Amicus Curiae Brief — Alfred H. Siegel, Trustee of the Circuit City Stores, Inc. Liquidating Trust, Petitioner v. John P. Fitzgerald, III, Acting United States Trustee for Region 4

No. 21-441

In the Supreme Court of the United States

ALFRED H. SIEGEL, TRUSTEE OF THE CIRCUIT CITY

STORES, INC. LIQUIDATING TRUST,

Petitioner,

v.

JOHN P. FITZGERALD, III, ACTING UNITED STATES

TRUSTEE FOR REGION 4,

Respondent.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BRIEF OF AMICUS CURIAE

THE CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA

IN SUPPORT OF PETITIONER

Paul Lettow

Janet Galeria

U.S. C HAMBER

L ITIGATION C ENTER

1615 H Street, NW

Washington, DC 20062

(202) 463-5337

Steven P. Lehotsky

Counsel of Record

LEHOTSKY KELLER LLP

200 Massachusetts Ave. NW

Washington, DC 20001

(512) 693-8350

steve@lehotskykeller.com

Michael C. Cotton

LEHOTSKY KELLER LLP

919 Congress Ave

Austin, TX 78701

michael@lehotskykeller.com

i

TABLE OF CONTENTS

Interest of Amicus Curiae ................................................... 1

Summary of Argument ......................................................... 1

Argument ................................................................................ 3

The Appropriate Remedy is a Full Refund of

All Unconstitutional Fees ............................................... 3

A. There is no workable, constitutionally

permissible

level-down

remedy

available here.. ..................................................... 3

B. The appropriate remedy is a level-up

refund of unconstitutional fees. ....................... 11

Conclusion ............................................................................. 15

(i)

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Allegheny Pittsburgh Coal Co. v. Cty.

Com’n of Webster Cty., W. Va.,

488 U.S. 336 (1989) .........................................................12

Matter of Buffets, L.L.C.,

979 F.3d 366 (5th Cir. 2020) ..................................... 8, 10

In re Buffets, LLC,

597 B.R. 588 (Bankr. W.D. Tex. 2019),

rev’d, 979 F.3d 366 (5th Cir. 2020) ..................................8

Califano v. Goldfarb,

430 U.S. 199 (1977) .........................................................12

Califano v. Westcott,

443 U.S. 76 (1979) ...........................................................11

In re Circuit City Stores, Inc.,

996 F.3d 156 (4th Cir. 2021) ..................................... 8, 10

In re Clinton Nurseries, Inc.,

998 F.3d 56 (2d Cir. 2021) ................................................7

Comptroller of the Treas. v. Wynne,

575 U.S. 542 (2015) ...........................................................4

Dep’t of Agric. V. Moreno,

413 U.S. 528 (1973) .........................................................12

Frontiero v. Richardson,

411 U.S. 677 (1973) .........................................................12

iii

Harper v. Va. Dep’t of Taxation,

509 U.S. 86 (1993) .............................................................5

Heckler v. Mathews,

465 U.S. 728 (1984) .........................................................11

Iowa-Des Moines Nat. Bank v. Bennett,

284 U.S. 239 (1931) .................................................... 5, 11

Jimenez v. Weinberger,

417 U.S. 628 (1974) .........................................................12

In re John Q. Hammons Fall 2006, LLC,

15 F.4th 1011 (10th Cir. 2021) .................................. 7, 10

Levin v. Commerce Energy, Inc.,

560 U.S. 413 (2010) .................................................... 4, 14

In re Life Partners Holdings, Inc.,

606 B.R. 277 (Bankr. N.D. Tex. 2019) ............................8

Lucia v. SEC,

138 S. Ct. 2044 (2018) .....................................................12

McKesson Corp. v. Div. of Alcoholic

Beverages & Tobacco, Dep’t of Bus.

Regulation of Fla.,

496 U.S. 18 (1990) .................................................... 4, 5, 6

In re Mosaic Mgmt. Grp., Inc.,

22 F.4th 1291 (11th Cir. 2022) .........................................8

Reich v. Collins,

513 U.S. 106 (1994) ...........................................................6

Sessions v. Morales-Santana,

137 S. Ct. 1678 (2017) ........................................ 11, 12, 13

iv

Stern v. Marshall,

564 U.S. 462 (2011) ...........................................................7

United States v. Booker,

543 U.S. 220 (2005) ...........................................................4

USA Sales, Inc. v. Office of U.S. Tr.,

No. 19-2133, 532 F.Supp.3d 921 (C.D.

Cal. 2021)............................................................................8

Welsh v. United States,

398 U.S. 333 (1970) .........................................................12

Constitutional Provisions & Statutes

U.S. CONST. ART. I, § 8, Cl. 4 .................................................2

Bankruptcy Administration Improvement

Act of 2020, Pub. L. No. 116-325 (2021): ................. 6, 10

§3(d)(2), 134 Stat. 5088 (2021) ............................ 6, 10

§3(e), 134 Stat. 5088 (2021) ......................................10

Other Authorities

Elizabeth Warren & Jay L. Westbrook,

The Success of Chapter 11: A Challenge

to the Critics, 107 Mich. L. Rev. 603

(2009) ..................................................................................2

Report of the Proceedings of the Judicial

Conference of the United States (Sept.

13, 2018), https://tinyurl.com/2018-judconf-report .........................................................................6

INTEREST OF AMICUS CURIAE

The Chamber of Commerce of the United States of

America is the world’s largest business federation.1 It

represents approximately 300,000 direct members and

indirectly represents the interests of more than three

million companies and professional organizations of every

size, in every industry sector, and from every region of the

country. An important function of the Chamber is to

represent the interests of its members in matters before

Congress, the Executive Branch, and the courts. To that

end, the Chamber regularly files amicus briefs in cases,

like this one, that raise issues of concern to the nation’s

business community.

The Chamber has a strong interest in this case, as

Chapter 11 plays a vital role in the health of the nation’s

economy and business community. Businesses across

industries are routinely involved in bankruptcies, and

whether as debtors or creditors, they depend on uniform

bankruptcy laws consistently applied. When Congress

fails in its constitutional duty to create uniform

bankruptcy laws, it harms both debtors and creditors, and

debtors here should be given an appropriate remedy—a

refund of excessive fees.

SUMMARY OF ARGUMENT

American businesses depend on the uniformity of

Chapter 11 of the U.S. Bankruptcy Code, which enables

failing businesses to be reorganized into once-again

Pursuant to this Court’s Rule 37.6, amicus curiae affirms that no

counsel for a party authored this brief in whole or in part or made a

monetary contribution intended to fund the preparation or submission

of this brief, and that no person other than amicus curiae, its

members, and its counsel made such a monetary contribution. Counsel

of record for all parties have consented to its filing. See this Court’s

Rule 37.3.

1

(1)

2

successful companies. Chapter 11 “create[s] value for

business’s

creditors,

workers,

investors,

and

communities.” Elizabeth Warren & Jay L. Westbrook,

The Success of Chapter 11: A Challenge to the Critics, 107

Mich. L. Rev. 603 (2009). But for debtors and creditors to

manage their affairs efficiently and predictably in

bankruptcy proceedings, uniform laws must be put in

place that treat businesses fairly and equally.

Congress has chosen to divide the nation’s bankruptcy

courts into two distinct categories: Bankruptcy

Administrator districts (“Administrator districts”) and

U.S. Trustee districts (“Trustee districts”). And pursuant

to the Bankruptcy Judgeship Act of 2017, debtors in those

two systems must sometimes pay radically different fees.

This disparate treatment violates the Bankruptcy Clause

of the U.S. Constitution, which requires bankruptcy laws

to be “uniform.” U.S. CONST. ART. I, § 8, Cl. 4. Yet the

Government contends that even if the Bankruptcy

Judgeship Act of 2017 is unconstitutional, the petitioner

here is not entitled to a refund of the Government’s

collection of unconstitutional fees. In fashioning a remedy,

the Government argues that the Court can either “level

up” or “level down.” And here, according to the

Government, the Court should offer no relief whatsoever,

making its ruling a purely prospective declaratory

ruling—even though such a declaration would not equalize

the treatment of current Chapter 11 debtors in Trustee

and Administrator districts. The Government’s proposed

remedy would be wrong as a matter of law and would leave

debtors with no relief for excessive, non-uniform fees that

violate the Bankruptcy Clause of the Constitution.

The Government’s proposed declaratory remedy is not

acceptable under this Court’s precedents, because

forward-looking declaratory relief is not an appropriate

level-down remedy for a past constitutional violation that

caused monetary harm. That type of violation requires

3

backward-looking relief. But here, a backward-looking

level-down remedy would sow utter chaos into America’s

bankruptcy courts. That’s because an appropriate leveldown remedy would entail retroactively increasing fees on

non-parties—Chapter 11 debtors in Administrator

districts—many of whose cases are now permanently

closed. Reopening closed cases to collect enormous fees

from debtors (and potentially creditors) would be wildly

impractical, if not impossible.

It would introduce

confusion and disorder into bankruptcy courts in

Administrator districts—affecting debtors and creditors

alike—and leave debtors in Trustee districts, like

petitioner here, with no relief from the Government’s

unconstitutional fees.

The only logical, workable, and constitutionally

permissible remedy is the simple and elegant solution of

the district court here: petitioner should be charged fees

under the fee statute in place before the Bankruptcy

Judgeship Act of 2017—rather than under the

unconstitutional fee structure introduced in the

Bankruptcy Judgeship Act—and petitioner should be

issued a refund for the difference.

ARGUMENT

THE APPROPRIATE REMEDY IS A FULL REFUND OF

ALL UNCONSTITUTIONAL FEES

A.

There is no workable, constitutionally

permissible level-down remedy available

here.

If the Bankruptcy Judgeship Act of 2017 violates the

Bankruptcy Clause of the Constitution, and it does, then

petitioner should receive a refund of any

unconstitutionally assessed fees.

The Government

contends, however, that petitioner should not get a refund

because the Court, in choosing a remedy, must “seek to

determine what ‘Congress would have intended’ in light of

4

the Court’s constitutional holding.” Respondent’s Br. at

19 (quoting United States v. Booker, 543 U.S. 220, 246

(2005)). And the constitutional violation can be cured “by

either ‘leveling up’ or ‘leveling down.’” Respondent’s Br.

at 19 (quoting Comptroller of the Treas. v. Wynne, 575

U.S. 542, 569 (2015)). According to the Government,

Congress would opt for leveling down with mere

“declaratory relief.” Ibid.

It’s true that “courts may attempt, within the bounds

of their institutional competence, to implement what the

legislature would have willed had it been apprised of the

constitutional infirmity.” Levin v. Commerce Energy,

Inc., 560 U.S. 413, 427 (2010). But the remedies on the

table for the hypothetical Congress to consider must be

actual remedies, and they must comport with the

Constitution. Here, declaratory relief alone would not be

a constitutionally permissible remedy (whether level up or

level down) for Congress to entertain, were it to have its

pick of possible remedies.

Whether Congress would level up or level down, the

end result must equalize fees paid by petitioner with those

of similarly situated debtors in Administrator districts.

Forward-looking declaratory relief is not an appropriate

remedy for constitutional violations that occurred in the

past and resulted in past economic harm. See McKesson

Corp. v. Div. of Alcoholic Beverages & Tobacco, Dep’t of

Bus. Regulation of Fla., 496 U.S. 18, 22 (1990). Here,

because the unequal treatment arose in the past and

resulted in past financial harm, leveling down would not

mean merely declaring the 2017 Act unconstitutional. In

this case, that forward-looking relief would do nothing to

equalize treatment of debtors across Trustee and

Administrator districts. Instead, leveling down would

entail retrospectively raising fees in Administrator

districts, during the relevant timeframe, to meet those of

Trustee districts during the same timeframe—a

5

disastrous course of action that the Government is

unwilling to suggest.

For example, in McKesson, the Florida Supreme

Court had found that Florida’s liquor excise tax violated

the Commerce Clause of the U.S. Constitution, yet the

Florida Supreme Court merely enjoined the State from

giving effect to its unconstitutional tax preferences in the

future—all while denying the petitioner a tax refund or

any other relief for the taxes it had already paid. Ibid.

This Court reversed, holding that “the Due Process

Clause requires the State to afford taxpayers a meaningful

opportunity to secure postpayment relief for taxes already

paid pursuant to a tax scheme ultimately found

unconstitutional.”

Ibid.

The State’s prospective

injunctive relief was not a constitutionally permissible

remedy because it did not address the harm actually

suffered by the petitioner in the form of unlawfully

collected taxes.

The Due Process Clause of the

Fourteenth Amendment obligated “the State to provide

meaningful backward-looking relief to rectify any

unconstitutional deprivation.” Id. at 31 (emphasis added);

see also Harper v. Va. Dep’t of Taxation, 509 U.S. 86, 101

(1993) (same).

This Court in McKesson noted that the State could

provide backward-looking relief and cure the

constitutional violation in two ways: (1) the State could

issue a tax refund to the petitioner, or (2) “to the extent

consistent with other constitutional restrictions, the State

may assess and collect back taxes from petitioner’s

competitors who benefited from the rate reductions

during the contested tax period, calibrating the

retroactive assessment to create in hindsight a

nondiscriminatory scheme.” McKesson, 496 U.S. at 40

(emphasis added); see also Iowa-Des Moines Nat. Bank v.

Bennett, 284 U.S. 239, 247 (1931) (same); Harper, 509 U.S.

at 101 (same). In other words, whether the State leveled

6

up or leveled down, the result had to equalize the

petitioner’s tax burden with that of its competitors. Mere

declaratory relief is never enough to remedy an economic

deprivation. This Court has consistently held that “a

denial by a state court of a recovery of taxes enacted in

violation of the laws or Constitution of the United States

by compulsion is itself a contravention of the Fourteenth

Amendment.” Reich v. Collins, 513 U.S. 106, 109 (1994)

(internal quotation marks omitted).

Indeed, the Government’s suggested remedy is even

more meaningless here than it would have been in

McKesson.

The disparate fee structures between

Administrator and Trustee districts have already been

equalized moving forward. The Judicial Conference

raised fees in Administrator districts to match those in

Trustee districts for all cases filed on or after October 1,

2018.

Report of the Proceedings of the Judicial

Conference of the United States 11-12 (Sept. 13, 2018),

https://tinyurl.com/2018-jud-conf-report. And Congress

has since amended the fee statute to require the Judicial

Conference to impose fees equal to those in Trustee

districts. Bankruptcy Administration Improvement Act

of 2020, Pub. L. No. 116-325, §3(d)(2), 134 Stat. 5088

(2021). So even without the Government’s suggested

remedy of a declaration, any new cases in Administrator

and Trustee districts, opened on or after October 1, 2018,

will incur equal fees.

Yet this does nothing to address cases like petitioner’s,

which began incurring increased fees during the ninemonth period in which Administrator and Trustee

districts charged unequal fees.

The Government’s

proposed remedy is a hollow gesture. The petitioner was

subject to a constitutional violation resulting in actual

harm.

That harm warrants an actual, real-world

remedy—one that “calibrat[es]” the disparate fee

structures “to create in hindsight a nondiscriminatory

7

scheme.” McKesson, 496 U.S. at 40.

The Government does not bother to cite a single case

that supports a mere declaratory ruling to remedy an

economic injury. Instead, it simply argues that this Court

must look to the intent of Congress in any attempts to fix

the problem. And Congress would have no interest in

refunding fees, the Government argues, since “Congress

enacted the 2017 amendment because of a looming

shortfall in the UST Fund that threatened to impose

substantial financial impacts upon

taxpayers.”

Respondent’s Br. at 19. In other words, the Government

argues that Congress would not provide a proper remedy

here because it would be expensive and inconvenient. But

“[t]he fact that a given law or procedure is efficient,

convenient, and useful in facilitating functions of

government, standing alone, will not save it if it is contrary

to the Constitution.” Stern v. Marshall, 564 U.S. 462, 501

(2011) (internal quotation marks omitted).

In the

hypothetical reality in which the Court contemplates

Congress’s likely remedial preferences, Congress is only

permitted lawful options that comport with this Court’s

remedial jurisprudence in constitutional cases. It’s not

enough that Congress, all things being equal, would prefer

to spend less money to fix the problem. So here, mere

forward-looking declaratory relief would not be an option

for Congress to consider. And the Government cites no

authority that suggests otherwise.

The Government appears to have advanced its

remedial argument (that mere prospective declaratory

relief is the appropriate remedy) in many of the courts that

have heard constitutional challenges to the Bankruptcy

Judgeship Act of 2017. To date, no court has accepted the

Government’s position on the remedial question. Every

court that has held the 2017 Act unconstitutional has

awarded the debtors the relief that petitioner asks for

here—a refund. In re Clinton Nurseries, Inc., 998 F.3d

8

56 (2d Cir. 2021); In re John Q. Hammons Fall 2006, LLC,

15 F.4th 1011, 1026 (10th Cir. 2021); USA Sales, Inc. v.

Office of U.S. Tr., No. 19-2133, 532 F.Supp.3d 921 (C.D.

Cal. 2021); In re Life Partners Holdings, Inc., 606 B.R.

277, 286 (Bankr. N.D. Tex. 2019); In re Buffets, LLC, 597

B.R. 588, 597 (Bankr. W.D. Tex. 2019), rev’d, 979 F.3d 366

(5th Cir. 2020). Judge Clement, dissenting in the Fifth

Circuit, would have likewise ordered a refund. Matter of

Buffets, L.L.C., 979 F.3d 366, 384 (5th Cir. 2020) (Clement,

J., concurring in part and dissenting in part).2 No court

has given credit to the Government’s remedial argument

because it is completely baseless and plainly contrary to

this Court’s precedents.3

Declaratory relief would not constitute an appropriate

level-down remedy in this context. An actual level-down

remedy would mean retroactively raising the fees of

In his dissent below, Judge Quattlebaum did not discuss the issue of

the appropriate remedy. In re Circuit City Stores, Inc., 996 F.3d 156,

169-175 (4th Cir. 2021) (Quattlebaum, J. concurring in part and

dissenting in part).

2

3 While it is true that no court has given credence to the Government’s

remedial theory, Judge Brasher, in his concurring opinion in In re

Mosaic Mgmt. Grp., Inc., did reject the remedial theory advanced by

petitioner here. 22 F.4th 1291, 1330 (11th Cir. 2022) (Brasher, J.,

concurring). Judge Brasher reasoned that Congress would not have

wanted to issue a refund in these circumstances, because Congress

demonstrated a “manifest intent to raise fees in all districts.” Ibid.

Judge Brasher, however, did not embrace the Government’s position

that mere declaratory relief was sufficient to cure the constitutional

infirmity. Instead, he argued that the appropriate remedy (one

challengers in that case did not pursue) would be for the Judicial

Conference to apply the higher fee in Administrator districts. Ibid.

For reasons explained above, Congress would not choose this fraught

remedial path. And the Government recognizes this, which is why the

Government does not even brief this remedy as an alternative theory

of relief.

9

debtors in Administrator districts, for the relevant time

period, to those of debtors in Trustee districts, in order to

create, “in hindsight a nondiscriminatory scheme.” Yet,

for reasons explained below, Congress would never choose

this disastrous path. Given the choice to retroactively

equalize fees by leveling up or leveling down, Congress

would level up.

Leveling down, to the extent it is even practically

achievable, would sow utter chaos in bankruptcy courts,

cause enormous harm to debtors and creditors, and

entangle the federal government in years of costly

litigation. That’s because leveling down would entail

reopening hundreds of closed Chapter 11 cases and

imposing new, substantially increased fees on those

former debtors’ estates. Many of those bankruptcies will

have since failed, the cases either having been converted

to Chapter 7 or simply dismissed altogether. Even for the

cases that remain open, collecting increased fees going

back to 2017 would be an administrative nightmare, besot

with lengthy and contentious litigation.

The debtors and creditors in this scenario, whose cases

remain open, would have long devised a reorganization

plan. That plan would certainly have taken into account

the expected fees to be paid to the Administrator from the

debtor’s estate. And money from the debtor’s estate

would have long gone to creditors, as well as lawyers,

financial advisors, restructuring consultants, and in some

cases investment bankers. All of these players would have

relied on the known Administrator’s fees, which factored

into the feasibility of the reorganization plan. Going back

in time to recharge fees at an increase of over 800% after

such a plan is in place (and debtors have been making

payments for years) would throw these bankruptcies into

utter disarray, potentially derailing successful Chapter 11

reorganizations into Chapter 7 liquidations—harming not

only debtors and creditors, but the workers and

10

communities that these businesses serve.

It would likely be impossible in many cases to recoup

such fees from debtors’ estates. And it would instigate

endless litigation.

Here, several parties originally

mounted due process challenges to the 2017 Amendment

on retroactivity grounds because the 2017 Amendment

imposed radical fee increases after debtors’ plans were

already in place. None of those challenges prevailed in any

of the courts of appeals that considered the issue. In re

John Q. Hammons Fall2006, 15 F.4th at 1020; In re

Circuit City Stores, Inc., 996 F.3d 156, 169 (4th Cir. 2021);

Matter of Buffets, 979 F.3d at 375. But retroactively

raising fees in order to equalize treatment of debtors

across Trustee and Administrator districts would be a

very different matter; it would require raising fees that

have already been paid—and at much lower rates.

Congress would never choose such a remedy. If

Congress were apprised of the constitutional infirmity of

the Bankruptcy Judgeship Act of 2017, Congress would

choose the only reasonable path and level up by simply

refunding the constitutionally impermissible portion of

petitioner’s fees. In fact, this question isn’t purely

hypothetical. When Congress amended Section 1930(a)(7)

in 2021, in an attempt to fix this very problem, Congress

made the fee change prospective only. Pub. L. No. 116325, supra, §3(e). Congress demonstrated that it had

absolutely no appetite for the administrative and legal

obstacles that lie along the path of retroactive fee

increases.

In sum, prospective declaratory relief is not a

constitutionally permissible level-down remedy. And the

available level-down remedy of retroactively increasing

fees in Administrator districts would be so wildly

impractical (and likely unconstitutional) that the

Government does not even mention it. Leveling down may

11

also be the far more expensive option, as the federal

government would be thrown into copious lawsuits with

aggrieved debtors and creditors, all while chasing down

fees from former debtors, currently bankrupt debtors,

creditors, and lawyers and other service providers who

were paid out of the debtor’s estate. Simply put, leveling

down is not an option.

B.

The appropriate remedy is a level-up refund

of unconstitutional fees.

The only viable remedial path is a level-up refund of

unconstitutional fees. Indeed, although the Court should

not “use its remedial powers to circumvent the intent of

the legislature,” Califano v. Westcott, 443 U.S. 76, 94

(1979) (Powell, J., concurring in part and dissenting in

part), this Court has historically given an overt preference

to level-up remedies. Sessions v. Morales-Santana, 137 S.

Ct. 1678, 1700 (2017) (“Ordinarily, we have reiterated,

‘extension, rather than nullification, is the proper

course.’”); Heckler v. Mathews, 465 U.S. 728, 739 n.5 (1984)

(same); Califano, 443 U.S. at 82 (same).

In the context of discriminatory taxation (which is

much more analogous to the dispute at hand than the

Government’s equal protection sex-discrimination cases),

this preference for leveling up is even more pronounced.

Bennett, 284 U.S. at 247. In Bennett, like here, the “right

invoked [was] that to equal treatment.” Ibid. Yet the

Court stressed that it was “not material” that equal

treatment could be achieved “if either their competitors’

taxes are increased or their own reduced” because “it

[was] well settled that a taxpayer who has been subjected

to discriminatory taxation through the favoring of others

in violation of federal law cannot be required himself to

assume the burden of seeking an increase of the taxes

12

which others should have paid.” Ibid.4 This Court has

held that the same principle applies when a State violates

the Fourteenth Amendment in assessing property values.

Allegheny Pittsburgh Coal Co. v. Cty. Com’n of Webster

Cty., W. Va., 488 U.S. 336, 346 (1989) (“A taxpayer in this

situation may not be remitted by the State to the remedy

of seeking to have the assessments of the undervalued

property raised.”).

Leveling up has also been the Court’s clear preference

when federal financial assistance benefits are at stake—

another context where the unequal treatment results in

economic harm, and the appropriate remedy is monetary

in nature. Morales-Santana, 137 S. Ct. at 1699 (noting

that federal financial benefits cases “illustrat[e]” that

“[o]rdinarily” leveling up “is the proper course.”) (citing

Califano v. Goldfarb, 430 U.S. 199, 202-204, 213-217 (1977)

(survivors’ benefits); Jimenez v. Weinberger, 417 U.S. 628,

630-631, and n.2, 637-638 (1974) (disability benefits); Dep’t

of Agric. V. Moreno, 413 U.S. 528, 529-530 (1973) (food

stamps); and Frontiero v. Richardson, 411 U.S. 677, 67879, and n.2, 691 (1973) (military spousal benefits)).

Moreover, leveling up is the right course because

courts generally choose remedies that “create incentives

to raise [constitutional] challenges.” Lucia v. SEC, 138 S.

Ct. 2044, 2055 n.5 (2018) (cleaned up). Yet here, the

incentive that the Government’s remedial theory offers for

a successful constitutional challenge is literally nothing,

Justice Harlan, concurring in Welsh v. United States, noted that this

preference for leveling up in Bennett was “[b]ased on the

impracticality” of the only level-down remedy available. 398 U.S. 333,

362 n.15 (1970) (Harlan, J., concurring). Yet in the context here of

disparate fees in bankruptcy proceedings, a level-down remedy is

significantly more impractical: the bankrupt entity may no longer

exist, and even if it does, it may no longer be under the supervision of

the bankruptcy court.

4

13

unless challengers are meant to be cheered by the fact that

the federal government can save money by ignoring the

problem all together.

The Government’s own cases highlight the

inappropriateness of level-down relief (and of prospective

declaratory relief) in this context. Consider MoralesSantana. There, the respondent challenged, on equal

protection grounds, the Immigration and Nationality Act,

which provides a framework for obtaining U.S. citizenship

for a child born abroad, when only one parent is a U.S.

citizen. Morales-Santana, 137 S. Ct. at 1686. The Act

required the U.S.-citizen parent to have ten years of

physical presence in the United States prior to the child’s

birth, but Congress created an exception for unwed U.S.citizen mothers, whose citizenship could be transmitted to

the child if the mother had lived in the United States for

only one year before the child’s birth. The remedy that

Morales-Santana sought was U.S. citizenship. But the

Court emphasized that the equal protection violation could

be cured by leveling down, that is removing the exception

granted to unwed mothers and imposing the general 10year-presence rule on all parents. Id. at 1698.

This Court noted that, “[a]lthough the preferred rule

in the typical case is to extend favorable treatment, this is

hardly the typical case.” Id. at 1701 (emphasis added)

(citation omitted). Morales-Santana was not “typical,”

because leveling up would have turned “special

treatment”—the statutory exception for unwed

mothers—into “the general rule, no longer an exception.”

Ibid. The Court emphasized that it must consider whether

the legislature would have struck the exception and

applied the general rule to all or “broadened the exception

to cure the equal protection violation.” Id. at 1700. The

Court chose the former because Congress would have

done the same.

14

But the case at hand involves no general rule and no

exception. There is no favored class that is excused from

the rules that everyone else must follow. The Trustee

program is substantially larger than the Administrator

program, but the Administrator program does not create

a carve-out for certain classes of debtors whereby special

treatment is given. Congress has simply chosen—

arbitrarily—two entirely separate programs. No remedy

here would require that an exception be made the general

rule. The petitioner merely asks that it pay the fees in

place before the unconstitutional 2017 Act, making its fees

equal to debtors in Administrator districts during the

same period.

Moreover, unlike here, prospective injunctive relief

made perfect sense in Morales-Santana because the

respondent was asking for forward-looking relief. He

wanted to become a U.S. citizen. The Court did not order

the remedy that Morales-Santana wanted, but the remedy

did correct the sex-based unequal treatment moving

forward. Here, the Government’s remedy would have

absolutely no effect on the unequal treatment. And the

Government cites no case in which this Court has ordered

level-down relief to remedy an economic injury.5

In sum, the Bankruptcy Judgeship Act of 2017 caused

enormous fees to be imposed on petitioner and other

similarly situated debtors—significantly higher than fees

for debtors in other parts of the country—in contravention

There have been several cases involving monetary harm in which this

Court has declined to choose a remedy, as this Court typically defers

to state courts on remedial questions that implicate state law. Levin,

560 U.S. at 427 (collecting cases). This may be true where this Court

reviews state court judgments on the constitutionality of state tax

measures. See id. But the case at hand does not implicate any state

law or interest. And in each of those cases, a level-down option was at

least theoretically viable. The same is not true here.

5

15

of the Bankruptcy Clause of the Constitution. The

petitioner’s rights were violated. Now, petitioner asks for

relief.

The Government here suggests a paltry remedy that

neither equalizes the treatment of debtors across

Administrator and Trustee districts, nor repays petitioner

for unconstitutionally collected fees. A proper remedy

must retrospectively equalize treatment of similarly

situated debtors.

The only sensible, fair, and

administratively feasible solution is to provide petitioner

(and any other similarly situated debtors with standing)

the remedy of a refund.

CONCLUSION

The judgment of the Court of Appeals should be

reversed, and the case should be remanded for further

proceedings consistent with the Court’s opinion.

Respectfully submitted,

Paul Lettow

Janet Galeria

U.S. C HAMBER

L ITIGATION C ENTER

1615 H Street, NW

Washington, DC 20062

(202) 463-5337

Steven P. Lehotsky

Counsel of Record

LEHOTSKY KELLER LLP

200 Massachusetts Ave. NW

Washington, DC 20001

(512) 693-8350

steve@lehotskykeller.com

Michael C. Cotton

LEHOTSKY KELLER LLP

919 Congress Ave

Austin, TX 78701

michael@lehotskykeller.com

March 3, 2022