Court Opinion

ID: 9431809
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:33:15.272829+00
Date Added: 2024-06-11T17:23:30.356479
License: Public Domain

*106Justice Marshall,
with whom Justice Brennan, Justice Blackmun, and Justice Stevens join, dissenting.
In my view, the language of § 106(c) of the Bankruptcy Code (Code), 11 U. S. C. § 106(c), satisfies even the requirement that Congress’ intent to abrogate the States’ Eleventh Amendment immunity be “unmistakably clear.” Atascadero State Hospital v. Scanlon, 473 U. S. 234, 242 (1985). Because Congress clearly expressed its intent to authorize a bankruptcy court to issue a money judgment against a State that has not filed a proof of claim in a bankruptcy proceeding, and because Congress has the authority under the Bankruptcy Clause to abrogate the States’ Eleventh Amendment immunity, I respectfully dissent.
Section 106(c) states that, “notwithstanding any assertion of sovereign immunity,” any Code provision containing one of the trigger words — “creditor,” “entity,” or “governmental unit” — applies to the States, and that “a determination by the court of an issue arising under such a provision binds [the States]” (emphasis added). The drafters of § 106(c) were fully aware of “the requirement in case law that an express waiver of sovereign immunity is required in order to be effective.” 124 Cong. Rec. 32394 (1978) (statement of Rep. Edwards); id., at 33993 (statement of Sen. DeConcini); see Employees v. Missouri Dept. of Public Health and Welfare, 411 U. S. 279, 285 (1973). They therefore carefully abrogated the States’ sovereign immunity in three steps. First, they eliminated “any assertion of sovereign immunity.” § 106(c). Second, they included States within the trigger words used elsewhere in the Code. § 106(c)(1). Third, they provided that States would be bound by the orders of the bankruptcy court. § 106(c)(2). What the plurality sees as redundancy in subsections (c)(1) and (c)(2) is thus more reasonably understood as evidence of the importance Congress attached to *107ensuring that the abrogation of sovereign immunity was express.1
By its terms, § 106(c) makes no distinction between Code provisions that contain trigger words and permit only injunc-tive and declaratory relief, and Code provisions that contain trigger words and permit money judgments. Nevertheless, by placing heavy emphasis on the word “determination” in § 106(c)(2), the plurality concludes that § 106(c), in its entirety, is “more indicative of declaratory and injunctive relief than of monetary recovery.” Ante, at 102. The plurality justifies this conclusion by accepting an analogy to the use of the word “determine” in a Code provision dealing with taxes, § 505(a)(1), while rejecting an equally compelling analogy to the use of the word “determine” in the Code’s jurisdictional provision, 28 U. S. C. § 157(b)(1) (1982 ed., Supp. V). But instead of trying to force meaning into the word “determination” through competing analogies to other Code provisions, we should give decisive weight to the explicit language abrogating sovereign immunity.
The plurality correctly points out that the abrogation of sovereign immunity in § 106(c) should not be read to over*108whelm the narrow scope of the voluntary waiver set forth in §§ 106(a) and (b). But the plurality’s conclusion that § 106(c) must therefore refer only to declarative and injunctive relief rests on the mistaken assumption that, without such a narrowing interpretation, “the only limit is the number of provisions in the Bankruptcy Code containing one of the trigger words.” Ante, at 102 (emphasis added). The plurality then raises the specter that “§ 106(c) would apply in a scatter-shot fashion to over 100 Code provisions,” ibid., offering virtually endless opportunities for money judgments against the States.
Nothing could be further from the truth, for most of the Code provisions containing trigger words do not contemplate money judgments. Some provide States, in their role as creditors or entities, with rights against the debtor.2 Others limit relief against “creditors,” “entities,” or “governmental units” to declaratory or injunctive relief.3 Only a *109handful of the triggered sections clearly contemplate money judgments against a “creditor,” “entity,” or “governmental unit.” These include the Code provisions at issue in this case, i. e., the provision giving a trustee the power to avoid preferential payments made to “creditors,” §547, and the provision requiring “entities” to turn over property and money belonging to the debtor. §542.4 Thus, rather than reading § 106(c) in isolation as the plurality does, the provision should be read in light of the Code provisions containing the trigger words “creditor,” “entity,” and “governmental unit.” Only in this way is it possible to appreciate the limited extent to which Congress sought to abrogate the States’ sovereign immunity in § 106(c). See Kelly v. Robinson, 479 U. S. 36, 43 (1986) (Code should be read as an integrated whole).
By expressly including States within the terms “creditor” and “entity,” Congress intended States generally to be treated the same as ordinary “creditors” and “entities,” who are subject to money judgments in a relatively small number of Code provisions. The effect of today’s decision is to exempt States from these provisions, which are crucial to the efficacy of the Code. The plurality therefore ignores Congress’ careful choice of language and turns States into pre*110ferred actors.5 By allowing a trustee to recapture payments made to creditors 90 days before a bankruptcy petition is filed, the preference provision prevents anxious creditors from grabbing payments from an insolvent debtor and hence getting more than their fair share. After today, however, any State owed money by a debtor with financial problems will have a strong incentive to collect whatever it can, as fast as it can, even if doing so pushes the debtor into bankruptcy. Ordinary creditors will soon realize that States can receive more than their fair share; the very existence of this governmental power will cause these other creditors, in turn, to increase pressure on the debtor. See McVey Trucking, Inc. v. Secretary of State of Illinois, 812 F. 2d 311, 328 (CA7), cert. denied, 484 U. S. 895 (1987).6 The turnover provision is designed to prevent third parties from keeping property of the debtor or from refusing to make payments owed to the debtor, thereby aiding the reorganization of the debtor’s af*111fairs or the orderly and equitable distribution of the estate. See United States v. Whiting Pools, Inc., 462 U. S. 198, 202-203 (1983). Exempting States from this provision, as well as from the preference provision, undermines these important policy goals of the Code.
My conclusion that Congress intended § 106(c) to abrogate the States’ Eleventh Amendment immunity against money judgments requires me to decide whether Congress has the authority under the Bankruptcy Clause to do so.7 In Pennsylvania v. Union Gas Co., 491 U. S. 1, 19 (1989) (plurality opinion); id., at 57 (White, J., concurring in judgment), we held that Congress has the authority under the Commerce Clause to abrogate the States’ Eleventh Amendment immunity. I see no reason to treat Congress’ power under the Bankruptcy Clause any differently, for both constitutional provisions give Congress plenary power over national economic activity. See The Federalist No. 42, p. 271 (C. Rossiter ed. 1961) (J. Madison) (describing the Bankruptcy Clause and the Commerce Clause as “intimately connected”); cf., ante, at 105 (Scalia, J., concurring in judgment).
For the reasons stated, I respectfully dissent.

 Not surprisingly, most courts considering § 106(c) have concluded that it clearly allows a trustee to recover preferences from a State and to require a State to turn over money belonging to the debtor. See, e. g., WJM, Inc. v. Massachusetts Dept. of Public Welfare, 840 F. 2d 996, 1001 (CA1 1988); McVey Trucking, Inc. v. Secretary of State of Illinois, 812 F. 2d 311, 326-327 (CA7), cert. denied, 484 U. S. 895 (1987); Neavear v. Schweiker, 674 F. 2d 1201, 1202-1204 (CA7 1982); Rhode Island Ambulance Services, Inc. v. Begin, 92 B. R. 4, 6-7 (Bkrtcy. Ct., RI 1988); Tew v. Arizona State Retirement System, 78 B. R. 328, 329-331 (SD Fla. 1987); cf. Gingold v. United States, 80 B. R. 555, 561 (Bkrtcy. Ct., ND Ga. 1987); R & L Refunds v. United States, 45 B. R. 733, 735 (Bkrtcy. Ct.,WD Ky. 1985); Gower v. Farmers Home Administration, 20 B. R. 519, 521-522 (Bkrtcy. Ct., MD Ga. 1982); Remke, Inc. v. United States, 5 B. R. 299, 300-302 (Bkrtcy. Ct., ED Mich. 1980). A leading bankruptcy commentator also reads § 106(c) to abrogate state sovereign immunity. 2 Collier on Bankruptcy *1106.04 (15th ed. 1989).

 See, e. g., § 303(b)(1) (permitting three or more “entities” to file an involuntary case against a debtor); § 303(c) (giving “creditors” who do not file an involuntary case the same rights as those who do); § 303(j) (requiring notice to all “creditors” before a court may dismiss an involuntary case); § 341(a) (requiring a meeting of “creditors”); § 343 (permitting “creditors” to examine the debtor); § 349(b)(3) (revesting property in an “entity” if the petition is dismissed); § 361 (setting forth adequate protection for certain property interests of an “entity”); § 363(c)(2)(A) (preventing use, lease, or sale of cash collateral assets absent consent of an interested “entity”); §§ 501 and 502 (regulating filing of proofs of claims by “creditors”); § 506(a) (granting secured status to lien “creditors”); § 553 (granting rights of setoff to certain “creditors”); §§ 702(a) and 705 (giving qualified “creditors” the right to vote for the trustee and the creditors’ committee); §§ 507 and 726 (setting forth priorities of distribution to “creditors”); § 727(c) (giving a “creditor” the right to object to a discharge); § 1102 (providing for court appointed creditors’ committee); § 1109(b) (giving a “creditor” the right to be heard on any issue); § 1121(c) (providing that a “creditor” may file a reorganization plan).

 See, e. g., §365 (permitting the trustee to assume or reject executory contracts and unexpired leases in certain circumstances); § 505 (permitting the bankruptcy court to determine the debtor’s tax liability in certain circumstances); § 525 (protecting the debtor against government discrimina*109tion in licensing and employment); § 1141 (binding “creditors” to the terms of a confirmed reorganization plan and discharging all other claims); § 1142 (permitting the bankruptcy court to require performance of any act necessary to carry out a confirmed reorganization plan); § 1143 (preventing an “entity” that fails to perform a required act from participating in the distribution of estate assets).

 Several Code provisions that permit money judgments do not apply to States. For example, 11 U. S. C. § 362(h) (1982 ed., Supp. V) provides that an individual injured as a result of a willful violation of an automatic stay may recover actual damages and, where appropriate, punitive damages. Because § 362(h) contains no trigger words, it does not apply to States. See also Prime, Inc. v. Illinois Dept. of Transp., 44 B. R. 924, 925-927 (Bkrtcy. Ct., WD Mo. 1984); Gillman v. Board of Trustees of Alpine School Dist., 40 B. R. 781, 788-790 (Bkrtcy. Ct., Utah 1984).

 When Congress wanted to grant States special treatment, it specifically used the term “governmental unit.” See, e. g., § 101(35) (1982 ed., Supp. V) (defining the term “person” so that it does not generally include a “governmental unit”); § 346(f) (requiring the trustee to withhold State and local taxes from claims based on wages or salaries); §§ 362(b)(4) and (5) (exempting from the automatic stay provision actions of “governmental units” to enforce police or regulatory powers); § 362(b)(9) (1982 ed., Supp. V) (exempting from the automatic stay provision a “governmental unit’s” issuance of a notice of tax deficiency); § 507(a)(7) (1982 ed., Supp. V) (creating relatively high priority for certain taxes owed to “governmental units”); §§ 523(a)(1) and (7) (exempting from discharge certain taxes and fines payable to “governmental units”); § 523(a)(8) (exempting from discharge student loans guaranteed by “governmental units”); § 1129(d) (barring bankruptcy court from confirming a reorganization plan if the principal purpose of the plan is the avoidance of taxes).

 The plurality’s decision to exempt States from the preference provision is contrary to the understanding of the members of the Conference Committee who presented § 106(c) to Congress. See 124 Cong. Rec. 32394 (1978) (statement of Rep. Edwards) (§ 106(c) will cover situations in which “a trustee or debtor in possession . . . assert[s] avoiding powers under title 11 against a governmental unit”); id., at 33993 (statement of Sen. DeCon-cini) (same).

 The Bankruptcy Clause provides: “Congress shall have Power To . . . establish . . . uniform Laws on the subject of Bankruptcies throughout the United States.” U. S. Const., Art. I, §8, cl. 4.