United States Trustee v. John Q. Hammons Fall 2006, LLC
602 U.S. 487
| SCOTUS | 2024Background
- In 2017, Congress amended the bankruptcy fee statute to raise quarterly fees for large Chapter 11 debtors in U.S. Trustee districts but not in Bankruptcy Administrator districts (in Alabama and North Carolina), creating a fee disparity.
- The fee disparity lasted from January 2018 to April 2021, after which Congress amended the law to require prospective uniformity in all districts.
- In Siegel v. Fitzgerald (2022), the Supreme Court held that this fee disparity violated the Bankruptcy Clause's uniformity requirement.
- Plaintiffs in this case are Chapter 11 debtors from a U.S. Trustee district (Kansas) who paid the higher fees and sought a refund of the excess, claiming the fee regime was unconstitutional.
- The Tenth Circuit ordered a refund; the Supreme Court granted certiorari to resolve the appropriate remedy for the constitutional violation identified in Siegel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appropriate remedy for Bankruptcy Clause uniformity violation | Hammons: Refund excess fees paid due to unconstitutional disparity | U.S. Trustee: Only require future prospective fee parity; refunds would disrupt the statutory scheme | Prospective parity is appropriate; no refund required |
| Congressional intent on remedy | Congress would have intended refunds to remedy the past harm | Congress intended the U.S. Trustee program to be self-funded; refunds conflict with that goal and Congress fixed the issue going forward | Remedy should align with congressional intent: uniform fees prospectively only |
| Due Process implications of denying refund | Due process requires meaningful backward-looking relief if no clear pre-deprivation remedy | Due process satisfied; debtors had opportunity for pre-deprivation challenge; no constitutional right to refund | Due process does not mandate a specific remedy here |
| Disparity size/impact | Non-uniformity, even if affecting few debtors and for a limited time, merits retrospective relief | Disparity was short-lived and affected only small percentage (2%) of cases; refunds would create more problems than they solve | Short-lived, small disparity warrants prospective fix only |
Key Cases Cited
- Siegel v. Fitzgerald, 596 U.S. 464 (fee disparity violates Bankruptcy Clause uniformity requirement)
- Swann v. Charlotte-Mecklenburg Bd. of Ed., 402 U.S. 1 (remedy shaped by the nature of the constitutional violation)
- Sessions v. Morales-Santana, 582 U.S. 47 (remedy for statutory disparity should consider legislative intent)
- Harper v. Virginia Dep't of Taxation, 509 U.S. 86 (due process and retrospective remedies in tax context)
- McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (due process requires meaningful post-payment remedy in certain contexts)