Justia Government & Administrative Law Opinion Summaries

The case involves Puerto Rico's attempt to enact Law 29, which aimed to relieve municipalities from contributing to the Commonwealth's reformed public pension funding scheme. The Financial Oversight and Management Board for Puerto Rico (the Board) challenged the law, and the Title III court overseeing Puerto Rico's debt restructuring declared Law 29 a nullity and of no effect. This decision was not appealed. La Liga de Ciudades de Puerto Rico (La Liga) argued that the Title III court's order did not authorize the Board to recover funds retained by municipalities under Law 29 before the order took effect.The United States District Court for the District of Puerto Rico, interpreting its own prior order, granted motions to dismiss filed by the Board and other defendants. The court dismissed some claims on the merits and others for lack of standing. The court held that the Title III court's order applied retroactively, nullifying Law 29 from its inception and allowing the Board to recover the funds.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's dismissal of La Liga's complaint. It held that the Title III court's order declaring Law 29 a nullity and of no effect applied retroactively, covering the period from the law's enactment. The court found that the Title III court had the authority under PROMESA to nullify Law 29 from its inception and that the Board's actions to recover the funds were justified. The court also addressed standing issues, affirming that La Liga had standing to sue the Board and CRIM but not the executive branch defendants. View "La Liga de Ciudades de P.R. v. Financial Oversight and Management Board" on Justia Law

The case revolves around a former coal miner, Richard McLain, who developed a serious lung condition after working underground for nearly two decades. McLain filed a claim under the Black Lung Benefits Act, alleging that his years of mine work had left him totally disabled from a pulmonary perspective. His former employer, Old Ben Coal Company, had been liquidated through bankruptcy, so Liberty Mutual Insurance Company, the surety guaranteeing Old Ben’s debts under the Act, contested liability on the coal company’s behalf.The case was initially heard by an administrative law judge (ALJ), who determined that McLain was disabled within the meaning of the Black Lung Benefits Act. The ALJ's decision was based on a thorough review of the medical record and a set of medical findings regarding how to distinguish between lung disorders arising from coal dust and those arising from tobacco smoke. Old Ben appealed the ALJ’s decision to the Benefits Review Board, arguing that the ALJ erroneously treated the 2001 preamble as if it were binding law and made factual findings unsupported by the medical record. The Review Board affirmed the benefits decision in full.The case was then brought before the United States Court of Appeals for the Seventh Circuit. The court affirmed the decision of the Benefits Review Board, emphasizing the broad discretion ALJs enjoy when evaluating competing medical theories, the weight ALJs may properly attribute to the perspective of the Department of Labor on such issues, and the significant deference owed to ALJs’ medical findings and scientific judgments on appeal. The court found no error in the ALJ's application of a regulatory preamble or in the factual findings that were challenged by Old Ben. View "Safeco Insurance/Liberty Mutual Surety v. OWCP" on Justia Law

The Supreme Court of Mississippi examined whether a school district was entitled to funds recovered by a county from the bankruptcy proceedings of a delinquent taxpayer. The taxes, if collected normally, would have been used to fund the school district. However, the county board of supervisors had anticipated the delinquency and adjusted the levy of ad valorem taxes to compensate, ensuring the school district did not experience a shortfall. The school district argued it was entitled to its original portion of the recovered bankruptcy funds, but the county claimed that this would result in a double recovery outside the statutory scheme for public school funding. The Supreme Court of Mississippi found in favor of the county, ruling that the recovery of delinquent taxes through bankruptcy proceedings is outside the statutory funding scheme for public school districts in Mississippi. The court found that the school district was not entitled to receive delinquent taxes recovered years later in bankruptcy proceedings and reversed and remanded the lower court's award to the school district. View "Clarke County, Mississippi v. Quitman School District" on Justia Law

The bankruptcy court, administering a complex bankruptcy, dismissed NexPoint Advisors, LP’s objection to professional fees paid to myriad organizations. NexPoint appealed to the district court, sitting as an appellate court. The district court dismissed for lack of standing to appeal. NexPoint appealed.   The Fifth Circuit affirmed. The court held that NexPoint failed to establish that the adversary proceeding “directly, adversely, and financially impacts” it beyond anything other than mere speculation. Further, the court held that: Lexmark does not expressly reach prudential concerns in bankruptcy appeals and brought no change relevant here. The court wrote by failing to raise the Cajun Electric argument simultaneously, NexPoint waived its right to do so here. Finally, the court wrote that Collins, when read in conjunction with the “party in interest” language from Bankruptcy Code Sections 330 and 1109, still fails to engage the court’s longstanding precedent that appellate standing in bankruptcy actions is afforded only to a “person aggrieved.” View "NexPoint Advisors v. Pachulski Stang" on Justia Law

The Lac du Flambeau Band of Lake Superior Chippewa Indians is a federally recognized Indian tribe. One of its businesses extended Coughlin a payday loan. After receiving the loan, Coughlin filed for Chapter 13 bankruptcy, triggering an automatic stay under the Bankruptcy Code against further collection efforts by creditors. The lender allegedly continued attempting to collect Coughlin’s debt. The First Circuit reversed the Bankruptcy Court's dismissal of Coughlin’s subsequent suit on tribal sovereign immunity grounds.The Supreme Court affirmed. The Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian tribes; 11 U.S.C. 106(a), expressly abrogates the sovereign immunity of “governmental unit[s]” for enumerated purposes. Section 101(27) defines “governmental unit” as “United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States.... a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government.” The sections cannot plausibly be read to preserve sovereign immunity. The definition of “governmental unit” exudes comprehensiveness and includes a broad catchall phrase, sweeping in “other foreign or domestic government[s].” Reading the statute to carve out certain governments from the definition of “governmental unit” would risk upending the Code’s policy choices. Federally recognized tribes are indisputably governments. Congress need not use any particular words to make its abrogation intent clear. View "Lac du Flambeau Band of Lake Superior Chippewa Indians v. Coughlin" on Justia Law

When the ACA’s mandate and SRP were still in effect, a husband and wife (“Taxpayers”) did not maintain the minimum insurance coverage required by the ACA. The taxpayers did not include their $2409 SRP when they filed their 2018 federal tax return. The Taxpayers filed for Chapter 13 bankruptcy protection in the Eastern District of North Carolina. The IRS filed a proof of claim for the unpaid SRP and asserted that its claim was entitled to priority as an income or excise tax under Section 507 of the Bankruptcy Code. The Taxpayers objected to the government’s claim of priority. The bankruptcy court granted the objection, concluding that, for purposes of the Bankruptcy Code, the SRP is a penalty, not a tax, and therefore is not entitled to priority under Section 507(a)(8). The government appealed to the district court, which affirmed the bankruptcy court’s decision. The district court held that even if the SRP was generally a tax, it did not qualify as a tax measured by income or an excise tax and thus was not entitled to priority. The government thereafter appealed.   The Fourth Circuit reversed and remanded. The court concluded that that the SRP qualifies as a tax under the functional approach that has consistently been applied in bankruptcy cases and that nothing in the Supreme Court’s decision in NFIB requires the court to abandon that functional approach. Because the SRP is a tax that is measured by income, the government’s claim is entitled to priority under 11 U.S.C. Section 507(a)(8)(A). View "US v. Fabio Alicea" on Justia Law

Outstanding debt for Chicago traffic tickets surpassed $1.8 billion last year. Under a 2016 Chicago ordinance, when a driver incurs the needed number of outstanding tickets and final liability determinations, Chicago is authorized to impound her vehicle and to attach a possessory lien. Many drivers cannot afford to pay their outstanding tickets and fees, let alone the liens imposed on their cars through this process. Mance incurred several unpaid parking tickets; her car was impounded and subject to a possessory lien of $12,245, more than four times her car’s value. With a monthly income of $197 in food stamps, Mance filed for Chapter 7 bankruptcy and sought to avoid the lien under 11 U.S.C 522(f). When a vehicle owner files for Chapter 7 bankruptcy, she can avoid a lien under 522(f) if the lien qualifies as judicial and its value exceeds the value of her exempt property (the car). If the lien is statutory, it is not avoidable under the same provision.The bankruptcy and district courts and the Seventh Circuit concluded that the lien was judicial and avoidable. The lien was tied inextricably to the prior adjudications of Mance’s parking and other infractions, so it did not arise solely by statute, as the Bankruptcy Code requires for a statutory lien. View "City of Chicago v. Mance" on Justia Law

Springfield, debtors in bankruptcy who applied for and were denied Paycheck Protection Program (PPP) funds pursuant to the CARES Act solely due to their bankruptcy status, initiated this adversary proceeding in bankruptcy court against the Administrator of the SBA, in her official capacity. Springfield challenges the SBA's administration of PPP funds and asks that the bankruptcy court enjoin the SBA from denying its PPP application on the basis of its bankruptcy status.The Second Circuit held that, based upon the plain language of Section 525(a) of the Bankruptcy Code, that the PPP is a loan guaranty program and not an "other similar grant," and Section 525(a) does not apply to the PPP. Therefore, the bankruptcy court incorrectly ruled that Springfield was entitled to summary judgment and a permanent injunction. Rather, the court concluded, as a matter of law, that summary judgment in the SBA's favor is warranted on the Section 525(a) claim, reversing the judgment and vacating the permanent injunction. The court remanded to the bankruptcy court for further proceedings. View "Springfield Hospital, Inc. v. Guzman" on Justia Law

The Fifth Circuit affirmed the bankruptcy court's judgment and held that, under the particular circumstances presented here, Ultra Resources is not subject to a separate public-law obligation to continue performance of its rejected contract, and that 11 U.S.C. 1129(a)(6) did not require the bankruptcy court to seek FERC's approval before it confirmed Ultra Resource's reorganization plan.Applying In re Mirant Corp., 378 F.3d 511 (5th Cir. 2004), the court concluded that the power of the bankruptcy court to authorize rejection of a filed-rate contract does not conflict with the authority given to FERC to regulate rates; rejection is not a collateral attack upon the contract's filed rate because that rate is given full effect when determining the breach of contract damages resulting from the rejection; and in ruling on a rejection motion, bankruptcy courts must consider whether rejection harms the public interest or disrupts the supply of energy, and must weigh those effects against the contract's burden on the bankrupt estate. Because Mirant clearly holds that rejection of a contract is not a collateral attack on the filed rate, the court concluded that FERC does not have the authority to compel continued performance and continued payment of the filed rate after a valid rejection. The court rejected any further arguments to the contrary. View "Federal Energy Regulatory Commission v. Ultra Resources" on Justia Law

Debtor, licensed under North Dakota’s pari-mutuel wagering system, filed for bankruptcy in 2004. Ten years later, the district court ruled that the state was not authorized to collect certain taxes from the Debtor. North Dakota agreed to pay the estate $15 million. Creditors asserted claims. Although the state constitution provides that “the entire net proceeds of such games of chance are to be devoted to educational, charitable, patriotic, fraternal, religious, or other public-spirited uses,” North Dakota did not raise the rights of any charities.In 2018, the bankruptcy court ruled on the claims. North Dakota filed a new proof of claim. The court concluded that the state lacked parens patriae authority to assert claims on behalf of charities. The Eighth Circuit Bankruptcy Appellate Panel (BAP) remanded. On remand, the state attempted to add a breach of contract claim. The bankruptcy court denied that motion and concluded that the contract claim had no merit. The court also rejected a constitutional-statutory claim.The BAP affirmed, rejecting arguments that North Dakota law requires that charities, not Debtor, recover the remaining tax settlement funds and that the court erred when it disallowed the contract claim. The state constitution concerns the legislature and does not govern the actions of private parties such as Debtor. Debtor paid the taxes originally; the reimbursement of those improperly-paid taxes should inure to the benefit of Debtor after distribution under the bankruptcy priority scheme. View "North Dakota v. Bala" on Justia Law