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. e du/thir dc ir c uit_1998/4Filed January 8, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-1126

IN RE: SACRED HEART HOSPITAL OF NORRISTOWN, dba
SACRED HEART HOSPITAL & REHABILITATION CENTER,

Debtor

SACRED HEART HOSPITAL OF NORRISTOWN, dba

SACRED HEART HOSPITAL & REHABILITATION CENTER

v.

COMMONWEALTH OF PENNSYLVANIA,

DEPARTMENT OF PUBLIC WELFARE (D.C. Civil No. 96-cv-06172)

IN RE: SACRED HEART HOSPITAL OF NORRISTOWN, d/b/a SACRED HEART HOSPITAL &
REHABILITATION CENTER,

Debtor

SACRED HEART HOSPITAL OF NORRISTOWN

v.

COMMONWEALTH OF PENNSYLVANIA,

DEPARTMENT OF PUBLIC WELFARE (D.C. Civil No. 96-cv-06286)

Sacred Heart Hospital of Norristown, Appellant

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Nos. 96-cv-06172 and 96-cv-06286)Argued September 25, 1997

BEFORE: COWEN, ROTH and LEWIS, Circuit Judges

(Filed January 8, 1998)

William A. Slaughter, Esq. (Argued)
Matthew M. Strickler Ballard, Spahr, Andrews & Ingersoll
1735 Market Street

51st Floor Philadelphia, PA 19103

COUNSEL FOR APPELLANT Sacred Heart Hospital of
Norristown

Sallie A. Rodgers, Esq. Commonwealth of Pennsylvania, Office of Legal Counsel Department of Public Welfare Health & Welfare Building
P.O. Box 2675 Harrisburg, PA 17105-2675

Thomas Blazusiak, Esq. (Argued) Pennsylvania Department of
Public Welfare
1600 Hanover Avenue Allentown, PA 18103

COUNSEL FOR APPELLEE Commonwealth of PA, Department
of Public Welfare

Leonard H. Gerson, Esq. Angel & Frankel
460 Park Avenue New York, NY 10017

COUNSEL FOR AMICUS-

APPELLANT Business Bankruptcy Law
Committee of the New York County Lawyers' Association

2OPINION OF THE COURT

COWEN, Circuit Judge.

This appeal involves a challenge to the constitutio nality of section 106(a) of the Bankruptcy Code, 11 U.S.C. S 106(a). That section purports to abrogate state s overeign immunity in federal court. The defendant-appellee, Commonwealth of Pennsylvania Department of Public Welfare ("DPW"), argued before the bankruptcy court that section 106(a) was not enacted pursuant to a valid exercise of congressional power. Therefore, DPW asserted tha t the
Eleventh Amendment to the United States Constitutio n bars Debtor-appellant Sacred Heart Hospital of Norristown's ("Sacred Heart") lawsuit against DPW. The bankruptcy court denied DPW's claim of Eleventh Amendment immunity. It also entered an order on the merits granting declaratory judgment for Sacred Hea rt. The district court reversed the bankruptcy court's orde r dealing with Eleventh Amendment immunity and thereafter vac ated the order of the bankruptcy court concerning the me rits of the dispute. We will affirm the district court.

I.

Sacred Heart, an acute care community hospital in Norristown, Pennsylvania, began providing medical treatment to patients under Pennsylvania's Medical Assistance program ("the Program"), 55 Pa. Code S 1 101.11 et seq., in 1967. By May of 1994, however,financial difficulties forced Sacred Heart to cease operation s and lay off substantially all of its several hundred employ ees. Shortly thereafter, Sacred Heart filed a voluntary petition for relief under Chapter 11 of the United States Ba nkruptcy

Code.

During the course of Sacred Heart's Chapter 11 proceedings, the Commonwealth asserted various clai ms against the Debtor. The Commonwealth's Department o f Labor and Industry ("DLI") asserted claims against the
Debtor for amounts claimed to be owed to the

3Commonwealth under the Commonwealth's Unemployment

Compensation and Workers' Compensation statutes; th e Commonwealth's Department of Revenue ("DOR") assert ed claims against the Debtor for sales and use taxes; and DPW asserted a claim against the Debtor arising under a lease.1

Earlier in the bankruptcy proceedings, the Debtor submitted invoices to DPW to obtain payment for som e of the medical treatments it provided to patients unde r the Program. The Commonwealth's Office of Inspector Gen eral ("OIG") returned the invoices to the Debtor, howeve r, because they were incorrectly completed. The Debtor resubmitted them to OIG in January of 1996, and submitted additional invoices to DPW in May of 1996 . DPW
denied all of the Debtor's claims because the Debto r failed to comply with 55 Pa. Code S 1101.68. This statute requires claims to be submitted to DPW within 180 days after the
treatment is rendered.

The Debtor subsequently filed in the bankruptcy cou rt the instant adversary proceeding against DPW, deman ding judgment against DPW "in the amount to which it is entitled under the Medical Assistance program." Adv

. Compl. at 5. The Debtor did not request a declarato ry judgment, nor did it request any prospective injunc tive relief against any Commonwealth officials.

DPW filed motions to dismiss based principally on t he
Eleventh Amendment to the United States Constitutio n. Sacred Heart responded by claiming that no Commonwealth agency was entitled to Eleventh Amendment immunity in these proceedings because the DLI and DOR claims in the bankruptcy proceedings constituted a waiver of the Commonwealth's sovereig n

___________________________________________________ ______________

1. Although DPW filed a proof of claim against the Debtor in these proceedings, it is undisputed that this claim was m isdocketed. The lease in question was between DPW and the Sacred Heart Ge neral Hospital ("SHGH"), which also had a matter pending in the Ba nkruptcy Court for the Eastern District of Pennsylvania. Once DPW reco gnized that its claim against SHGH was unrelated to the Debtor, it agreed not to pursue any claim against the Debtor and not to oppose the Debt or's objection to the claim. Sacred Heart has never argued that DPW waive d its Eleventh Amendment immunity because of this inadvertent fili ng.

4immunity.2 Sacred Heart did not argue that the Elev enth

Amendment did not apply or that DPW had waived its immunity under 11 U.S.C. S 106(c).

The bankruptcy court denied DPW's motions. It held that the Eleventh Amendment was not implicated because: (1) the adversary complaint sought not monetary relief but only a declaration that section 108(a) of the Bankr uptcy Code affected state billing rules to require that o therwise untimely invoices be accepted as timely; and (2) th e Commonwealth waived its sovereign immunity as to al l claims relating to Sacred Heart's bankruptcy procee dings when DLI filed its proof of claim for unreimbursed unemployment benefits.3 The bankruptcy court subsequently issued a final order, stating that "[u ]pon
advice of the Debtor's counsel . . . the Debtor wou ld presently be satisfied with an Order declaring 11 U .S.C. S 108(a) applies here." App. at A52.4 The bankruptc y court ordered that DPW accept as timely all billings that were not untimely under state rules as of the filing of Sacr ed Heart's bankruptcy. The Commonwealth appealed both orders t o the district court.

___________________________________________________ ______________

2. While it is unclear whether Sacred Heart's waive r argument before the bankruptcy court was based on 11 U.S.C. S 106(b) or some undefined general waiver principle, we need not be concerned with this ambiguity (or the constitutional issues concerning either the ory) because Sacred Heart has failed to pursue these arguments in this appeal.

3. DPW filed an immediate appeal of this order unde r the collateral order exception to the final judgment rule. Although the bankruptcy court refused to grant a stay pending appeal, the distric t court subsequently granted the stay.

4. Section 108(a) provides as follows:

(a) If applicable nonbankruptcy law, an orde r entered in a non- bankruptcy proceeding, or an agreement fixes a period within which the debtor may commence an action, and such period has not expired before the date of the filing of the petition, the trustee

may commence such action only before the later o f--

(1) the end of such period, including any su spension of such period occurring on or after the commencemen t of the case; or

(2) two years after the order for relief.

11 U.S.C. S 108(a) (1993).

5The district court by order entered on January 21, 1997,

reversed the bankruptcy court. Specifically, the di strict court held that 11 U.S.C. S 106(a), which purports to abrogate state sovereign immunity, violates the Ele venth Amendment to the United States Constitution in ligh t of the Supreme Court's decision in Seminole Tribe of Flori da v. Florida, ___ U.S. ___, 116 S. Ct. 1114 (1996).5 The district court also determined that, because there was no contention that Sacred Heart's claims against DPW a rose out of the same transaction or occurrence as either DLI's or DOR's claims against Sacred Heart, DPW did not waiv e its immunity pursuant to 11 U.S.C. S 106(b). In additio n, because Sacred Heart never argued before the bankru ptcy
court that its claims were raised to offset DLI's o r DOR's claims pursuant to 11 U.S.C. S 106(c), the district court found this issue waived. Finally, the district cour t held that the bankruptcy court lacked jurisdiction over the a dversary proceeding after DPW appealed the August 7, 1996, o rder of the bankruptcy court, which was a collateral ord er dealing with the jurisdiction of the bankruptcy cou rt. It also vacated the August 15, 1996, order of the bankruptc y court which dealt with the merits of the adversary procee dings. This appeal followed.

___________________________________________________ ______________

5. Section 106 of the Bankruptcy Code, entitled "Wa iver of sovereign immunity," provides, in pertinent part:

(a) Notwithstanding an assertion of soverei gn immunity, sovereign immunity is abrogated as to a governmental u nit to the extent set forth in this section with respect to the fo llowing:

(1) Sections . . . 106 [and] 108 . . . of t his title.

. . . .

(b) A governmental unit that has filed a pr oof of claim in the

case is deemed to have waived sovereign immunity with respect to a claim against such governmental unit that is property of the estate
and that arose out of the same transaction o r occurrence out of which the claim of such governmental unit ar ose.

(c) Notwithstanding any assertion of sovere ign immunity by a governmental unit, there shall be offset aga inst a claim or
interest of a governmental unit any claim against suc h governmental unit that is property of the estate.

11 U.S.C. S 106 (1994).

6Sacred Heart essentially raises three arguments on

appeal. First, it contends that the Eleventh Amendm ent does not limit bankruptcy court jurisdiction becaus e bankruptcy courts do not exercise the judicial powe r of the United States under Article III. Second, it asserts that the Bankruptcy Clause, U.S. Const. art. I, S 8, cl. 4, vests Congress with the power to abrogate state sovereign immunity from suit in federal court. Third, it main tains that even if the Bankruptcy Clause itself does not authorize Congress to abrogate state sovereign immunity, Cong ress' abrogation of sovereign immunity in section 106(a) should
be sustained as a valid exercise of its enforcement power under the Fourteenth Amendment.6

II.

"Because in bankruptcy cases the district court sit s as an appellate court, our review of the district court's decision is plenary." Brown v. Pennsylvania State Employees Cre dit Union, 851 F.2d 81, 84 (3d Cir. 1988) (citing Unive rsal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 1 01-02 (3d Cir. 1981)). We review the findings of fact of the bankruptcy court only for clear error. Id. (citing In re Morrissey, 717 F.2d 100, 104 (3d Cir. 1983)). Findi ngs of fact by a trial court are clearly erroneous when, a fter reviewing the evidence, the appellate court is "lef t with a
definite and firm conviction that a mistake has bee n committed." Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 573, 105 S. Ct. 1504, 1511 (1985) (quotat ion marks omitted). We exercise plenary review over leg al questions. In re Fegeley, 118 F.3d 979, 982 (3d Cir . 1997) (citing In re Siciliano, 13 F.3d 748, 750 (3d Cir. 1994)). It is error for a district court, when acting in the capa city of a court of appeals, to make its own factual findings. Universal Minerals, 669 F.2d at 104.

___________________________________________________ ______________

6. DPW also contends that because DLI and DORfiled proofs of claim in these proceedings, Sacred Heart may bring a declara tory judgment action against DPW pursuant to section 106's "offse t" provision, 11 U.S.C. S 106(c). However, we need not address this argument and, thus, the constitutionality of 11 U.S.C. S 106(c), becaus e Sacred Heart failed

to raise this issue below and, therefore, for purposes of this appeal, has
waived it.

7The bankruptcy court had jurisdiction pursuant to 2 8

U.S.C. S 1334(a) and 28 U.S.C. S 157(a). The distri ct court's appellate jurisdiction was based upon 28 U.S.C. S 1 58(a) and the collateral order exception to the final jud gment rule. See Puerto Rico Aqueduct & Sewer Auth. v. Met calf & Eddy, Inc., 506 U.S. 139, 142-43, 113 S. Ct. 684, 6 87 (1993). We have jurisdiction pursuant to 28 U.S.C.S 158(d).

III.

The Eleventh Amendment provides:

The Judicial power of the United States shal l not be construed to extend to any suit in law or eq uity, commenced or prosecuted against one of the U nited States by Citizens of another State, or by C itizens or Subjects of any Foreign State.

U.S. Const. amend. XI. Although the Amendment expre ssly prohibits only suits against States by citizens of other States, the Supreme Court has long held that the El eventh Amendment also bars suits against the State by its own citizens, Edelman v. Jordan, 415 U.S. 651, 662-63, 94 S. Ct. 1347, 1355 (1974) (collecting cases), and may b ar suits invoking the federal question jurisdiction of Artic le III courts. See Idaho v. Coeur d'Alene Tribe of Idaho, ___ U.S. ___, ___, 117 S. Ct. 2028, 2033 (1997) (citing Semi nole Tribe, ___ U.S. at ___, 116 S. Ct. at 1114). This i mmunity is based on a two-part presupposition: (1) "each St ate is a sovereign entity in our federal system[,]" Seminole Tribe, ___ U.S. at ___, 116 S. Ct. at 1122; and (2) "[i]t is i nherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent." Id. at ___, 116 S. Ct. at 1122 (quotation marks omitted).

Eleventh Amendment immunity, however, is not absolute. When, as here, a plaintiff seeks recovery only from the state, and not from its officials, there a re two ways
to divest a state of its Eleventh Amendment soverei gn immunity and hale the state into federal court. Fir st, a state may waive its Eleventh Amendment immunity and
consent to suit in federal court. See Atascadero St ate Hosp. v. Scanlon, 473 U.S. 234, 238, 105 S. Ct. 3142, 314 5 (1985). Second, Congress can abrogate a state's Ele venth

8Amendment immunity, but only if two requirements ar e

met: Congress must unequivocally express an intent to abrogate state immunity, and the legislative action must be "pursuant to a valid exercise of power . . . ." Gre en v. Mansour, 474 U.S. 64, 68, 106 S. Ct. 423, 425-26 (1 985) (citing Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 98, 104 S. Ct. 900, 906 (1984)).

"Congress' intent to abrogate the States' immunity from suit must be obvious from `a clear legislative stat ement.' " Seminole Tribe, ___ U.S. at ___, 116 S. Ct. at 1123 (quoting Blatchford v. Native Village of Noatak, 501 U.S. 77 5, 786, 111 S. Ct. 2578, 2584 (1991)). "A general authoriza tion for suit in federal court is not the kind of unequivoca l statutory language sufficient to abrogate the Eleventh Amendm ent." Atascadero, 473 U.S. at 246, 105 S. Ct. at 3149. Ra ther, abrogation will be effected only when the intent to abrogate is "stated by the most express language or by such overwhelming implication from the text as [will] le ave no room for any other reasonable construction." Id. at 239-40, 105 S. Ct. at 3146 (quotation marks omitted).

If congressional intent to abrogate is found, a fed eral court must next determine whether Congress, in enac ting the specific legislation, was acting pursuant to a valid exercise of power. Prior to Seminole Tribe, the Sup reme Court had recognized two sources of authority throu gh which Congress could validly abrogate state soverei gn immunity: section 5 of the Fourteenth Amendment, Fitzpatrick v. Bitzer, 427 U.S. 445, 96 S. Ct. 2666 (1976), and the Interstate Commerce Clause. Pennsylvania v. Union Gas Co., 491 U.S. 1, 109 S. Ct. 2273 (1989). In Sem inole Tribe, however, the Court overruled Union Gas and h eld that "[t]he Eleventh Amendment restricts the judici al power under Article III, and Article I cannot be used to circumvent the constitutional limitations placed upon federal jurisdiction." ___ U.S. at ___, 116 S. Ct. at 1131- 32. "Thus,
since Seminole Tribe section five of the Fourteenth Amendment has been the sole basis for Congress to abrogate the states' immunity under the Eleventh Amendment."7 College Savings Bank v. Florida Prepai d

___________________________________________________ ______________

7. As the Fitzpatrick Court explained, the Fourteen th Amendment, adopted well after the adoption of the Eleventh Ame ndment, expanded

9Postsecondary Education Expense Bd., ___ F.3d ___,
___,

1997 WL 749514, at *4 (3d Cir. Dec. 5, 1997).

In light of the foregoing, we must determine, first
, whether Congress expressly abrogated the states' El eventh Amendment immunity when enacting the current versio n of section 106(a),8 and, second, whether the Act in qu estion was passed pursuant to a constitutional provision g ranting Congress the power to abrogate.

There can be no doubt that Congress unequivocally expressed its intent to abrogate the states' Eleven th Amendment immunity under the Bankruptcy Code. See Matter of Fernandez, 123 F.3d 241, 243 (5th Cir. 19 97); In re Creative Goldsmiths of Washington, D.C., Inc., 1 19 F.3d 1140, 1145 (4th Cir. 1997). Section 106(a) explicit ly states that, "[n]otwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmenta l unit
to the extent set forth in this section . . . ." Th e only question before us, therefore, is whether Congress acted pursuant to a valid exercise of its power.

___________________________________________________ ______________

federal power at the expense of state autonomy and thereby fundamentally altered the pre-existing balance betw een state and federal power achieved by Article III and the Eleventh Amen dment. 427 U.S. at 453-56, 96 S. Ct. at 2670-71. The Court reaffirmed this view of section 5 in Seminole Tribe. ___ U.S. at #6D 6D6D#, 116 S. Ct. at 1128.

8. Pursuant to section 113 of the Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, 108 Stat. 4106 (1994), former secti on 106(c) was amended and recodified as current section 106(a). T he Amendment was intended to overrule United States v. Nordic Villag e, Inc., 503 U.S. 30, 112 S. Ct. 1011 (1992) and Hoffman v. Connecticut D ep't of Income Maintenance, 492 U.S. 96, 109 S. Ct. 2818 (1989), " two Supreme Court
cases that have held the States and Federal Governm ent are not deemed to have waived their sovereign immunity by virtue o f enacting section 106(c) of the Bankruptcy Code." 140 Cong. Rec. H107 66 (daily ed. Oct. 4, 1994) (Section-By-Section Description). The amen dment was also intended "to clarify[ ] the original intent of Cong ress in enacting
Section 106 of the Bankruptcy Code with regard to sovereign immunity." See Matter of Merchants Grain, Inc., 59 F.3d 630, 634 ( 7th Cir. 1995) (quotation marks omitted), judgment vacated sub nom . Ohio Agr. Commodity Depositors Fund v. Mahern, ___ U.S. ___, 116 S. Ct. 1411 (1996).

10Sacred Heart contends that Seminole Tribe merely he ld

that Congress could not abrogate sovereign immunity pursuant to the Indian and Interstate Commerce Clau ses and did not address Congress' other Article I power s. Sacred Heart also argues that the Bankruptcy Clause is distinguishable from other Article I clauses becaus e it contains an affirmative requirement of uniformity. In addition, Sacred Heart asserts that we should uphol d section 106(a) as a valid exercise of Congress' pow er under
section 5 of the Fourteenth Amendment.9 We find ea ch of these arguments unpersuasive.

The Seminole Tribe Court held that Congress may not abrogate state sovereign immunity by legislation pa ssed pursuant to its Article I powers. ___ U.S. at ___, 116 S. Ct.
at 1131-32. The Court stated:

Even when the Constitution vests in Congress complete law-making authority over a particular area, the Eleventh Amendment prevents congressional authorization of suits by private parties ag ainst unconsenting States. The Eleventh Amendment restricts the judicial power under Article I II, and Article
I cannot be used to circumvent the constitut ional limitations placed upon federal jurisdiction

.

Id. (footnote omitted). The Court thereby overruled Union Gas, its only prior case finding congressional auth ority to abrogate state sovereign immunity pursuant to an Ar ticle I power, and "restored the balance of power between Congress and the Judiciary anticipated by the Frame rs in
Article I and Article III of the Constitution . . . ." Close v. New York, 125 F.3d 31, 38 (2d Cir. 1997).

___________________________________________________ ______________

9. While Sacred Heart also contends that the Eleven th Amendment is not even implicated in this matter because bankruptcy c ourts do not exercise the judicial power of the United States un der Article III, this argument cannot withstand the Supreme Court's recen t pronouncement in Seminole Tribe that "[t]he Eleventh Amendment re stricts the judicial power under Article III, and Article I cannot be us ed to circumvent the constitutional limitations placed upon federal juri sdiction." ___ U.S. at ___, 116 S. Ct. at 1131-32. See also In re Grewe, 4 F.3d 299, 304 (4th Cir. 1993) ("[W]hile functionally there may appear to be a separate bankruptcy court, for jurisdictional purposes there is only one court, i.e., the district court." (quotation marks and citation omitted)).

11Moreover, there is simply no principled basis to

distinguish the Bankruptcy Clause from other Articl e I clauses. See Matter of Fernandez, 123 F.3d at 244; In re Creative Goldsmiths, 119 F.3d at 1145-46; see also Hoffman, 492 U.S. at 111, 109 S. Ct. at 2828 (Marsh all, J., dissenting) ("I see no reason to treat Congress' po wer under the Bankruptcy Clause any differently [than the Com merce Clause], for both constitutional provisions give Co ngress plenary power over national economic activity." (ci tation omitted)). Nor does the uniformity requirement in t he Bankruptcy Clause change this analysis. "The Constitutional requirement of uniformity is a requi rement of geographic uniformity" and nothing more. Vanston Bondholders Protective Comm. v. Green, 329 U.S. 156 , 172, 67 S. Ct. 237, 244 (1946) (Frankfurter, J., concurr ing). Because Eleventh Amendment immunity applies uniform ly to all states and to all parties in a bankruptcy pr oceeding, the uniformity requirement is not frustrated, and S acred Heart's argument must fail. As such, we hold that t he Bankruptcy Clause is not a valid source of abrogati on

power.

Equally unavailing is Sacred Heart's assertion that Congress enacted section 106(a) pursuant to section 5 of
the Fourteenth Amendment. Section 5 of the Fourteen th Amendment provides that "Congress shall have the po wer to enforce, by appropriate legislation, the provisi ons of this article." U.S. Const. amend. XIV, S 5. "Correctly v iewed, S 5 is a positive grant of legislative power authorizin g Congress to exercise its discretion in determining whether a nd what legislation is needed to secure the guarantees of t he Fourteenth Amendment." Katzenback v. Morgan, 384 U. S. 641, 651, 86 S. Ct. 1717, 1723-24 (1966). Congress' power, however, "extends only to enforc[ing] the provision s of the Fourteenth Amendment." City of Boerne v. Flores, __ _ U.S. ___, ___, 117 S. Ct. 2157, 2164 (1997) (quotation m arks omitted). "Any suggestion that Congress has a subst antive, non-remedial power under the Fourteenth Amendment i s not supported by our case law." Id. at ___, 117 S. Ct. at
2167-68.

While Congress need not "recite the words `section 5' or `Fourteenth Amendment' or `equal protection' " when

12enacting laws pursuant to this power, E.E.O.C. v. W yoming,

460 U.S. 226, 243 n.18, 103 S. Ct. 1054, 1064 n.18 (1983) (citation omitted), "if Congress does not explicitl y identify the source of its power as the Fourteenth Amendment
, there must be something about the act connecting it to recognized Fourteenth Amendment aims." Wilson-Jones v. Caviness, 99 F.3d 203, 210 (6th Cir. 1996), modifie d on other grounds, 107 F.3d 358 (6th Cir. 1997) (per cu riam);10 see also Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 16, 101 S. Ct. 1531, 1539 (1981) (respect f or state sovereignty requires that courts "should not quickl y attribute to Congress an unstated intent to act und er its authority to enforce the Fourteenth Amendment"). He re, there is simply no evidence suggesting that section 106(a) was enacted pursuant to any constitutional provisio n other than Congress' Bankruptcy Clause power. See Matter of Fernandez, 123 F.3d at 245; In re Creative Goldsmit hs, 119 F.3d at 1146; In re Kish, 212 B.R. 808, 815 (D.N.J. 1997); In re C.J. Rogers, Inc., 212 B.R. 265, 272-73 (E.D. Mich. 1997). On the contrary,

the conclusion seems logically inescapable t hat in passing the 1994 Act Congress exercised the same specifically enumerated Article I bankruptcy power that it has traditionally relied on in enacting p rior incarnations of the bankruptcy law dating ba ck to 1860--68 years before the passage of the Fou rteenth Amendment. We will not presume that Congress intended to enact a law under a general Four teenth Amendment power to remedy an unspecified vio lation of rights when a specific, substantive Artic le I power clearly enabled the law.

In re Creative Goldsmiths, 119 F.3d at 1146 (citati on omitted). Sacred Heart's argument must fail.

___________________________________________________ ______________

10. Although the Wilson-Jones court indicated that the only cases it "could locate where legislation was upheld under th e Fourteenth
Amendment's enforcement clause concerned discrimina tion by state actors on the basis of race or gender[,]" 99 F.3d a t 210, this court recently considered whether the Trademark Remedy Cl arification Act of 1992, Pub. L. No. 102-542, 106 Stat. 3567 (1992), w as a valid
mechanism to enforce the Due Process Clause. See Co llege Savings Bank, ___ F.3d at ___-___, 1997 WL 749514, at *5-9.

13Finally, we also reject Sacred Heart's contention t hat

bankruptcy constitutes a "privilege or immunity" un der section 1 of the Fourteenth Amendment, thereby enab ling Congress to utilize section 5 of the Fourteenth Ame ndment to abrogate Eleventh Amendment immunity. As we observed in Lutz v. City of York, 899 F.2d 255, 264 (3d Cir. 1990), the Privileges and Immunities Clause of the Fourteenth Amendment "has remained essentially moribund" since the Supreme Court's decision in The Slaughter-House Cases, 83 U.S. (16 Wall.) 36 (1873) , and the Supreme Court has subsequently relied almost exclusively on the Due Process Clause as the source of unenumerated rights.11 Moreover, the Supreme Court has expressly held that there is no constitutional righ t to a bankruptcy discharge, see United States v. Kras, 40 9 U.S. 434, 446-47, 93 S. Ct. 631, 638-39 (1973), and we c an conceive of no reason to resuscitate this section o f the Fourteenth Amendment by finding that bankruptcy is a privilege of national citizenship. See Matter of Fe rnandez, 123 F.3d at 245 ("[T]here is no indication that Con gress passed the 1994 Act to remedy any incipient breache s or even some unarticulated, general violation of the r ights specified in S 1 of the Fourteenth Amendment." (cit ation omitted)); see also In re Kish, 212 B.R. at 817; In re NVR, L.P., 206 B.R. 831, 842 (Bankr. E.D. Va. 1997).

Having concluded that Congress may not abrogate sta te sovereign immunity pursuant to any of its Article I powers,

___________________________________________________ ______________

11. "The Fourteenth Amendment forbids states from a bridging the privileges and immunities that flow from national c itizenship." In re Storer, 58 F.3d 1125, 1128 (6th Cir. 1995) (citing U.S. Const. amend. XIV, S 1). The most prominent rights of national ci tizenship were catalogued in Twining v. New Jersey, 211 U.S. 78, 2 9 S. Ct. 14 (1908), and include the right to inform federal officials o f violations of federal law, In re Quarles, 158 U.S. 532, 15 S. Ct. 959 (18 95), the right to be free from violence while in the lawful custody of a United States marshal, Logan v. United States, 144 U.S. 263, 12 S. Ct. 617 (1892), the right to enter the public lands, United States v. Waddell, 1 12 U.S. 76, 5 S. Ct. 35 (1884), the right to vote in national elections, The Ku-Klux Cases, 110 U.S. 651, 4 S. Ct. 152 (1884), the right to petitio n Congress for redress of grievances, United States v. Cruikshank, 92 U.S. (2 Otto) 542 (1875), and the right to pass freely from state to state, C randall v. Nevada, 73 U.S. (6 Wall.) 35 (1867).

14and that there is no evidence that Congress enacted section

106(a) of the Bankruptcy Code pursuant to section 5 of the Fourteenth Amendment, we hold that section 106(a) i s unconstitutional to the extent that it purports to abrogate state sovereign immunity in federal court. The Janu ary 21, 1997, order of the district court will be affirmed in all respects.

15ROTH, Circuit Judge, concurring.

I agree with the majority holding rejecting the Bankruptcy Clause as a source of abrogation power p ostSeminole Tribe of Florida v. Florida, ___ U.S. ___, 116 S.Ct. 1114 (1996), and consequently declaring 11 U.S.C. S 106(a) unconstitutional. I write separately, however, to e xpress my concern about the breadth of the language used by t he majority in reaching this holding.

The Supreme Court in Seminole Tribe, rejected both the Indian Commerce Clause and, by overruling Pennsylva nia v. Union Gas Co., 491 U.S. 1, 109 S.Ct. 2273 (1989) , the Interstate Commerce Clause as sources of abrogation power. ___ U.S. at __, 116 S.Ct. at 1127, 1131. The majority in the instant case, concludes that "there is simpl y no principled basis to distinguish the Bankruptcy Clau se from other Article I clauses." Majority Op. at 12. I wou ld not go so far as to discuss the merits of Article I powers other than
the ones at issue in Seminole Tribe and the instant case: the Interstate Commerce Clauses, and the Bankruptcy Clause, respectively. I would hold that there is si mply no principled basis to distinguish the Bankruptcy Clau se from

the Interstate Commerce Clause. In both words and s cope, the Bankruptcy Clause is identical to the Indian Co mmerce Clause. Both clauses read as follows: "The Congress shall have Power [t]o . . . ." Furthermore, nothing in th e history or text of the Bankruptcy Clause indicates any more an "alter[ation of the] pre-existing balance between s tate and federal power," Seminole Tribe, #6D6D 6D# U.S. at _ __, 116 S.Ct. at 1128, than the Indian Commerce Clause.

In short, I would not foreclose the possibility tha t in the post-Seminole Tribe era, there exist any Article I powers sufficiently [powerful/unique/similar to the Fourte enth Amendment in effect as] to abrogate state sovereign immunity. See, e.g., Diaz-Gandia v. Dapena-Thompson , 90 F.3d 609, 616 (1st Cir. 1996) (reaffirming that Con gress, acting pursuant to its War Powers, see U.S. Const. art. I, S 8, abrogated state sovereign immunity to damages actions brought under the Veterans' Reemployment Rights Act , 38 U.S.C. S 2021 et seq.). As the First Circuit reason ed, it is not clear that the Court's holding in Seminole Trib e was so broad as to strike down all sources of abrogation p ower in

16Article I. 90 F.3d at 616. I would deal with potent ial

sources of abrogation power in Article I, as they a rise on a case-by-case basis.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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