Kathryn R. Montgomery, Esq., AUST (Va. Bar No. 42380)

Shannon Pecoraro, Esq. (Va. Bar No. 46864)

Jason B. Shorter, Esq. (Va. Bar No. 80989)

Office of the United States Trustee

701 East Broad Street - Suite 4304

Richmond, VA 23219

Telephone (804) 771-2310

Facsimile (804) 771-2330

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA 

(Richmond Division)

In re:

CIRCUIT CITY STORES, INC., et al.,

Debtors. 

Adv. No. 19-03091 (KRH) 

Adv. No. 19-03060 (KRH)

Case No. 08-35653 (KRH) 

Chapter 11 

(Jointly Administered)

PROPOSED SCHEDULE FOR POST-REMAND BRIEFING

 

The Acting United States Trustee for Region 4 (“United States Trustee”) respectfully 

files this proposal for briefing the issue remanded by the United States Supreme Court and the 

United States Court of Appeals for the Fourth Circuit. See Siegel v. Fitzgerald, 142 S. Ct. 1770, 

1783 (2022); In re Circuit City Stores, Inc., Case No. 19-2240, Dkt. No. 59 (4th Cir. July 20, 

2022). 

BACKGROUND

A. The Liquidating Trustee files a motion asking this Court to determine that 

the 2017 amendment to the quarterly fee statute does not apply to this case. 

1. On March 28, 2019, the Liquidating Trustee filed a Motion of the Liquidating 

Trustee to Determine Extent of Liability for Post-Confirmation Quarterly Fees Payable to the 

United States Trustee Pursuant to 28 U.S.C. § 1930(a)(6) and Memorandum in Support [ECF 

No. 14197] (the “Motion to Determine”), seeking a determination that the 2017 amendment to 

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28 U.S.C. § 1930(a)(6) was unconstitutional as applied in this case and that the quarterly fee 

amount “due since January 1, 2018 should be determined based on the statutory rates in effect as 

of the Petition Date in this Case.” Id. at 14.

2. On July 15, 2019, this Court ruled that the 2017 amendment to 28 U.S.C. 

§ 1930(a)(6), which temporarily increased quarterly fees for large chapter 11 cases, was 

unconstitutionally non-uniform, although application of the amendment to cases pending on its 

effective date is not impermissibly retroactive. See In re Circuit City Stores, Inc., 606 B.R. 260 

(Bankr. E.D. Va. 2019) (the “Fee Decision”). The Court also converted the Liquidating 

Trustee’s Motion to Determine to an adversary complaint proceeding under docket number 19-

03060.

3. Both parties appealed.

B. The Liquidating Trustee files a separate proceeding seeking a refund, which 

is stayed pending the appeals of the Fee Decision.

4. While the appeals of the Fee Decision were pending, on October 9, 2019, the 

Liquidating Trustee filed a complaint based on the Fee Decision, docketed as Adversary No. 19-

03091, seeking declaratory relief and a return of allegedly overpaid quarterly fees, asserting a 

claim for turnover under 11 U.S.C. § 542 (the “Turnover Adversary”).

5. The United States Trustee moved to dismiss the Turnover Adversary, arguing 

among other things that (1) the claim for a declaratory judgment that the allegedly overpaid 

amount is an asset of the “Trust estate” fails to state a claim because money, once paid to the 

United States Treasury, ceases to be property (or an asset) of the payor, and (2) the complaint 

fails to state a claim for turnover under section 542(b) because the alleged debt is not property of 

the bankruptcy estate as it did not exist until after confirmation, at which point the bankruptcy 

estate ceased to exist. Adversary No. 19-03091, Dkt. No. 5.

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6. On December 2, 2019, the parties stipulated to stay the Turnover Adversary 

pending a “final decision” in the appeals from the Fee Decision. Adversary No. 19-3091, ECF 6, 

8. The stipulation defined “final decision” as meaning “that no further request for review 

(whether via reconsideration, appeal or certiorari) has been sought and the date by which any 

request for further review must be sought has passed.” Id. ¶ 2. 

7. As part of that stipulation, the United States Trustee agreed to withdraw his

motion to dismiss without prejudice. Id. 

8. Were the stay vacated, the next step in the Turnover Adversary would be the 

filing of an answer or a renewed motion to dismiss.

C. In the appeals from the Fee Decision, the Supreme Court finds the 2017 

amendment to be unconstitutionally non-uniform, but remands the question 

of the remedy for lower court adjudication.

9. On April 29, 2021, the Fourth Circuit rendered a decision in the parties’ appeals

of the Fee Decision. In re Circuit City Stores, Inc., 996 F.3d 156 (4th Cir. 2021). The Fourth 

Circuit affirmed this Court’s holding that the 2017 amendment is not impermissibly retroactive. 

Id. at 169. However, it reversed this Court’s decision on uniformity, holding that the 2017 

amendment is constitutional. Id. 

10. The Liquidating Trustee sought Supreme Court review of the Fourth Circuit’s

decision on uniformity only. 

11. On June 6, 2022, the Supreme Court reversed and remanded, holding that the 

2017 amendment “violated the uniformity requirement” of the Bankruptcy Clause. Siegel v. 

Fitzgerald, 142 S. Ct. 1770, 1775 (2022); see id. at 1782-83. 

12. In rendering its merits decision, the Supreme Court declined to decide what if any 

remedy should be ordered to address that constitutional violation. 

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13. Before the Supreme Court, the Solicitor General and the Liquidating Trustee 

disagreed on the appropriate remedy for the lack of uniformity.

14. Among other things, the Solicitor General argued before the Supreme Court that 

when determining the proper remedy for unconstitutionally unequal treatment, a court “must 

adopt the remedial course Congress likely would have chosen ‘had it been apprised of the 

constitutional infirmity.’” See Brief for the Respondent at *43, Siegel v. Fitzgerald, No. 21-441, 

596 U.S. ___, 2022 WL 943378 (Mar. 1, 2022) (quoting Sessions v. Morales-Santana, 137 S. Ct. 

1678, 1701 (2017) (quoting Levin v. Commerce Energy, Inc., 560 U.S. 413, 427 (2010))). Thus, 

the Solicitor General argued that a refund was not an appropriate remedy; rather, only 

prospective relief was appropriate, but if any retrospective relief was needed it would be 

increasing the quarterly fees in the BA districts. Id. at *16, *43-48 & n.7.

15. The Liquidating Trustee disagreed. He argued that the proper remedy is a full 

refund of fees. See Brief for the Petitioner at *31-32, Siegel v. Fitzgerald, No. 21-441, 596 U.S. 

___, 2022 WL 618987 (Feb. 24, 2022); Reply Brief for the Petitioner at *16-19, Siegel v. 

Fitzgerald, No. 21-441, 596 U.S. ___, 2022 WL 1120376 (Apr. 8, 2022).

16. The Supreme Court, noting that “[t]he parties raise a host of legal and 

administrative concerns with each of the remedies proposed” and that “[t]he court below . . . has 

not yet had an opportunity to address these issues or their relevancy to the proper remedy,” 

elected to “remand for the Fourth Circuit to consider these questions in the first instance.” 

Siegel, 142 S. Ct. at 1783; see id. (“remand[ing] for further proceedings consistent with this 

opinion”).

17. The parties jointly proposed to the Fourth Circuit a briefing schedule to address 

the remanded remedy issue under which they would submit simultaneous briefs, not to exceed 

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5,000 words each, within 28 days of the Court’s order, and simultaneous reply briefs, not to 

exceed 2,500 words each, within 21 days thereafter. In re Circuit City Stores, Inc., Case No. 19-

2240, Dkt. No. 58 (4th Cir. July 13, 2022).

18. However, on July 20, 2022, the Fourth Circuit entered an order remanding the 

case to this Court “for consideration of remedies in light of the Supreme Court’s decision in 

Siegel.” Id., Dkt. No. 59 (4th Cir. July 20, 2022).1

D. The parties are unable to agree on a schedule for post-remand proceedings in 

this Court.

19. Two days after the Fourth Circuit’s order remanding the remedy question to this 

Court, counsel for the United States Trustee contacted counsel for the Liquidating Trustee to 

propose a briefing schedule regarding the remanded question.

20. After several emails between the parties, it became clear that they could not agree 

on a proposal. The main sticking point is that, rather than briefing focused exclusively on the

issue the Fourth Circuit remanded, the Liquidating Trustee wants to consolidate the two 

adversary proceedings and expand the briefing (but not the schedule for or the length of the 

briefs) to include issues raised in the stayed Turnover Adversary. 

21. The United States Trustee proposed to keep the Turnover Adversary stayed until 

the question of which fee schedule should apply is finally decided—as originally contemplated 

when he agreed to withdraw his motion to dismiss without prejudice. 

1 The Fourth Circuit has not yet issued its mandate. Unless the court orders otherwise, the 

mandate will issue on about September 13, 2022: seven days after the time to petition for 

rehearing expires, which is 45 days after entry of judgment because the federal government is a 

party. See Fed. R. App. P. 40(a), 41; see also Notice of Judgment, In re Circuit City Stores, Inc., 

Case No. 19-2240, Dkt. No. 60 (4th Cir. July 20, 2022). 

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22. In an effort to compromise, the United States Trustee offered to agree to the 

Liquidating Trustee’s proposal to consolidate the two adversaries, and to treat the remedy 

briefing as a motion to dismiss the Turnover Adversary. The United States Trustee would also 

agree to the schedule proposed by the Liquidating Trustee for briefing the remanded remedy 

issue, which mirrored the schedule jointly proposed for briefing the issue in the Fourth Circuit: 

opening briefs (not to exceed 5,000 words) due on September 12 with simultaneous replies (not 

to exceed 2,500 words) due on October 3.2

23. The United States Trustee proposed, however, that the briefing would be limited 

to the remedy issue remanded by the Fourth Circuit, with the United States Trustee reserving the 

right to raise all other arguments and defenses, including those raised in his motion to dismiss the 

Turnover Adversary, either in an answer to the turnover complaint or in a subsequent motion. 

This proposal simply reflects the rights any party has under the rules of procedure to assert 

defenses to a complaint in his answer and to raise arguments in subsequent motions, such as a 

motion for judgment on the pleadings. See Fed. R. Bankr. P. 7012(b); Fed. R. Civ. P. 12(c), 

(h)(2), (3).

24. The Liquidating Trustee rejected this proposal and the parties agreed to submit 

their respective proposals to this Court.

THE UNITED STATES TRUSTEE’S PROPOSAL

25. The United States Trustee proposes that the parties brief the remanded remedy 

question sent down by the Supreme Court and the Fourth Circuit. That question, specifically, is 

whether the appropriate remedy for the non-uniformity of fees during the time when the 2017 

2 The Liquidating Trustee recently revised his proposed schedule to suggest later dates: opening 

briefs due September 19 with reply briefs due October 11. If briefing is limited to the remedy 

issue, the United States Trustee is amenable to either schedule.

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amendment was in effect is prospective only and, if a retrospective remedy is required, what that 

retrospective remedy should be. 

26. Had the Fourth Circuit accepted the parties’ joint proposal for post-remand 

proceedings, this is the only issue the briefing would have addressed. And the remedy issue is 

the only issue raised by the Fourth Circuit’s remand to this Court. 

27. The Turnover Adversary should remain stayed. When the parties stipulated to 

stay the Turnover Adversary and to the withdrawal without prejudice of the motion to dismiss, 

the expectation was that the question of which fee schedule should apply would be finally 

decided through the appeals from the Fee Decision and the stay would only be lifted after that 

final decision.

28. Moreover, the Turnover Adversary claims were predicated on the Court’s ruling 

in the Fee Decision, see Compl. ¶¶ 1, 27, 33-34, 41-42, however, the Fourth Circuit’s remand 

order vacated “any prior orders regarding remedies.” In re Circuit City Stores, Inc., Case No. 

19-2240, Dkt. No. 59 (4th Cir. July 20, 2022). The fact that the Fee Decision addressed what the 

fee payments should have been retroactively goes to the merits of the remedy question and was 

therefore vacated by the Fourth Circuit. See 606 B.R. at 270 (“The quarterly fees due and 

payable by the Liquidating Trust since January 1, 2018, must be determined based on the prior 

version of the statute.”). 

29. The Turnover Adversary also raises issues outside the scope of the remand—such 

as whether money paid to the government is property of the payor and whether a turnover claim 

can be asserted for a post-confirmation debt—that need not be addressed at this juncture and may 

not need to be addressed at all in this case. 

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30. Even if the Turnover Adversary is not stayed and the two proceedings are 

consolidated, the proposed simultaneous briefing can and should be limited to the remanded 

remedy question without any waiver of the United States Trustee’s rights to later raise other 

defenses to the complaint. 

31. The Liquidating Trustee apparently wants to obtain a decision not just on his 

Motion to Determine but also on the merits of his complaint in the Turnover Adversary. But no 

party is entitled to an immediate ruling on a complaint to which no response has yet been filed, 

and the government has the right to assert any and all defenses it may have to the claims alleged 

in the Turnover Adversary. 

32. The government has the right to respond to the complaint in the Turnover

Adversary by answer or motion to dismiss. The government has the right to defend suits against 

it and will do so if it is unstayed. We do not believe lifting the stay represents the best way 

forward now, and it is beyond the scope of the remand to this Court. 

33. If briefing is limited to the remanded remedy question, the United States Trustee 

can agree to the Liquidating Trustee’s latest briefing proposal: opening briefs (not to exceed 

5,000 words) due on September 19 with simultaneous replies (not to exceed 2,500 words) due on 

October 11.

34. If the stay is lifted on the Turnover Adversary, then the next step—in addition to 

briefing the remanded question—is for the government to answer or move to dismiss the 

turnover complaint within its allotted time to do so.

CONCLUSION

For these reasons, the United States Trustee requests that the Court enter a briefing 

schedule for the remanded remedy question and that the Court leave the stay of the Turnover

Adversary in place for now. 

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Date: August 25, 2022

RAMONA D. ELLIOTT

Deputy Director/General Counsel 

P. MATTHEW SUTKO

Associate General Counsel

BETH A. LEVENE

Trial Attorney

Department of Justice

Executive Office for 

 United States Trustees

441 G Street, N.W., Suite 6150 

Washington, DC 20530 

(202) 307-1399 

Fax: (202) 307-2397

Respectfully submitted,

By: /s/ Kathryn R. Montgomery

JOHN P. FITZGERALD, III

Acting United States Trustee, Region 4 

KATHRYN R. MONTGOMERY 

Assistant United States Trustee

Department of Justice

Office of the United States Trustee

701 East Broad Street, Suite 4304 

Richmond, Virginia 23219 

(804) 771-2310 

Fax: (804) 771-2330 

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