Rodriguez v. Fed. Deposit Ins. Corp.
589 U.S. 132
SCOTUS2020Background
- The IRS allows affiliated corporations to file consolidated federal tax returns and issues any refund as a single payment to the group’s designated agent. 26 U.S.C. §1501 et seq.
- United Western Bank entered receivership under the FDIC; its parent, United Western Bancorp, later entered Chapter 7 bankruptcy with Simon Rodriguez as trustee.
- The IRS issued a $4 million consolidated refund to the group’s designated agent; both the FDIC (as receiver for the bank) and Rodriguez (as trustee for the parent) claimed the refund.
- The Tenth Circuit applied the expansive federal common-law “Bob Richards” rule (In re Bob Richards Chrysler-Plymouth Corp.), treating it as the default allocation rule unless a tax-allocation agreement unambiguously displaced it, and awarded the refund to the FDIC.
- The Supreme Court granted review to decide whether Bob Richards is a valid exercise of federal common-lawmaking or whether state law (and any applicable federal rules) should govern allocation of consolidated refunds.
Issues
| Issue | Plaintiff's Argument (Rodriguez) | Defendant's Argument (FDIC) | Held |
|---|---|---|---|
| Whether federal courts may apply the Bob Richards federal common-law rule to allocate consolidated tax refunds | State law should govern allocation; no federal common-law rule is warranted | Bob Richards is a permissible federal common-law rule that supplies the default allocation | Bob Richards is not a legitimate exercise of federal common lawmaking; federal courts may not adopt it absent satisfying strict conditions |
| Whether federal common law is necessary to protect a uniquely federal interest sufficient to displace state law | No unique federal interest exists; state law can resolve property and allocation disputes | Federal interests in tax administration justify a uniform federal rule | No showing of a uniquely federal interest here; threshold requirement not met |
| Whether the Tenth Circuit’s judgment can be affirmed on alternative state-law or IRS-regulatory grounds | The outcome under state law or regulations may differ from the Bob Richards result | The Tenth Circuit’s result also follows from applicable state law and IRS agent-appointment regulations | Court did not decide the merits under state law or regs; vacated and remanded for further proceedings consistent with the opinion |
Key Cases Cited
- In re Bob Richards Chrysler-Plymouth Corp., 473 F.2d 262 (9th Cir. 1973) (origin of the federal common-law allocation rule)
- Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (limits on federal judicial lawmaking)
- Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630 (1981) (federal common law requires protection of uniquely federal interests)
- Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) (discussion of federal interests and common lawmaking)
- Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) (absence of a federal general common law)
- Butner v. United States, 440 U.S. 48 (1979) (property rights in bankruptcy are generally governed by state law)
- United States v. National Bank of Commerce, 472 U.S. 713 (1985) (tax code generally does not create property rights)
- United States v. Bess, 357 U.S. 51 (1958) (similar principle on tax and property rights)
- FDIC v. AmFin Financial Corp., 757 F.3d 530 (6th Cir. 2014) (rejecting broad application of Bob Richards and emphasizing federal-interest threshold)