standard of living if required to repay her loans. Id. at 3a-4a (quoting Brunner, 831 F.2d at 396). The court explained that such

“additional circumstances encompass circumstances

that impacted on the debtor’s future earning potential

but which were either not present when the debtor applied for the loans or have since been exacerbated.” Id.

at 4a-5a (quoting In re Gerhardt, 348 F.3d at 92) (brackets omitted). The court observed that, when debtors invoke additional circumstances, bankruptcy courts consider when they arose to prevent debtors from relying

on circumstances that they “could have calculated” into

their “cost-benefit analysis” when deciding whether to

obtain their loans in the first place. Id. at 6a (quoting

Thoms v. Educational Credit Mgmt. Corp. (In re

Thoms), 257 B.R. 144, 149 (Bankr. S.D.N.Y. 2001)).

The court of appeals agreed with the district court

that, because petitioner’s “critical health issues * * *

occurred before [she] took out the bulk of the loans and

did not prevent her from obtaining her doctorate and

various forms of employment,” the bankruptcy court

did not “clearly err” in concluding that petitioner had

failed to satisfy the second prong of the Brunner framework and therefore to carry her burden of demonstrating undue hardship. Pet. App. 6a-7a.

7

Because the court of appeals affirmed on that basis,

it did not reach the government’s other arguments in

favor of affirmance, including that petitioner had failed

to challenge the governing standard in the district

court; that the district court had correctly determined

that petitioner waived her evidentiary arguments by

failing to cite the record; and that, under the third

Brunner prong, petitioner failed to demonstrate that

she had made “good faith efforts” to repay her student

loans. Gov’t C.A. Br. 20; see id. at 12-13, 23-24.

ARGUMENT

Petitioner contends (Pet. 9-26) that the court of appeals applied the wrong standard to determine whether

“excepting” her student loan debt “from discharge * * *

would impose an undue hardship” on her. 11 U.S.C.

523(a)(8). This case would be an unsuitable vehicle for

considering the question presented because petitioner

did not preserve her objection to the framework applied

by the court of appeals; the district court’s determination that petitioner forfeited her arguments by failing

to include citations to the record provides an alternative

basis for affirmance; and petitioner has not demonstrated that she would be entitled to discharge her student loan debt in bankruptcy under her preferred approach to “undue hardship.” In addition, the court of

appeals applied the same framework that is used by the

overwhelming majority of the courts of appeals. While

the Eighth Circuit applies a somewhat different test,

that difference in approach does not warrant this

Court’s review at this time, especially since the Department of Education is currently studying whether to revise its regulations governing how student loan holders

should evaluate undue hardship and has expressly

8

called for information about whether the use of different tests for undue hardship has created inequities

among borrowers. The petition for a writ of certiorari

should be denied.

1. Under Section 523(a)(8) of the Bankruptcy Code,

the general discharge of debts in a bankruptcy proceeding under Chapter 7, 11, 12, or 13 “does not discharge

an individual debtor from any debt” for certain educational loans unless “excepting such debt from discharge

* * * would impose an undue hardship on the debtor

and the debtor’s dependents.” 11 U.S.C. 523(a)(8). Section 523(a)(8) does not define the phrase “undue hardship.” Ibid. As petitioner observes (Pet. 9), however,

the overwhelming majority of the courts of appeals, including the Fifth Circuit in the decision below, apply a

three-part framework first articulated by the Second

Circuit in Brunner v. New York State Higher Education Services Corp., 831 F.2d 395 (1987) (per curiam).

The Brunner framework requires a debtor who seeks

to discharge student-loan debt to show, by a preponderance of the evidence, the following three things:

(1) that the debtor cannot maintain, based on current

income and expenses, a “minimal” standard of living

for herself and her dependents if forced to repay the

loans; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a

significant portion of the repayment period of the

student loans; and (3) that the debtor has made good

faith efforts to repay the loans.

831 F.2d at 396; accord Pennsylvania Higher Educ. Assistance Agency v. Faish (In re Faish), 72 F.3d 298, 306

(3d Cir. 1995), cert. denied, 518 U.S. 1009 (1996); Educationalal Credit Mgmt. Corp. v. Frushour (In re

Frushour), 433 F.3d 393, 400 (4th Cir. 2005); United

9

States Dep’t of Educ. v. Gerhardt (In re Gerhardt), 348

F.3d 89, 91 (5th Cir. 2003); Oyler v. Educational Credit

Mgmt. Corp. (In re Oyler), 397 F.3d 382, 385 (6th Cir.

2005); In re Roberson, 999 F.2d 1132, 1135 (7th Cir.

1993); United Student Aid Funds, Inc. v. Pena (In re

Pena), 155 F.3d 1108, 1114 (9th Cir. 1998); Educational

Credit Mgmt. Corp. v. Polleys, 356 F.3d 1302, 1309 (10th

Cir. 2004); Hemar Ins. Corp. of Am. v. Cox (In re Cox),

338 F.3d 1238, 1240 (11th Cir. 2003) (per curiam), cert.

denied, 541 U.S. 991 (2004).

Petitioner does not dispute that if the Brunner

framework applies, the court of appeals correctly applied it to the facts of this case. Like the bankruptcy

court and the district court, the court of appeals focused

on Brunner’s second prong, which requires the debtor

to demonstrate that her future earning potential is limited by “additional circumstances * * * which were either not present when the debtor applied for the loans

or have since been exacerbated.” Pet. App. 4a-5a (quoting Gerhardt, 348 F.3d at 92) (brackets omitted). As the

court of appeals observed, “the timing of additional circumstances” is relevant because the debtor “could have

calculated” into her “cost-benefit analysis” any circumstances that already existed when she sought the loans.

Id. at 6a (quoting Thoms v. Educational Credit Mgmt.

Corp. (In re Thoms), 257 B.R. 144, 149 (Bankr. S.D.N.Y.

2001)).

Here, petitioner claimed that two “additional circumstances” were relevant: her proximity to the “minimum

retirement age” and her “mental and physical disabilities.” Pet. App. 5a. But petitioner “incurred a large

amount of student loan debt * * * beginning when she

was in her forties,” and “applied for the majority of her

10

loans ‘after the first couple years’ of her Ph.D. program,” when she was in her fifties; it would have been

clear to her at that time that at least some of that debt

might still be outstanding as she approached the age of

65. Id. at 2a, 15a-16a. And the “critical health issues”

on which petitioner relied in claiming undue hardship

had already “occurred before [she] took out the bulk of

the loans.” Id. at 6a. Furthermore, those events “did

not prevent her from obtaining her doctorate and various forms of employment,” thus suggesting that she

might be able to repay her loans while maintaining a

minimal standard of living in the future. Ibid.

2. Petitioner nonetheless contends (Pet. 15-18) that

the court of appeals should have applied a “totality of

the circumstances” approach to determine whether exempting her loans from discharge would cause her “undue hardship” under Section 523(a)(8). Pet. 17-18 (citations and emphasis omitted). The vast majority of circuits use the Brunner framework applied by the court

of appeals in this case. 1 See pp. 8-9, supra. Although

the Eighth Circuit applies a totality of the circumstances approach, see, e.g., Long v. Educational Credit

Mgmt. Corp. (In re Long), 322 F.3d 549 (2003), this case

presents an unsuitable vehicle for reviewing any disagreement among the courts of appeals, for three reasons.

First, although petitioner asserts (Pet. 24) that she

“fully preserved for this Court’s review” the question of

which framework should be used to assess undue hardship, it is not clear that the court of appeals agreed that

As petitioner acknowledges, the First Circuit has “not formally

committed to either approach.” Pet. 10; see Nash v. Connecticut

Student Loan Found. (In re Nash), 446 F.3d 188, 190 (1st Cir. 2006).

1

11

the issue was preserved. Petitioner pressed her challenge to the Brunner framework in the court of appeals,

but she had forfeited that argument by failing to raise

it in her first-level appeal from the bankruptcy court to

the district court. See Gov’t C.A. Br. 23 (pointing out

the forfeiture). The court of appeals applied the Brunner framework without addressing petitioner’s contention that the totality of the circumstances approach

should instead apply. See Pet. App. 1a-7a.

Second, the judgment of the court of appeals may be

affirmed on a distinct ground. The district court determined that petitioner’s appeal “fail[ed]” because she did

not include any citations to the record, in “clear violation” of Bankruptcy Rule 8014(a)(8). Pet. App. 14a (citation omitted); see p. 5, supra. Although the district

court “continue[d] to the substance of the appeal for the

sake of completeness,” Pet. App. 15a (citation omitted),

the court’s determination provides an alternative

ground for affirming the decision below.

Third, petitioner has not demonstrated that she

would have likely succeeded in obtaining an unduehardship discharge of her student-loan debt under the

totality of the circumstances approach for which she advocates. As discussed below, see pp. 18-20, infra, it is

far from clear that the choice between the two approaches results in different outcomes in a significant

number of cases. Here, petitioner suggests (Pet. 24-25)

that a court applying the totality approach would consider her claimed medical and financial impediments to

repayment. But three courts below considered those issues under the Brunner framework, and each one determined that petitioner’s discharge request failed because petitioner had failed to adduce “any evidence at

all” that repayment would inflict undue hardship upon

12

her. Pet. App. 21a (bankruptcy court); see id. at 5a-7a

(court of appeals); id. at 15a-16a (district court).

Petitioner cites (Pet. 25) Grimes v. ECMC (In re

Grimes), No. BK06-81303, 2013 WL 5592913 (Bankr. D.

Neb. Oct. 10, 2013), to suggest that application of the

totality approach might have changed the result in her

case. But even if the facts of Grimes were comparable,

a conflict between the court of appeals decision below

and an unpublished and unreviewed bankruptcy court

decision would not warrant this Court’s review. And the

facts of Grimes are readily distinguishable from petitioner’s case. As the court there explained, the loans at

issue were disbursed more than a decade before the

debtor’s health problems commenced, id. at *1, whereas

the courts here emphasized that petitioner did not apply

for “the bulk” of her loans until after her health issues

arose, Pet. App. 6a; see id. at 16a-17a. Moreover, the

debtor in Grimes had not enrolled in an income-based

repayment program, see 2013 WL 5592913, at *2,

whereas petitioner has enrolled in such a program and

has, as a result, monthly payments of $0.00, see Pet.

App. 20a. Although the court of appeals here did not

rely on the payment plan, see id. at 4a, courts applying

the Eighth Circuit’s totality of the circumstances approach have relied on the low level of payments under

such plans to support the denial of undue-hardship discharge requests. E.g., Piccinino v. U.S. Dep’t of Educ.

(In re Piccinino), 577 B.R. 560, 567 (B.A.P. 8th Cir.

2017) (finding that the bankruptcy court did not clearly

err in concluding that the debtor “has sufficient funds

to make” payments of $0.00 under a repayment plan);

Nielson v. ACS, Inc. (In re Nielson), 473 B.R. 755, 761762 (B.A.P. 8th Cir. 2012) (noting that “the ability to

make” a payment under such a plan “is, at a minimum,

13

an important factor in the analysis” and that the

debtor’s payments “would be zero”); see generally Educational Credit Mgmt. Corp. v. Jesperson, 571 F.3d

775, 783 (8th Cir. 2009) (observing that, because repayment plans adjust for future declines in income, they “in

most cases will avoid undue hardship”). Petitioner

therefore has not demonstrated that she would have

been likely to receive a discharge of her student-loan

debt under a totality of the circumstances approach.

3. More generally, the lopsided disagreement about

how to characterize the standard for evaluating undue

hardship does not presently warrant this Court’s review. The Brunner framework is not foreclosed by the

text or history of Section 523(a)(8), as petitioner contends. And the practical difference between Brunner

and petitioner’s preferred approach appears to be limited. In addition, because the Department of Education

is currently considering this issue, review would be

premature.

a. Contrary to petitioner’s contentions (Pet. 15-20),

the Brunner framework is neither foreclosed by the

statutory “undue hardship” standard, nor inconsistent

with the provision’s history.

i. Because Section 523(a)(8) does not define the

word “undue,” courts give the term its “ordinary, contemporary, common meaning.” Sandifer v. United

States Steel Corp., 571 U.S. 220, 227 (2014) (citation

omitted). “Undue” means “excessive” or “[e]xceeding

what is appropriate or normal.” The American Heritage Dictionary of the English Language 1949 (3d ed.

1996); see 18 The Oxford English Dictionary 1010 (2d

ed. 1989) (“Going beyond what is appropriate, warranted, or natural; excessive”); Webster’s Third New

14

International Dictionary 2492 (1968) (“exceeding or violating propriety or fitness: excessive, immoderate, unwarranted”) (capitalization and emphasis omitted); see

also, e.g., In re Pena, 155 F.3d at 1111 (“The existence of

the adjective ‘undue’ indicates that Congress viewed

garden-variety hardship as insufficient excuse for a discharge of student loans.”) (citation omitted). It also

connotes some degree of unfairness—that something is

“[n]ot in accordance with what is just and right.” Oxford English Dictionary 1010; see also American Heritage Dictionary 1949 (“Not just, proper, or legal.”).

The Brunner framework reflects most courts’ interpretation of the phrase “undue hardship.” The first

prong of the framework limits discharge to those debtors who would be unable to maintain a “minimal” standard of living if required to repay their loans, while the

second prong requires a debtor to show that this state

of affairs will persist for the foreseeable future. Brunner, 831 F.2d at 396. Those conditions implement Section 523(a)(8)’s restriction on the discharge of studentloan debt to the circumstances in which repayment would

inflict excessive hardship. The third prong requires a

debtor to have made a good-faith effort at repaying her

student-loan obligations before seeking to discharge

them. That condition implements Section 523(a)(8)’s requirement that discharge be limited to circumstances in

which requiring repayment would be unfair, which

would not be true of a debtor who seeks to discharge her

obligations without first making good-faith efforts to

meet them. 2

Petitioner contends that some courts of appeals have required a

debtor to prove hardship using a standard more rigorous than that

of Brunner itself, e.g., by requiring the debtor to show a “total incapacity in the future to pay [her] debts for reasons not within [her]

2

15

ii. Courts have also explained that the Brunner

standard is consistent with the history of Section

523(a)(8). Congress enacted that provision in 1978 to

implement the recommendations of a congressionally

chartered advisory commission. Polleys, 356 F.3d at

1306. The commission concluded that there had been a

“rising incidence of consumer bankruptcies of former

students motivated primarily to avoid payment of educational loan debts.” Report of the Commission on the

Bankruptcy Laws of the United States, H.R. Doc. 137,

93d Cong., 1st Sess., Pt. II, at 140 n.14 (1973). In response, the commission urged that student loans be nondischargeable unless a debtor can demonstrate that “he

is unable to earn sufficient income to maintain himself

and his dependents and to repay the educational debt.”

Id. at 140 n.15; see In re Pelkowski, 990 F.2d 737, 742743 (3d Cir. 1993) (discussing legislative history).

Petitioner suggests (Pet. 19) that the Brunner

framework is inconsistent with congressional intent because, when Congress adopted the “undue hardship”

standard in 1978, it intended to create only “a narrow

window of nondischargeability.” But as petitioner

acknowledges, ibid., over the next several decades,

control.” Pet. 17-18 (citation omitted; brackets in original). That

issue, however, is not presented in this case. Although the court of

appeals referred to the “total incapacity” standard, Pet. App. 5a (citation omitted), the court’s reasoning did not rely on it. Instead, the

court held that petitioner had failed to meet the second Brunner

factor because petitioner had known about her ailments before taking out the “bulk” of her loans, and those ailments were unlikely to

impair petitioner’s ability to repay her loans because they “did not

prevent her from obtaining her doctorate and various forms of employment.” Id. at 6a. The court did not address whether petitioner

had demonstrated a “total incapacity” to repay her loans in the future. Id. at 5a (citation omitted); see id. at 5a-7a.

16

Congress expanded the scope of its general rule that

certain student loans are not dischargeable in bankruptcy, extending both the timeframe and the scope of

loans covered without altering the requirement that, to

qualify for an exception, a debtor must demonstrate

“undue hardship.” Indeed, following the Second Circuit’s 1987 decision in Brunner, and as “the Brunner

test spread through multiple circuits,” Pet. 20, Congress expanded application of the “undue hardship” requirement on four separate occasions. 3 At a minimum,

petitioner has not demonstrated that Section 523(a)(8)’s

history forecloses the Brunner framework, though Congress could, of course, easily address that question

through another amendment to Section 523(a)(8).

b. Petitioner nonetheless contends (e.g., Pet. 16)

that the court of appeals erred in applying the Brunner

framework rather than the totality of the circumstances

approach. Under the latter approach—which only the

Eighth Circuit has adopted, see pp. 8-9, 10 n.1, supra—

the court “consider[s]: (1) the debtor’s past, present,

and reasonably reliable future financial resources; (2) a

calculation of the debtor’s and her dependent’s reason-

See Student Loan Default Prevention Initiative Act of 1990,

Pub. L. No. 101-508, Tit. III, § 3007, 104 Stat. 1388-28 (expanding

the undue-hardship requirement by making it an exception to discharge in Chapter 13 bankruptcies); Federal Debt Collection Procedures Act of 1990, Pub. L. No. 101-647, Tit. XXXVI, § 3621,

104 Stat. 4964 (increasing the applicable time limit from five to

seven years); Higher Education Amendments of 1998, Pub. L. No.

105-244, § 971(a), 112 Stat. 1837 (eliminating time limit entirely);

Bankruptcy Abuse Prevention and Consumer Protection Act of

2005, Pub. L. No. 109-8, § 220, 119 Stat. 59 (excluding from discharge any debt meeting the Internal Revenue Code’s definition of

a “qualified education loan”).

3

17

able necessary living expenses; and (3) any other relevant facts and circumstances surrounding each particular bankruptcy case.” In re Long, 322 F.3d at 554.

Petitioner’s principal argument in favor of the totality test is that, in her view, “§ 523(a)(8) confers ‘discretion.’ ” Pet. 16 (quoting In re Long, 322 F.3d at 554).

But as discussed above, the phrase “undue hardship”

permits courts to discharge certain student-loan debt

only in specific circumstances. In particular, Section

523(a)(8) permits courts to discharge certain studentloan obligations where the debtor would suffer an “undue” or excessive degree of hardship, and the debtor

has made good-faith efforts to repay her loans. See pp.

13-14, supra.

For similar reasons, petitioner errs in suggesting

(Pet. 17-18) that the totality approach is required by

this Court’s decisions in Octane Fitness, LLC v. ICON

Health & Fitness, Inc., 572 U.S. 545 (2014), and Halo

Electronics, Inc. v. Pulse Electronics, Inc., 136 S. Ct.

1923 (2016). Those cases involved far more “open-ended

statutory standards,” Pet. 17, than Section 523(a)(8)’s

“undue hardship” standard. In Octane Fitness, the

Court considered Section 285 of the Patent Act, which

“provides, in its entirety, that ‘[t]he court in exceptional

cases may award reasonable attorney fees to the prevailing party.’ ” 572 U.S. at 548 (quoting 35 U.S.C. 285).

And in Halo Electronics, the Court considered Section

284 of the Patent Act, which provides that in cases of

infringement, “courts ‘may increase the damages up to

three times the amount found or assessed.’ ” 136 S. Ct.

at 1928 (quoting 35 U.S.C. 284). Section 523(a)(8)’s

undue-hardship standard provides greater guidance to

courts than do those other statutes. See pp. 13-14, supra.

18

c. In any event, it is far from clear that, in practice,

the totality approach differs from Brunner in a manner

sufficient to warrant this Court’s review at this time.

Although the Eighth Circuit has described the totality

approach as “less restrictive” than the Brunner framework, In re Long, 322 F.3d. at 554, it has also observed

that the burden it imposes on debtors is a “rigorous”

one, and it has recognized that the distinction between

the standards “may not be that significant,” Jesperson,

571 F.3d at 779 & n.1. Cf. Pet. 21 (noting that “[l]ike

Brunner, the totality approach erects a high barrier to

discharging student loans”). Like the Brunner framework, the totality approach focuses on factors relevant

to the debtor’s economic situation. As the Eighth Circuit explained:

Simply put, if the debtor’s reasonable future financial resources will sufficiently cover payment of the

student loan debt—while still allowing for a minimum standard of living—then the debt should not be

discharged. Certainly, this determination will require a special consideration of the debtor’s present

employment and financial situation—including assets, expenses, and earnings—along with the prospect of future changes—positive or adverse—in the

debtor’s financial position.

In re Long, 322 F.3d at 554-555. And the totality approach incorporates Brunner’s third factor, by considering “evidence of a less than good faith effort to repay

* * * student loan debts.” Jesperson, 571 F.3d at 782;

see id. at 784 (Smith, J., concurring).

Other courts have likewise acknowledged that while

the totality approach is “facially” different from the

Brunner framework, In re Nash, 446 F.3d at 190, “the

distinctions between the two tests are modest, with

19

many overlapping considerations,” and the two “ ‘tests

take converging tacks,’ ” Bronsdon v. Educational

Credit Mgmt. Corp. (In re Bronsdon), 435 B.R. 791, 798799 (B.A.P. 1st Cir. 2010) (quoting Lorenz v. American

Educ. Servs. (In re Lorenz), 337 B.R. 423, 431 (B.A.P.

1st Cir. 2006)). Put differently, the Brunner framework

does not necessarily “rule out consideration of all the

facts and circumstances,” and “[a]s a practical matter

* * * the two tests will often consider similar information,” including “the debtor’s current and prospective financial situation in relation to the educational

debt and the debtor’s efforts at repayment.” Polleys,

356 F.3d at 1309; see ibid. (explaining that courts should

consider “all relevant factors, including the health of the

debtor” under the first and second Brunner factors);

Jesperson, 571 F.3d at 779 (observing that under the totality of the circumstances approach, a debtor must still

demonstrate that her “reasonable future financial resources will [not] sufficiently cover payment of the student loan debt”) (citation omitted).

Petitioner relies (Pet. 14-15) on three cases to suggest that the standards “diverge dramatically” in practice. Pet. 13. But differences in results may reflect different facts rather than the approach nominally applied

by each court. And two of the cases on which petitioner

relies (ibid.) are unreviewed Bankruptcy Court decisions (one unpublished), which do not necessarily reflect the courts of appeals’ understanding of the proper

application of the Brunner framework. See In re Armstrong, No. 10-82092, 2011 WL 6779326 (Bankr. C.D. Ill.

2011); In re Denittis, 362 B.R. 57 (Bankr. D. Mass.

2007). The third case, decided by a Bankruptcy Appellate Panel in the First Circuit, states only that “[u]nder

20

Brunner, the Debtor’s failure to make a good faith effort to repay the loans would result in a conclusion of

nondischargeability,” whereas under the totality approach, “a debtor’s failure to make a good faith repayment effort is an additional factor to be weighed, but not

necessarily a determinative factor.”

Educational

Credit Mgmt. Corp. v. Kelly (In re Kelly), 312 B.R. 200,

207 (2004). The First Circuit has not adopted either

test, see p. 10 n.1, supra, and that panel’s characterization of the two approaches does not warrant review in

this case.

d. Finally, review is also unwarranted because the

U.S. Department of Education, which has issued regulations requiring loan holders to evaluate undue-hardship

claims and concede an undue hardship in certain circumstances, see 34 C.F.R. 674.49(c), 682.402(i)(1), 685.212(c),

is currently considering the appropriate factors to be

taken into account in making that determination. In

2018, the Department of Education issued a request for

information on this issue, including on whether “the use

of two tests results in inequities among borrowers.” Request for Information on Evaluating Undue Hardship

Claims, 83 Fed. Reg. 7460, 7461 (Feb. 21, 2018). Because the Department of Education continues to study

this issue, and may revise its regulations and related

policies in the future, this Court’s review is unwarranted at this time.

21

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

ELIZABETH B. PRELOGAR

Acting Solicitor General

BRIAN M. BOYNTON

Acting Assistant Attorney

General

MICHAEL S. RAAB

MICHAEL SHIH

Attorneys

MAY 2021