1 (Slip Opinion) OCTOBER TERM, 2019

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

## SUPREME COURT OF THE UNITED STATES

Syllabus

RODRIGUEZ, AS CHAPTER 7 TRUSTEE FOR THE BANKRUPTCY ESTATE OF UNITED WESTERN BANCORP, INC. v. FEDERAL DEPOSIT INSURANCE CORPORATION,

AS RECEIVER FOR UNITED WESTERN BANK

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT

No. 18–1269. Argued December 3, 2019—Decided February 25, 2020

The Internal Revenue Service (IRS) a llows an affiliated group of corpo

rations to file a consolidated federal return. See 26 U. S. C. §1501. The IRS issues any refund as a single payment to the group’s designated agent. The tax regulations say ve ry little about how the group mem

bers should then distribute that refund among themselves. If a dis

pute arises and the members have no tax allocation agreement in place, federal courts normally turn to state law to resolve the distribu

tion question. Some courts, howeve r, have crafted their own federal common law rule, known as the Bob Richards rule. See In re Bob Rich

ards Chrysler-Plymouth Corp., 473 F. 2d 262. The rule initially pro

vided that, in the absence of an ag reement, a refund belongs to the group member responsible for the losses that led to it. But it has since evolved, in some jurisdic tions, into a general rule that is always fol

lowed unless an agreement unambiguou sly specifies a different result. Soon after United Western Bank suffered huge losses, its parent, United Western Bancorp, Inc., was fo rced into bankruptcy. When the IRS issued the group a $4 million ta x refund, the bank’s receiver, re

spondent Federal Deposit Insurance Corporation (FDIC), and the par

ent corporation’s bankruptcy trustee, petitioner Simon Rodriguez, each sought to claim it. The dispute wound its way through a bank

ruptcy court and a federal district court before the Tenth Circuit ex

amined the parties’ tax allocation agreement, applied the more expan

sive version of Bob Richards , and ruled for the FDIC.2 RODRIGUEZ v. FDIC

Syllabus

Held : The Bob Richards rule is not a legitimate exercise of federal com

mon lawmaking. Federal judges ma y appropriately craft the rule of decision in only limited areas, Sosa v. Alvarez-Machain, 542 U. S. 692, 729, and claiming a new area is subject to strict conditions. One of the most basic is that federal common lawmaking must be “ ‘necessary to protect uniquely federal interests.’ ” Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U. S. 630, 640. The Bob Richards rule has not
satisfied this condition. The fede ral courts applying and extending Bob
Richards have not pointed to any signif icant federal interest sufficient to support the Bob Richards rule. Nor have the parties in this case. State law is well-equipped to handle disputes involving corporate prop

erty rights, even in case s, like this one, that involve federal bankruptcy and a tax dispute. Whether this ca se might yield the same or a differ

ent result without Bob Richards is a matter the court of appeals may take up on remand. Pp. 4–6.
914 F. 3d 1262, vacated and remanded.

G ORSUCH , J., delivered the opinion for a unanimous Court._________________

_________________ 1 Cite as: 589 U. S. ____ (2020)

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash

ington, D. C. 20543, of any typographical or other form al errors, in order that corrections may be made before the preliminary print goes to press. 

## SUPREME COURT OF THE UNITED STATES

No. 18–1269

SIMON E. RODRIGUEZ, AS CHAPTER 7 TRUSTEE FOR THE BANKRUPTCY ESTATE OF UNITED WESTERN BANCORP, INC., PETITIONER v. FEDERAL DEPOSIT INSURANCE CORPORATION, AS

RECEIVER FOR UNITED WESTERN BANK

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT

[February 25, 2020]

J USTICE G ORSUCH delivered the opinion of the Court.
This case grows from a fight over a tax refund. But the question we face isn’t who gets the money, only how to de

cide the dispute. Should federal courts rely on state law, together with any applicable federal rules, or should they
devise their own federal commo n law test? To ask the ques

tion is nearly to answer it. The cases in which federal courts may engage in common lawmaking are few and far
between. This is one of the cases that lie between.
The trouble here started when the United Western Bank hit hard times, entered receivership, and the Federal De

posit Insurance Corporation took the reins. Not long after that, the bank’s parent, Unit ed Western Bancorp, Inc., faced its own problems and was forced into bankruptcy, led now by a trustee, Simon Rodriguez. When the Internal Revenue Service issued a $4 million tax refund, each of these newly assigned caretakers understandably sought to claim the money. Unable to resolve their differences, they2 RODRIGUEZ v. FDIC

Opinion of the Court

took the matter to court. The case wound its way through a bankruptcy court and a federa l district court before even

tually landing in the Tenth Circuit. At the end of it all, the court of appeals ruled for the FDIC, as receiver for the sub

sidiary bank, rather than for Mr. Rodriguez, as trustee for the corporate parent. How could two separate corporate entities both claim enti

tlement to a single tax refund? For many years, the IRS has allowed an affiliated group of corporations to file a consoli

dated federal return. See 26 U. S. C. §1501. This serves as a convenience for the government and taxpayers alike. Un

surprisingly, though, a corporate group seeking to file a sin

gle return must comply with a host of regulations. See 26
U. S. C. §1502; 26 CFR §1.1502–0 et seq. (2019). These reg

ulations are pretty punctilious about ensuring the govern

ment gets all the taxes due from corporate group members. See, e.g., §1.1502–6. But when it comes to the distribution of refunds, the regulations say considerably less. They describe how the IRS will pay the group’ s designated agent a single refund. See §1.1502–77(d)(5). And they warn that the IRS’s payment discharges the government’s refund liability to all group members. Ibid. But how should the members distrib

ute the money among themselves once the government sends it to their designated agent? On that, federal law says little. To fill the gap, many corporate groups have developed “tax allocation agreements.” Thes e agreements usually specify what share of a group’s tax li ability each member will pay, along with the share of any tax refund each member will re

ceive. But what if there is no tax allocation agreement? Or what if the group members dispute the meaning of the terms found in their agreement? Normally, courts would turn to state law to resolve questions like these. State law is replete with rules readymade for such tasks—rules for interpreting contracts, creating equitable trusts, avoiding unjust enrich

ment, and much more. Some federal courts, howeve r, have charted a different3 Cite as: 589 U. S. ____ (2020)

Opinion of the Court

course. They have crafted their own federal common law rule—one known to those who practice in the area as the
Bob Richards rule, so named for the Ninth Circuit case from which it grew: In re Bob Richards Chrysler-Plymouth Corp. , 473 F. 2d 262 (1973). As initially conceived, the Bob
Richards rule provided that, in the absence of a tax alloca

tion agreement, a refund belongs to the group member re

sponsible for the losses that led to it. See id., at 265. With the passage of time, though, Bob Richards evolved. Now, in some jurisdictions, Bob Richards doesn’t just supply a stopgap rule for situations when group members lack an al

location agreement. It represents a general rule always to be followed unless the parties’ tax allocation agreement un

ambiguously specifies a different result. At the urging of the FDIC and consistent with circuit precedent, the Tenth Circuit employed this more expansive
version of Bob Richards in the case now before us. Because the parties did have a tax allocation agreement, the court of appeals explained, the quest ion it faced was whether the agreement unambiguously deviated from Bob Richards ’s
default rule. In re United Western Bancorp, Inc. , 914 F. 3d 1262, 1269–1270 (2019). After laying out this “analytical framework” for decision, id., at 1269 (emphasis deleted), the court proceeded to hold that the FDIC, as receiver for the bank, owned the tax refund. Not all circuits, however, follow Bob Richards. The Sixth Circuit, for example, has observed that “federal common law constitutes an unusual exercise of lawmaking which should be indulged . . . only when there is a significant con

flict between some federal polic y or interest and the use of
state law.” FDIC v. AmFin Financial Corp. , 757 F. 3d 530, 535 (2014) (internal quotation marks omitted). In the Sixth Circuit’s view, courts employing Bob Richards have simply “bypassed th[is] threshold question.” 757 F. 3d, at 536. And any fair examination of it, the Sixth Circuit has sub

-4 RODRIGUEZ v. FDIC

Opinion of the Court

mitted, reveals no conflict that might justify resort to fed

eral common law. Ibid. We took this case to decide Bob
Richards ’s fate. 588 U. S. ___ (2019) Judicial lawmaking in the form of federal common law plays a necessarily modest role under a Constitution that vests the federal government’s “legislative Powers” in Con

gress and reserves most other regulatory authority to the States. See Art. I, §1; Amdt. 10. As this Court has put it, there is “no federal general common law.” Erie R. Co. v. Tompkins , 304 U. S. 64, 78 (1938). Instead, only limited areas exist in which federal judges may appropriately craft
the rule of decision. Sosa v. Alvarez-Machain , 542 U. S. 692, 729 (2004). These areas have included admiralty dis

putes and certain controversies between States. See, e.g., Norfolk Southern R. Co. v . James N

. Kirby

, Pty Ltd ., 543
U. S. 14, 23 (2004); Hinderlider v. La Plata River & Cherry
Creek Ditch Co. , 304 U. S. 92, 110 (1938). In contexts like these, federal common law often plays an important role. But before federal judges may claim a new area for common lawmaking, strict conditions mu st be satisfied. The Sixth Circuit correctly identified one of the most basic: In the ab

sence of congressional authorization, common lawmaking
must be “ ‘necessary to protect uniquely federal interests.’ ” Texas Industries, Inc. v. Radcliff Materials, Inc. , 451 U. S. 630, 640 (1981) (quoting Banco Nacional de Cuba v. Sab

batino , 376 U. S. 398, 426 (1964)). Nothing like that exists here. The federal government may have an interest in regulating how it receives taxes from corporate groups. See, e.g., 26 CFR §§1.1502–6, –12, –13. The government also may have an interest in regulat

ing the delivery of any tax refund due a corporate group. For example and as we’ve seen, the government may wish to ensure that others in the group have no recourse against federal coffers once it pays the group’s designated agent. See §1.1502–77(d)(5). But what unique interest could the federal government have in de termining how a consolidated5 Cite as: 589 U. S. ____ (2020)

Opinion of the Court

corporate tax refund, once paid to a designated agent, is dis

tributed among group members? The Sixth Circuit correctly observed that Bob Richards offered no answer—it just bypassed the question. Nor have the courts applying and extending Bob Richards provided satisfactory answers of their own. Even the FDIC, which
advocated for the Bob Richards rule in the Tenth Circuit, failed to point that court to any unique federal interest the rule might protect. In this Court, the FDIC, now repre

sented by the Solicitor General, has gone a step further, ex

pressly conceding that federa l courts “should not apply a federal common law rule to . . . put a thumb on . . . the scale” when deciding which corporate group member owns some or all of a consolidated refund. Tr. of Oral Arg. 40; see also
id ., at 32–36. Understandably too. Corporations are generally “crea

tures of state law,” Cort v. Ash , 422 U. S. 66, 84 (1975), and state law is well equipped to handle disputes involving cor

porate property rights. That cases like the one now before us happen to involve corporate property rights in the con

text of a federal bankruptcy and a tax dispute doesn’t change much. As this Court has long recognized, “Congress has generally left the determi nation of property rights in the assets of a bankrupt’s estate to state law.” Butner v. United States , 440 U. S. 48, 54 (1979). So too with the In

ternal Revenue Code—it generally “ ‘creates no property rights.’ ” United States v. National Bank of Commerce , 472
U. S. 713, 722 (1985) (quoting United States v. Bess , 357
U. S. 51, 55 (1958)). If special exceptions to these usual rules sometimes might be warranted, no one has explained why the distribution of a consolidated corporate tax refund should be among them.
Even if the Tenth Circuit’s reliance on Bob Richards ’s an

alytical framework was mistaken, the FDIC suggests we might affirm the court’s judgment in this case anyway. The6 RODRIGUEZ v. FDIC

Opinion of the Court

FDIC points out that the court of appeals proceeded to con

sult applicable state law—and the FDIC assures us its re

sult follows naturally from state law. The FDIC also sug

gests that the IRS regulations concerning the appointment and duties of a corporate group’s agent found in 26 CFR §§1.1502–77(a) and (d) tend to support the court of ap

peals’s judgment. Unsurprisingly, Mr. Rodriguez disagrees with these assessments and contends that, absent Bob
Richards , the Tenth Circuit would have reached a different

outcome. Who is right about all this we do not decide. Some, maybe many, cases will come out the same way under state law or
Bob Richards . But we did not take this case to decide how
this case should be resolved under state law or to determine how IRS regulations might interact with state law. We took this case only to underscore the care federal courts should exercise before taking up an in vitation to try their hand at common lawmaking. Bob Richards made the mistake of moving too quickly past important threshold questions at the heart of our separation of powers. It supplies no rule of decision, only a cautionary tale. Whether this case might yield the same or a different result without Bob Richards is a matter the court of appeals may consider on remand. See,

e.g., Conkright v. Frommert , 559 U. S. 506, 521–522 (2010); Travelers Casualty & Surety Co. of America v. Pacific Gas
& Elec. Co. , 549 U. S. 443, 455–456 (2007); Gonzales v. Duenas-Alvarez , 549 U. S. 183, 194 (2007). The judgment of the court of appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.