west cork norm we have a full week of of all arguments lots of variety in the docket lots of interesting cases and today is right in there with quite a mix of often want to hear dances well but primarily we do record the oral argument to listen back to later and so have so if you stay in a micro keep your voice up you know just ensure that we get your answers and we are able to move i  moving through these cases first one up is evan crocker versus  morning may please the court plaintiff michael should bars and received a discharge in bankruptcy in the eastern district of virginia he filed suit in the southern district of texas and in order to the farm what the district excuse me what the bankruptcy judge resolved in the case now under appeal with respect to mr shaw buzzing the court would have to do three things first the court would have to place itself in direct conflict with decisions of the second six seventy nine eleven circuits that are indistinguishable second the court would have to write an opinion that would find no support in any circuit opinion from any of the other circuits and third the court would have to distinguish binding fifth circuit precedent untenable ground and we respectfully submit that the court should do none of those things the issue in this case at least with respect to mr shaw buzzie is which court is the appropriate court to enforce a discharge injunction granted in bankruptcy and respectfully we submit that that is under binding precedent the court that issued the discharge order which is itself an injunction in the argument flows like this section five twenty four provides unequivocally that a discharge order in bankruptcy operates as an injunction so that's step one in the process step two is the well established rule that injunction can only be enforced by contempt and third is the equally well settled rule that contempt must be addressed by the court that issued the injunction out so let me ask you about mr c's bankruptcy i take it your client received notice when the bankruptcy was filed yes on ok and in response to the notice your client filed a proof of crime in mr bankruptcy i believe that's correct ok and is it your position i take it your position that and he says nothing other than any any debts that are destroyed as a matter of law or by destroy it says debts debts that are not discharged says debts for most student loans but it doesn't specify right and so your position is that this is a student loan that is non discardable yes i'm ok on and that's based on our interpretation of five twenty three eight two which is a piece of  the the covers both mr and mr crocker but there's nothing to clarify there was no objection or any motion practice in bankruptcy court where the bankruptcy court was called upon to rule on discharge ability is that correct either party all right so we're left with the virginia bankruptcy court stating that most student loans are not discharged but not specifying which student loans and as i understand the schedules that were filed this was the only student loan with respect to mr chabot that's correct ok and so the question then presented is after the fact with neither party having injunction which court hears that matter is there any particular statutory language or other type of talismanic language in loan documents that state this is a student loan pursuant to such and such statute and it is nondestructive bull in bankruptcy or is that just left for another day because mr as he calls this a student loan i believe on his schedule whereas in the other plaintiff's case he refers to it as educational which will look at that we can ask opposing counsel about that but is there anything in the loan documents for either of these plaintiffs that so says sets forth that it is a non dischargeable loan with respect to both borrowers the loan documents state that the loan is for education and can be only used for education and both on such a loan documents it says that the loan may not be destroyed a bill in bankruptcy may not be or is not destroy in the reason it says may not be is because even if these loans are nondestructive will generally there's a separate exception for any student loan that can become destructible if you prove under hardship and so all student loans you would have to believe there is a contractual basis for that for the nondestructive villa to unite is that the loans are specifically for the purpose of education and may not be used for any other purpose and that's the factual predicate that then gets us into the application of five twenty three in the non just destructibility provisions and that goes to the you know decision of this court in in in the murphy case on how do you determine whether a loan is a a student loan or not in that case that the borrower argued well i actually used my money for non educational purposes for you know joining to fratton for partying for living expenses and etc although the loan documents themselves said it was a student loan only only to be used for educational purposes in this court logically said that it's the purpose of the loan at the time of its initiation that determines whether it's a student loan because otherwise it borrowed to take out a purportedly student loan then use it for non authorised purposes and get it destruction which makes no sense so it's the purpose of the loan as set forth in the loan documents that determines whether it's a student loan is murphy your best case on that area are there is there some other case that you would cite as to for that proposition you back to where you were briefly which is the authority of just who are to act in a particularly on the virginia bankruptcy neither side nor as much case want to scare us the effect of bankruptcy roof four thousand four f and i'm wondering why not that rule says a final just georgia order may be registered in any other district and upon registration not aware has the same effect as an order of the court of the district where registered why doesn't whatever the hoops are and we'd be under that room in your honor i believe that that will need would need to be interpreted and i believe there's case law out there that interprets that will similar to the rule in non bankruptcy context that says one can register a judgment from one federal district court non bankruptcy judgment from a district or in another district and the case law says under that scenario yes you can register one judgment from district a in district b but that does not change the rule that if it's an injunction that's at issue and the question is contempt for violating the injunction it remains the the court that issued the injunction that has the only authority to enforce it by contempt what is that authority for doing that have the kind of blanket that underlies what you just said have the kind of language that is in four thousand who are which is the jewish order discharge order has the same effect as in one of the court where re to be perfectly honest you want to because the other side didn't raise that argument judge jones didn't rely on it and i'm reluctant to tell you that i'm certain that the language is exactly the same but i believe it is in that whereas the general statute on registering a foreign judgment so you can register a judgment from district a is industry b i believe it generally says that if you do that in the second district the judgment has the same effect as it doesn't first district as it did in the original district but place by definition the court can enforce the judgment because the whole point of registering it there is so it can be given a fix so why is it i was standing general notion that now it is registered in bankruptcy provision talks about registering a discharge order but the general statute on registering a judgment from one district to another has a carve out in the case law that says that yes as registered in the second district the judgment has the same force in effect as in the first district except when it comes to enforcing an injunction by consent and if i'm right about that i believe in him than than i believe that that same principle would apply under under the bankruptcy section that checks out what his present last point on that is it wasn't raised but you know the rule is their biggest down says they might say so you know we all sort of curious why nobody talk about it if it's available spot i get it to get the amount of pony that we may ask it at the end of all this for both of you to found some kind of supplement relative to the rule piece and what you say so we have the whole deal but in a way so we don't have to stay on it but to know since it wasn't a raise and maybe try benefit they will ask a supplemental letter brief to be found on the apple building or not of the ed he even though it's not in the case just so we have the  understood you're on the other point i would make on that it is it isn't a bankruptcy rule and you know i believe it's actually magic that that rules of procedure to not create such and have rights that don't otherwise exist and so even if it were to be interpreted as as broadly as it could be i think it still raises a question of whether there's a rule making process there would be an ability to change what is a fundamental bedrock principle of american jurisprudence which is that the court that issues in action is the court where it needs to be enforced and you know that the old which case the eleventh circuit is is just completely on all fours with with this case and it makes the point that i'm trying to make here to the court as absolutely clearly and start from the promise that section five twenty four which creates this discharge injunction does not create a private right of action and it's not just the ultimate case of the eleventh circuit says that it's at a true suitcase  the cox case out of the seventh circuit and the barrier case and another one whose name escapes me out of the ninth circuit they all say that five twenty four does not create a private right of action notably congress did with respect to section three sixty two of the bankruptcy code which is automatic stays of course where congress did provide a private right of action for violating three sixty two they mended five twenty four at the very same time that they created that private right of action under three sixty two in did not choose to have a private right of action under five twenty four a few years later in two thousand a bill was and this was discussed in detail in the patroons a case bill was introduced to congress to specifically at a private right of action to five twenty four the bill failed did not become law five twenty four has no private right of action which is not to say there's not a remedy for violating it the remedy for violating it is contempt and that brings us full circle to the often smith case that says this from this court that says injunctions have to be enforced by contempt in the court that issued the injunction and in the only basis assume you know the number of student loans that they are out there you know all over just with saying this question comes up you know recurr just say for me succinctly and i assume you represent this issues come up in other courts write it as a discharge ability issue some of it seems to be like parse in the language you know in terms of for educational benefit in so court and and and all of that so is there bright line in the the cases with respect to the language that you know we're focusing on case is about equally divided on whether to interpret the discharge ability the way i say or the way my post council says for many years after the amendment that added this language in two thousand and five all the cases went my way recently starting in about two thousand and twelve two thousand and thirteen in the cases some of the cases had started to go the other way and that in our view that the case of the go the other way go way off off a straight because they violate the fundamental canon that you don't need to go to all these cans of construction and you don't need to go to legislative history if the statute is clear on its face and the statute here is clear on its face because obligation to repay obviously covers alone alone isn't an obligation to repay and a benefit an educational benefit even under the under the an analysis offered by the other side a loan for education is a benefit under the standard definition of benefit which is again or an advantage they say they say well look to the secondary or tertiary definition of benefit in the dictionary but on page thirty five and thirty six of their brief they make a concession that under the standard first definition you'll find in the dictionary of benefit a loan is a benefit so we have an obligation to repay which obviously covers a loan a benefit which under their concession is a loan so an obligation to read to repay an educational benefit by definition covers a student jason bird's i'm here on behalf of evan bryan crocker and michael shear baazi who seek to represent a class of similarly situated individuals debtors who took out loans while students at non title for schools filed for bankruptcy merits on him either way someone start there and then i'll return to jurisdiction is it specifically relates to my question about and on the merits issue this discharge ability issue but some it is a pure question of statutory interpretation and the court should start with the of five twenty three eight and the full text of five twenty three eight because i think if you look carefully at the whole section you'll see it's broken into three parts you've got it eight one which covers federal and nonprofit loans neither the plaintiffs loans are covered by that you've got a two which is the section that it relies on but then you have section b which exams qualified education loans as defined by the i r s regulations now qualified education loans are a subset of private loans that me s requirements the plaintiffs those can't be qualified education loans because they didn't go to title four schools which is one of those requirements but i think reading the whole statute is so important because you can see there is a plan here these three sections achieve different goals and interpretation like nabby it has where section eight two swallows the entire statute is not a reasonable way to interpret the statute because if you look at the statute private loans of the type that nabby it services are already covered by the us some of them are already covered by the other two sections if you look at a one if there is a federal guarantee if the program is funded in part by a nonprofit it's going to be covered by a want if you look at b if nabby it's a loan meets all those i r s requirements then the loan will be exempt from destroyed and or b but would now be it is here before you today saying is don't worry about the funder don't worry about the guarantor don't worry about any of the iris requirements if it's a loan that gives an educational benefit it's covered the other two sections are completely irrelevant so how does that square with murphy your opponent offered us the murphy case sure murphy i think it is really a different question if you look at a one a one covers loans funded by the federal government well we have to have them lots of federal loans many of them have nothing to do with education and we have to have a way of determining is this the type of federal law that's covered by a one or is this some other type of federal loan that might be exempt from discharge elsewhere but isn't covered by eight and so murphy says if you take out a loan and you say you're going to use it for education it's a federal education it's covered by a one that's the question that's at issue in murphy what murphy didn't say is if you are an issue he say you're going to use your loan for educational purposes then no matter any other qualifications alone no matter what school you go to no matter what amount it is no matter guarantor funder it's covered by a two not certainly not what was an issue in america now just to finish that surplusage point this court in money thirds of the statute irrelevant blatantly fails the surpluses can't and then i think if you look at the specific language of the provision at issue it's an obligation to repay funds received as an educational benefit scholarship or educational benefit it's educational benefit scholarship or stipend and scholarships and stipends are educational grants made by third parties you don't normally expect to repay that's consistent with our interpretation of benefit payment receive from an insurance company an employer of the state that you don't expect to repay it unless you violate the conditions as the court below recognized the grammar of this that cuts against nagging suspicion as well congress didn't say funds received for an educational benefit and for as the proposition you'd use if benefit meant a advantage or profit gain from something they referred to fund received as an educational buffet and that difference mean for it as is relevant because as is the phrase you'd use if you're talking about the character of the funds themselves here the benefit is the funds and that's the understanding you have with benefits when you say i want to get a new job with benefits the benefits you're talking about are a payment you're not talking about some advantage or a profit came the corded nipe over in the western pennsylvania no to the distinction well when it said to use the word as in the phrase an obligation to repay funds received as an educational benefits scholarship or stipend suggest the predicate of that section educational benefit scholarship or stipend refers to the character of the funds not the purposes loans that's what the lower court recognized as the correct way to interpret congress's grammar and additionally in a lot of courts and go to this is well as the court below congress knew how to use the word loan it used the word loan in a one that used the word loan in deed it didn't use the word loan in a two and i'd submit it strains reason the suggest that the one provision in this statute that doesn't use the word lo of the legislative history but what i'd submit is the important point from legislative history is we've laid out a story of how we got here in originally congress exempted federal and nonprofit loans from discharge back in one thousand nine hundred response to the eight circuits decision in smith congress exempted conditional educational grants from discharge and they added the language issue here in one nine hundred ninety an obligation to repay funds received as an educational benefits scholarship or stipend no court from  two thousand and five thought that language covered private student loan then in two thousand and five congress revisited the statute and explicitly covered private student loans by adding the language about qualified education limbs that sounds like they have expanded it twice both and two thousand and five congress has sought to expand the scope of non discharge abilities act correctly but not to everything and i'd submit that congress when it added qualified education loans would have been shocked to discover they didn't need to do that because the language one section earlier already covered every imaginable type of qualified education so why have a specific exemption for a loan that meets all those requirements if the section before it covers any kind of loan used for any educational purpose at all not so  sightly to something in the record either the record on appeal or in the bankruptcy court record that specifically states for either of these plaintiffs that the loans at issue were discharged while there is not going to be anything because there is never in a standard chapter seven a specific statement that the loan initially was discharged so we're left with just this debts for most student loans not so most student loans which is the boilerplate language used in every single destroy i understand but you're a lying on that the most meaning that you fall within the smaller group of loans that are not dished discharge i should say that that happened discharged is that correct and most means almost means the majority are well i think if you look at the list in a loan program i don't know what you'll see is that the vast majority of student loans are federal student loans there are private student loans that are secured through the college offices which are going to be qualified educational to look talk about here are loads to go to technical schools it's a much smaller basket of loans than student loans more generally and to give you an example for this i mean we've got an agreed order in this case we're now being agreed to stop collection on all the loans that are at issue in this case we're talking about fifty thousand loans total for thirty thousand borrowers out of the entire country who are covered by this case that is a tiny tiny fraction of the total number of student loans out what's the state and how do you mention it what's the the pendency of the case after we filed that navvy and we read withdraw that we now have uniquely to voluntarily stop collections as those people in terms of where we are as a matter of procedure we were in the midst of classification discovery when this motion was filed so we have not yet f but it would seem like the issue would be whether your loan follows within the most student loans that have not been discharged or the minority of loans that would arguably fall within what you've just set similarly went through bankruptcy of virginia and decided to move and get a fresh start houston so i think the answer to that judging the heart is that most student loans is an attempt by the people who are writing a discharge order that's meant to be understood by many pro creditors responsibilities as chairman whether their debt is discharge or not and to do that they go look at five twenty three a all of the various discharge exemptions and to the extent they think there is a dispute about whether or not a particular debt was discharged to creditors obligation to take that dispute to the bank to court to get it resolved or alternatively to continue to collect with the risk that they're violating the discharge order but that is not the bankruptcy response bank of debtors responsibility to get a determination about whether the debt is covered by five twenty three and so here i think most student loans simply is a way to refer back to five hundred three a and i would submit our interpretation of five twenty three eight in which a two does not cover loans is going to ensure that our class of people who have non title for debt that is not guaranteed by the government or nonprofit are not going be covered by one or not can be covered by eighty are not going to cover by b which is why i feel like we've got a class that is all going to shit outside that most of the loans but the reason for that is we are covering a tiny subset of the student loan market it sounds like it sounds like you are arguing and i don't see it in the brief so maybe you have waived the waiver argument are you saying that that the navy and has a navy and has waived its right to contest a discharge ability by not filing an objection to discharge when the bankruptcy was pretty was missing this pending their right i'm saying that by continuing to collect they're taking the risk  there's never been a finding one way or the other that about whether this particular loan was discharged but the order discharges the debt without any particular findings so it's naveen has continued to collect their bought in violation of the discharge order they're violating the discharge order without any particular fine i guess my final point on this statutory interpretation issue is i think if you look at the lower court decisions both parties have cited a lot of them to you by opposing counsel conceded they're pretty even i think what you'll see is if you look at the better reason decisions the ones that seriously consider the statutory interpretation argument and consider these issues you'll see that they largely come out against naveen sitter protection of educational benefit most of what's your best we ask opposing counsel what his best fifth circuit case is what's your best fifth circuit case supporting your interpretation i don't have a fifth circuit case the fifth circuit hasn't you want one from us i forgot that's why we're here today because we need an appellate decision on this ok i think there has been saying b of the statute is really what gets you home my path is that a one covers federal and nonprofit law and everybody agrees that that's not an aid to covers conditional educational grants if you get a payment from your employer to go to school if you get a scholarship if you get a stipend like the eight circuit's decision and smith and you are forced to repay that back if you don't meet the requirement you don't serve as a physician in an under served area after you finish school you have to repay that that's covered by aid to private education loans are covered need if they meet the qualified education loan standards that makes all three sections of the statute relevant that matt needs the grammar in musicological cannon's that's the correct way to interpret the statute and one thing i would note is that the circuit cases that you say support your view the case is their analysis mirror where you just say it or some differ there is not a circuit court case that in and out that really analyze i guess the final point is the standard for interpreting a discharge except in matter of miller this court noted that exemptions from discharge are to be interpreted narrowly in favor of discharge and debtors if this issue is ambiguous you should interpret it in favor of discharge in favor of the debtors so with that i think the bankruptcy court got it correct on the merits issue and i want to turn to jurisdiction and briefly discuss how we got here on jurisdiction michael he took out a loan in two thousand  to attend the s t m sea training school in virginia it wasn't a usual college experience it was a weekend computer class where the instructor quit two weeks in nonetheless he paid on the loan for many years until in two thousand and eleven he declared bankruptcy after bankruptcy he moved to houston texas he still lives there today michael testified in this case it's in the record below that nabby continued aggressive efforts to collect on the sloan they call them eight times a day they called his wife they called his wife's employer so  thousand and sixteen he filed an action in houston where he lived at the time to seek to stop and we discuss what's happened in the case below in terms of plymouth area junction because we've obtained relief so far on behalf of our temporary relief on behalf of thirty jurisdiction there's no subject matter jurisdictional issue there's no constitutional jurisdictional issue there's no personal jurisdictional issue they have knowledge michael has standing the banks the court has jurisdiction under thirteen thirty four and the bankruptcy court has personal jurisdiction over knapped what they're contending is that quote prudential considerations require that the bankruptcy court refused to consider michael's claims even though he lives in texas and the defendants called him eight times a day in texas  hits it would be prudent to force michael i guess to make a pilgrimage back to virginia to get this decision made by the bankruptcy court in virginia and i guess for any other debtor to have to return to the place they got their bankruptcy discharge would wouldn't they also be able to  if this court instructs us that we need to file four thousand four f and we will certainly do that when we get down below i don't think if you look at four thousand four av it is a requirement to obtain relief from a bankruptcy court to read it is if you want to enforce it in another jurisdiction you need to follow up and that's probably something you both could helpfully address later and written filings and she's made a point that seems fair in the general understanding the operation of courts that is being made by your friend on the other side is it contempt is a very dreck attack on the authority and standing of a coup or stand bad work as it invokes of things on respect properly given to a court and the court is who is the one that issued the order you have all your arguments about the generic nature of the word and that sort of thing but that is the general rule so you have what's your best case to support that you get around that fairly the district court of the southern district the eastern district whatever you may be so there is some slippage maybe there but you're still talking about the court that issued the order but what's more on that on the top of the orders is southern district of texas so i think that the point here if you look at the system that's a specific injunction entered by a judge it's sort of silly generous to the case that was an injunction a transfigure alienating asses and there you might want to go back in front of that judge and determine what exactly you mean by that is a particular transaction really affect what he's seeking that here we're talking about a uniform nationwide injunction that is the same in every district across the entire country we're talking about the bankruptcy law which by constitution is required to be uniform across the entire country and we're talking about a injunction created not by a judge but by statute the courts in the southern us to texas interpret multiple times a day and i submit we're talking about what is printing about forcing a man who lives in houston who is being affected by behavior in houston to have to return to virginia when the courts in houston interpret this exact injunction multiple times a day i don't think the watchman case speaks to this i think if you look at the judge is irrelevant in fact as what the amicus points out is the uniform order is often entered by the clerk of court assuming you've met all the requirements there may not even be a judge who's influenced the case so the idea that michael shahbazi for prudent reasons has to go answer that you're urging that the general notion of injunctive believe lies with or that issue the junction as opposed to nothing in the bankruptcy code or the stack to this say is going to dish or go order that there's nationwide you know enforceability you know or so another way if that was congress's intent that that be the case where in the statute of the code would it say that well i think if you look at the court's decision  court has jurisdiction over thirteen thirty four there's no argument and the injunction here it's none of the injunction issued by the court the court issued a discharge order which has the effect of an injunction perce statute and i think that's a very big difference from an injunction issued by a judge after a collision or injunction motion or some other specific proceeding in front of the judge we're talking about a uniform nationwide injunction that's the same in every court around the country all right thank you secular thank you ron or to the point counsel just made that the injunction here flows from a stretcher and judge jones below relied on that on that very point it doesn't get them where they need to go because if you divorce the injunction enforce it is not through a private right of action and action to enforce the statute in the abstract you force it by getting contempt for violating the injunction which brings us right back to wasn't sure that in on the point that well i it was a case specific injunction crafted for that case not a uniform nationwide injunction i would have a direct report to the anderson case out of the second circuit near the statutory basis of the order nor it similarity even uniformity across bankruptcy bankruptcy cases alters the simple fact that the discharge injunction is an order issued by the bankruptcy court in the bankruptcy court alone just as the power and the unique access expertise to enforce it  interest in having sort of a uniform answer about this that your client or others ever sought a declaratory judgment ruling you know on this distorted bill of the issue you know or have you know a here to allow this to come up on and it was a tory basis so we could get a final answer the reason it didn't come up in this way when when the statute was first amended in two thousand and five is because as i said for years courts interpreted it our way and  the final answer to judging or to point about you know did navea have a naveen have a burden to go to the bankruptcy court in the case itself and get this resolved the interim that is no five twenty three obviously has lots of other discharge exceptions in it and five twenty three c one specifically identifies a subset of discharge exceptions not education loans but other ones where the burden is on the creditor to go get a decision in the bankruptcy case it's five twenty three c one and it doesn't apply to eight which is the destruction exception when lying and so the answer is we had no affirmative obligation that we could have but so too could be because the debtor we had no obligation to do so with respect to the statutory interpretation question it's undisputed that the purpose of the two thousand and five amendments was to bring private education loans within this discharge exception and what what counsel ignores and what all the cases that go his way ignore is that this language obligation to repay funds received as an education benefit had been in the statute prior in the one nine hundred ninety s amendment but it was in a subsection that was together with this discussion of governmental and nonprofit loans and what congress did in in two thousand and five is they added support the which is the qualified education loans but they also took the language and i'm relying on a two and they broke it out they took it out of the given grouped with with governmental and nonprofit loans and put it as a standalone section and the congress is presumed to have had a purpose when congress did that and it  exists as a standalone section and it was specifically we think to address cases that had previously before two thousand and five said that because this obligation to repay language is in a subsection that deals with government and nonprofit loans it only applies to government nonprofit loans it was a series of cases involving truck driving schools were court said you don't you don't get there because this other gay should repay language is tethered to governmental and nonprofit loans so in two thousand and five congress strips it out and puts it as a standalone section which we did in conjunction with also expanding the statute to otherwise cover private loans interim class spaces and after hearing on that motion judge jones looked at me and said you know counsel would your client consider just agreeing to a moratorium on collection while these issues are being sorted out so i don't have to rule policeman or injunction if you do it by agreement and frankly we agreed to that because it seemed like a logical suggestion so there is a universe of of i don't remember the exact number but tens of thousands of loans that by agreement would be would be that would otherwise be included in the proposed class here but by agreement naveen said in the interim without prejudice you know it's very clear that it's without prejudice to the legal arguments we will voluntarily suspend collection that i believe is that there's a universe council is referred so that univers though the ten thousand those are just open cases where people are still be paying them they are cases that are in bankruptcy or these are cases where the debtors days no more than simultaneous let a breeze principally address and the rule there we discussed but you know we'll take all the help we can get don't rewrite another fifty page break the that's the thing to at least get a sense of you know where the litigation is its posturing and what's out there and do our best to get it get it moved through but i guess both of you agree if we were to affirm the district court we'd have a clear bright one circuit split both of you agree th the extent to which a circuit split would be created by a ruling from this court on either or both of the points and clearly set forth the started off one way one another way some of these cases seemingly are bankruptcy decisions and circuit citizens only other hand side of the second circuit so it'll help to sort of crystallizes so we have a better sense of the big picture if you will of if there really is a split or not but particularly you know between or among the circuits you know on is and honing in i mean just to say it's a circus blip but i mean focusing on if it's on this language parsing net i may just be helpful to sharpen up the briefs a kind of you know sort of everywhere but to hone in on that point i think would be helpful just to