Legal Document

518 U.S. 213116 S.Ct. 2106135 L.Ed.2d 506 UNITED STATES, Petitioner,v.REORGANIZED CF & I FABRICATORS OF UTAH, INC., et al. No. 95-325. Supreme Court of the United States Argued March 25, 1996. Decided June 20, Syllabus* The Employee Retirement Income Security Act 1974 obligated Steel Corporation and its subsidiaries (CF I) to make certain annual funding contributions pension plans they sponsored. required contribution for 1989 plan year totaled some $12.4 million, but failed payment petitioned Bankruptcy Chapter 11 reorganization. Government filed, inter alia, a proof claim tax liability arising under § 4971(a) Internal Revenue Code, 26 U.S.C. 4971(a), which imposes 10 percent ''tax'' (of $1.24 million here) on any ''accumulated deficiency'' such as I's. court allowed rejected Government's argument that was entitled seventh priority an ''excise tax'' 507(a)(7)(E) 507(a)(7)(E), finding instead 4971 created penalty not in compensation pecuniary loss. also subordinated those all other general unsecured creditors, supposed authority Code's provision equitable subordination, 510(c), later approved reorganization giving lowest (and no money) claims noncompensatory penalties. District Tenth Circuit affirmed. Held: 1. is, bankruptcy purposes, be dealt with ordinary, claim. Pp. ___-___. (a) Here there Code Congress has referred or federal statutes define explain particular terms. It is significant included reference even though provides definition ''excise,'' ''tax,'' tax.'' This absence explicit connection between more revealing light this Court's history interpretive practice determining whether so called statute creating it purposes laws. (b) That reveals characterizations are dispositive context. In every case considered exaction looked behind label rested answer directly operation provision. See, e.g., v. New York, 315 510, 514-517, 62 712, 714-716, 86 L.Ed. 998. given statutory indication intended different method reading terms used 1978, see Midlantic Nat. Bank Jersey Dept. Environmental Protection, 474 494, 501, 106 755, 759-760, 88 859, specific references indicates cross-identity intended. suggests plain texts resolve case, approach inconsistent cases, refused rely terminology, unavailing own terms, because disavows suggestion use words ''Excise Taxes'' title chapter covering word 507(a)(7)(E). seeks statement from legislative taxes ''generally expressly treated excises covered by'' does call excise tax, tax[es]'' begs question begin with. There basis, therefore, avoiding functional examination ordinarily employs. (c) cases area look purpose support government punishment unlawful act. If concept means anything, act omission, what is. imposed violating separate requiring plans, thus obviously penal character. (d) reflects statute's punitive P. 2114.SC2S2. subordination creditors pursuant 510(c) error. Categorical reordering priorities takes place at level consideration beyond scope judicial order 510(c). ___-____. 53 F.3d 1155, reversed remanded. SOUTER, J., delivered opinion unanimous respect Part III, Parts I, II-A, II-B, II-C, REHNQUIST, C.J., STEVENS, O'CONNOR, SCALIA, KENNEDY, GINSBURG, BREYER, JJ., joined, II-D, joined. THOMAS, J, filed concurring part dissenting part. Kent L. Jones, Washington, DC, petitioner. Steven Jack McCardell, Salt Lake City, UT, respondents. Justice SOUTER Court.** 1 presents two questions affecting collect Service equal accumulated deficiency plans: first, (1988 ed.),1 time relevant here gave tax; and, second, principles categorical rule placing lower than generally. We hold create within meaning 2 * nine sponsored consequence by 1974, Stat. 935, 29 1001 seq. (ERISA), minimum based value benefits earned employees. See 1082; 412. payments were due each September 15th preceding year, CFR 11.412(c)-12(b) (1995), 15, 1990, pay total ending December 31, 1989. day passed without payment, November 7, Utah relief attempt financial prompted large company's inability fund plans. re: Fabricators Utah, Inc., 148 B.R. 332, 334 (Bkrtcy.D.Utah 1992). 3 1991, IRS several proofs liabilities, one arose imposing plans.2 sought claim, either ed.), loss 507(a)(7)(G). disputed alternative, adversary complaint asked subordinate creditors. 4 denied 507(a)(7), neither nor actual Instead, read penalty, B.R., 340, subsequent 5 appealed pressing theory objecting improper misconduct. While appeal pending, presented put Class 13, special category nonpecuniary penalties; provided that, if found inappropriate, would ranked them 12 (which receive funds). Appellees' Appendix 94-4034 (CA10), pp. 96-101, 137-141, 197-200. objected, affirmed plan. well, both denial treatment claims. App. Pet. Cert. A-11. likewise 1155 (1995). 6 granted certiorari, 516 ----, 116 558, 133 458 conflict among Circuits over categorically subject 510(c).3 affirm first second vacate judgment remand. 7 No denies could have calling (thereby affording claimed Government); only ought (and, so, excise) direction. 8 directions establish significance law term elsewhere statutes. Some provisions deal specifically subjects identified defined outside Code; 523(a)(13), example, addresses ''restitution issued 18, Code,'' 507(a)(1) refers ''any fees charges assessed against estate 123 28.'' Other adopt definitions contained statutes; §§ 761(5), (7), (8) Commodity Exchange Act's ''commodity option,'' ''contract market,'' sale,'' on. Not surprisingly, places where makes referential 101(41)(C)(i) referring ''an employee benefit governmental plan, section 414(d) 346(g)(1)(C) providing recognition gain ''to same extent transfer results 371 Code.'' 9 significant, refer ence itself connector following (as distinct debt penalty) setting laws.CCSBDB1S Although kinds taxes, enacted 92 2590 (1978 Act), nothing new. Section 64(a) 1898 (1898 governed frequently amended) until ''taxes legally owing bankrupt [or a] State, county, district, municipality.'' 30 544, 563.4 On number occasions, exaction, it, 64(a), placed using question. earliest involved state exemplified City York Feiring, 313 283, 61 1028, 85 1333 (1941). considering sales weight law, ascertain incidents constitute 64.'' Id., 285, S.Ct., 1029. Anderson, 203 483, 492, 27 137, 140, 51 284 (1906); Jersawit, 263 493, 495-496, 44 167, 167-168, 68 405 (1924). followed course when exaction. 998 (1942), '' 'tax[es]' statutes, id., 512, n. 2, 713, ''taxes'' 64(a). instance decision turned effects exactions, citing Feiring Anderson enquiry. U.S., 514-516, 714-715. Childs, 266 304, 309-310, 45 110, 111, 69 299 (1924); Sotelo, 436 268, 275, 98 1795, 1800, 56 275 (1978) (''We . cannot agree Appeals 'penalty' language 6672 status respondent's 17(a)(1)(e)''). could, course, 1978. But had we expect indication, 859 (1986), whereas most obvious indicator very much contrary: instances noted before, been redundant assumed presumed, matter course. challenge continuing vitality line, sidestep arguing, similarities case. approach, however, terminology provisions.6 accept proposition comparable similar dispositive, text still fail. 13 ''excise'' appears nowhere (whereas, contrast, 4401 explicitly states tax''). And although taxes'' applies (''Subtitle D--Miscellaneous Excise Taxes''), disclaims reliance caption. Tr. Oral Arg. 14, 17-20; 7806(b) (''No inference, implication, presumption construction shall drawn made reason location grouping portion title''). Furthermore, 507(a)(7)(E); while 4971(b) ''impos[es] 100 [the] corrected,'' says fact, Reply Brief 13-14; 19-24. positions, then, undermine statutes' standing together demonstrate tax. 14 effort avoid Sotelo enquiry relies 1978 Act, ''[a]ll Federal, State local generally 124 Cong. Rec. 32,416 (remarks Rep. Edwards); 34,016 Sen. DeConcini). taking authoritative, provide little position. may mean exactions called7 should 507(a)(7)(E),8 ex cise occurs subtitle heading ''Miscellaneous Taxes,'' disclaimed position recognizing inference placement Code. supra, __; 19. If, hand, literally, apparent upshot ones fails, 15 sum, conclude congressional intent reject principle context, relieve us making 4971(a). proceed examination.CCSCDB1S applied test debt: ''a burden laid upon individuals property supporting Government.'' 140; 515, 714-715; accord 1029 (''B 64 extends burdens their defraying expenses undertakings authorized it''). Or, somewhat ''[a] enforced government; used, act.'' La Franca, 282 568, 572, 278, 280, 75 551 (1931). 16 take Franca's distinction sufficient case; omission Title 1082 requires sponsor potential according complex formula, 412, employers who maintain deficiency. employer fails correct before earlier notice assessment additional 4971(b).9 character these underscored provisions, including Pension Benefit Guaranty (PBGC) entirely independent ''the amount unfunded liabilities,'' 1362(b)(1)(A), (a PBGC asserted Corp. Reorganized 179 704 (N.D.Utah 1994)); 1306-1307. are, indeed, unable find scheme cast issue anything light. D 17 character:SU21S''The bill new effective penalties fail meet standards. past, enforce relatively weak standards existing present immediate vesting employees' rights, funded, do procedure, proved defective since penalize responsible underfunding. For reason, obligation underfunding person whom belongs--namely, employer.'' H.R.Rep. 93-807, p. 28 (1974) U.S.Code Admin.News 4670, 4694.DCSAccord, S.Rep. 93-383, 24 (1973). Committee Reports stated ''[s]ince remains liable necessary after anticipated few, any, will willfully violate standards.'' 28; 24-25. 18 Given patently function 4971, must authorizing Accordingly, claim.CCSIIIDB1S Hence, next question: improperly Though parties allowable nonpriority basis.10 I's did lump class, four classes funds: comprised small ($1,500 less) grouped administrative convenience, 1122(b); (except assigned classes); (much smaller) claims; (all bankrupt), net zero. provided, nonetheless, determined subordinated, separately classified, w ould 12. (CA 10), 95-101, 196-200. 19 When challenged proposal confirmed A-31, ordered ''subordinated [CF I] 510(c).'' A-21. subsequently ruled ''should equitably A-18. Circuit, again contested defended, sustain result new, alternative arguments: 1122(a), restricting class substantially claims, prohibited 12, dissimilarity 1129(a)(7) authorizes impaired (i.e., getting less full like give get liquidation, courts power assign liquidation (in prepetition 726(a)(4)). addressed arguments, relying broad re Virtual Network Servs. Corp., 902 F.2d 1246 (C.A.7 1990) (subordinating otherwise 507(a)(7) creditors), holding ''section 510(c)(1) require claimant misconduct claims.'' F.3d, 1159. took note ''[d]eclining IRS's harm innocent rather punish debtor'' concluded correctly equities case.'' Ibid. 20 Nothing (or, matter, rulings Court) arguments sustainable never suggested 1122(a) relevant. necessarily review assumption possibility might permit basis except 510(c).DB1S So understood, Noland, 517 1524, 134 748 (1996), said characteristic 503(b)(1)(C). held fell court's doctrine generality establishing relative tantamount therefore leeway development doctrine. 1528. Of true Noland subordinatio n higher residual end disfavored subgroup category. classes, ranking them. simply violation Noland's was. 21 Without passing merits dealing guided Appeals, remand further proceedings consistent opinion. 22 ordered. 23 majority relied States' join III agree, majority's determination assessments ed.). congressionally 25 creates taxes. Congress, enacting purported enact (''[T]here hereby ''), properly Commissioner Keystone Consol. Industries, 508 152, 161, 113 2006, 2012-2013, 71 (1993) (stating, dicta, tax). (1906), progeny 1029, appropriate, perform inquiry into valid cites respectfully dissent. syllabus constitutes prepared Reporter Decisions convenience reader. Detroit Lumber Co., 200 321, 337, 282, 287, 50 499. ** SCALIA joins II-D 304(c) Reform 1994, 108 4132, added moved (B 507(a)(7)) eighth 507(a)(8)), altering germane change affect pre-1994 accordingly provisio reflect codification 4971(b), corrected mailed assessed. 1989, million. addition, approximate $25.6 ($12.4 plus $13.2 1990); 1990 $2.56 disallowed (for reasons pertinent here), 341 (Bkrtcy.Ct.C.D.Utah 1992), ruling. Thus, Court, focus here, year. Compare Mansfield Tire Rubber 942 1055 (C.A.6 1991), cert. sub nom., 502 1092, 112 1165, 117 412 (1992), Cassidy, 983 161 (C.A.10 1992); C-T Va., 977 137 (C.A.4 1992).CCSIIDB1S debtor's claimants 507, subsection (a)(7) read, part, accorded ''allowed units, ''(E) ''(i) transaction occurring date filing petition return, required, last due, applicable extension, three years petition; ''(ii) return during immediately petition.'' What ''[f]or taxable maintains [pension] (5 multiemployer plan) year.'' modified slightly notably 1938, 64(a)(4) fourth priority) amended apply subdivision thereof.'' 52 874. As ''[a]lthough money demanded 'a sum,' describe nature enactment. one, duty direction, intrinsic remains, declaration manner treated, decide accordance views Helwig States, 188 605, 612-613, 427, 429-430, 47 614 (1903). THOMAS's ''has tax,'' post, __, true, point. employed Feiring-Anderson analysis there; gave. (1978); conclusion functioned fact analysis. Assuming considered'' unless reasonable consider such, possible application prong legislators' answered below. noted, though, interpretation prove too much: denomination 6, 4, difficult sentence applying another ones. contends Secretary Treasury can waive former latter. imposition ERISA 3002(b), 997, eliminate reducing employer's requirement, 412(d); 1083(a). 412(d) 1083(a) waiver requirements, (b); (b). Thus incorrect suggesting ability 4971(a).FC21SMore fundamentally, clear why difference, serve reinforce prohibition. 57(j) 561 (''Debts municipality forfeiture allowed, sustained act, transaction, proceeding out arose'').

Classification Label: 11