In Re Pamela L. Hood, Debtor. Pamela L. Hood v. Tennessee Student Assistance Corporation

HOOD, In re Pamela L. Debtor. Hood, Appellee, L. Pamela Assistance

Tennessee Student

Corporation, Appellant.

No. 01-5769. Appeals,

United States Court Circuit.

Sixth Sept.

Argued: 2002.

Decided Filed: Feb. receiving

diction. After in her discharge Chapter bankruptcy plain- proceedings, hardship tiff Pamela Hood for a filed dis- charge from her student loans and named complaint. court denied motion TSAC’s to dismiss on grounds sovereign immunity, Appellate Panel affirmed appeals, arguing decision. TSAC now Clause, the Constitution’s I, give Art. sec. does not Congress the abrogate states’ immu- sovereign 106(a). nity § in 11 Applying U.S.C. Leonard H. (argued Gerson analysis that the Supreme Court set forth briefed), Frankel, York, NY, Angel & New Tribe, in Seminole we conclude that Arti- (briefed), A. William Cohn Cohn Law I, cle section 8 of the Constitution gives Firm, Cordova, TN, Appellee. for Congress abrogate states’ Clements, Jr., Marvin E. Atty. Asst. sovereign immunity. Accordingly, we AF- briefed), (argued Gen. Office of the FIRM and REMAND. General, Attorney Bankruptcy & Collec- Division, Nashville, TN, tion Appellant. for I. BACKGROUND (briefed), Michelle T. Sutter Ohio Attor- 4, 1999, On June Pamela Hood received General, Columbus, ney OH, Richard N. discharge a on Chapter her no-asset (briefed), Coglianese Attorney Office of the bankruptcy petition. Because U.S.C. General, Section, Employment Law Co- 523(a)(8) § prohibits discharge of student

lumbus, OH, (briefed), Elise W. Porter by governmental debts held except bodies General, Columbus, Attorney Office of the upon showing of “an hardship,” undue OH, for Amicus Curiae. September year 14 of that Hood filed an adversary for a proceeding hardship dis- MOORE, Before: KENNEDY and charge TSAC, of her student loans. DOWD, whom Judges; Circuit Judge.* District defendant, Hood had named as a moved to MOORE, J., opinion delivered the of the complaint dismiss the grounds on the court, DOWD, D.J., joined. which sovereign immunity. The Bankruptcy KENNEDY, J., separate delivered a Court for the Western District of Tennes- concurring opinion. dismiss, see denied the motion to holding that Congress pursuant acted a valid OPINION authority of constitutional when it abrogated the states’ MOORE, Judge. Circuit 106(a). in 11 U.S.C. The Tennessee Student Assistance Cor- (“TSAC”) poration appeals from the Bank- A Bankruptcy Appellate unanimous Pan- ruptcy Appellate denying Panel’s decision part el affirmed and ruled that “as TSAC’s motion to juris- plan Convention, dismiss for lack of of the Constitutional * Dowd, Jr., Ohio, The Honorable David D. sitting by designation. United Judge States District for the Northern District sovereignty- II. ANALYSIS Congress their ceded States discharge matters.” over discharge his a dеbtor could Until Assistance Tennessee Student Hood v. ordinary loan debts her student or (6th (In Hood), 262 B.R. re Corp. whether or not bankruptcy proceedings, 2001). panel ac Although B.A.P. Cir. agency. was a state or state the creditor Tribe Flori knowledged Seminole in a to assert an interest If a state wished Florida, 44, 116 S.Ct. da v. assets, the state had to file debtor’s (1996), interpret could be L.Ed.2d 252 claim, immu- waiving its thereby from ever abro precluding Congress ed as Co., Irving New York v. Trust nity under immunity under states’ gating 77 L.Ed. panel inter powers, I any of its Article Education Amend- No. 81 and No. 82 The Federalist preted 1976, however, gave ments of natural bankruptcy, along with distinguish that issued student loans public entities pow I ization, of the Article from the rest Congress prohibited benefit: significant Hood, B.R. at 417-419. ers. See loan debts ordi- discharge of student that, bankrupt respect to noted panel bankruptcy proceed- nary, non-adversary naturalization, the Constitution cy and repay- the loan had been ings unless to establish power granted Congress all years. than five For ment for more I, 8,§ Laws,” Art. U.S. Const. repayment “uniform for less that had been loans added), mere laws. not (emphasis cl. 4 however, prohib- years, than five Hood, According to the B.R. at 417. 262 initiated a discharge unless the debtor ited that No. 82 shows The Federalist panel, proceeding and demon- adversary separate uniform laws power to make Congress’s “im- repaying the state would that strated their own states to surrender required hardship.” Education pose an undue laws and thus power to make such 94-482, No. Pub.L. Amendments Id. sovereignty. their important degree (1976) (codi- Stat.2081, 439A(a), 2141 § 90 sovereignty (re- (1976)) Because limits at 418-19. § 1087-3 fied 20 U.S.C. on sover very nature limits by are their current replaced and with pealed 523(a)(8)). that immunity, panel concluded eign Having § received 11 U.S.C. proceed- laws on bank power special adversary to make a Congress’s the benefit of debtors power it the to abro it more difficult for ing carries with that makes debts, their student loan immunity. discharge Id. Con sovereign gate states’ by exploit in 11 that benefit here seeks clearly exercised TSAC gress pre- and 106(a), abrogat specifically asserting § its which U.S.C. In other venting discharge altogether. immunity with ed the states’ words, if it can have its cake TSAC asks § under 523. respect to аctions it, it can- conclude that

and eat too. We have timely ‍​​​‌​​‌‌‌‌‌​​‌​​‌​​​‌‌​‌​‌‌​‌‌‌​‌​‌‌‌‌​​‌‌‌​​​​‌‍appealed. We not. TSAC and

jurisdiction under 28 U.S.C. pro Amendment The Eleventh Appellate Procedure Rule of Federal vides: the decision We review States factual find of the United reviewing its The Judicial directly, court construed to extend legal and its conclu shall not be clear error ings for (In or equity, or commenced re suit law Harker v. Troutman de novo. sions (6th the United against one of Enters.), prosecuted F.3d Troutman State, or of another Cir.2002). by Citizens States by Subjects any Foreign or argument Citizens to consider Hood’s waived hard State. ly plain in a miscarriage justice; results Const, indeed, Judge Kennedy’s consideration of amend XI. This bar to federal the issue that was waivеd leads her to the jurisdiction against also extends to suits same conclusion that we reach on the issue state its own citizens. Hans v. See properly preserved. was Nor do we Louisiana, (1890). presented believe that the issue “is private L.Ed. 842 Thus suits clarity completeness” sufficient against may proceed only if materially state “its resolution will sovereign immunity waives its or if advance Congress, acting pursuant progress already protracted valid con- of ... liti authority, abrogates gation” stitutional the state’s special such that it warrants con sovereign immunity. sideration under Pinney Dock & Trans port Corp., Co. v. Penn Central Sovereign Immunity A. Waiver of (6th Cir.), denied, cert. At argument, oral for the first 102 L.Ed.2d 166 proceedings, time these suggested Hood contrаry, To the resolution of the waiver may have waived its issue no progress more advances the immunity; in a subsequent letter brief to litigation than does resolution of the court, suggested Hood that material issue, abrogation and resolution of the not appearing Court’s waiver issue requires reliance on extra- docket sheet demonstrated that TSAC had record evidence regarding significance in fact waived its sovereign immunity. of an proof undocketed of claim that Sallie Specifically, argues Hood that TSAC’s sov Mae filed its officer had executed after ereign immunity was waived when Sallie document assigning its interest to TSAC. Mae, the initial creditor for Hood’s student Holbrook, Wright See also v. 794 F.2d loans, proof submitted a of сlaim in Hood’s (6th Cir.1986) 1152, 1156 (refusing to hear original, non-adversary discharge proceed argument an in reply first raised a brief ing assigned proof and its of claim to appeal noting that consideration of TSAC. Neither nor Sallie Mae took arguments such inappropriate “when any further action on the claim in that obvious”). resolution of the issue is not proceeding, proof and the of claim was never entered on the court’s docket sheet. concurring opinion The would nonetheless have us rule on the waiver argument by

Hood waived this failing to in issue order to addressing avoid the ab Court, raise it before the However, rogation question. in an effort Panel, Bankruptcy Appellate or her “ to avoid ruling on one ques сonstitutional briefs before this court. ‘It is well-set tion, Judge Kennedy is forced to address tled that this court will not argu consider another: may she rules that a state ments raised for waive appeal the first time on sovereign immunity its simply by doing unless our failure to consider the issue will ” is, nothing. That plain justice.’ concurring opinion result a miscarriage of concludes that Overstreet v. Sallie Mae waived Lexington-Fayette Tennes Urban Gov’t, (6th County 566, sovereign see’s immunity 305 F.3d 578 when Sallie Mae Cir. 2002) (quoting assigned proof v. of claim Bailey Floyd County Bd. to TSAC and the Educ., 135, (6th Cir.1997)). object. 106 F.3d 143 state failed to position We take no None of the Judge Kennedy circumstances that occasional on whether is correct on ly justify abandoning this point, usual rule are as the issue ais difficult one. present matter, failing here. As initial Compare Gardner v. New Jersey, 329 U.S.

761 573-74, 467, sovereign immunity, Congress L.Ed. 504 state 67 S.Ct. (1947) voluntarily power. Look when exceeded its constitutional (holding that state proceed ing in a to The Federalist and other statements a claim submits Framers, the immuni Court determined ing, waives its the state sovereign immunity Florida state was an essential ty), College Sav. Bank v. with original Postsecondary Expense of the Constitution’s Educ. element Prepaid 666, 680, 69-71, 116 1114. Bd., id. at S.Ct. 119 S.Ct. structure. See (“The (1999) point of the Court held that Accordingly, “[t]he whole L.Ed.2d 605 judicial Amendment a ‘clear declaration’ the State Eleventh restricts requiring III, I Article and Article is to be certain that the State under its waiver suit.”) constitu (emphasis cannot be used circumvent the fact consents Jordan, juris placed upon limitations federal and Edelman v. tional original), 72-73, 1114. Id. at 94 S.Ct. 39 L.Ed.2d diction.” U.S. (1974) two-step, his (rejecting applied constructive similar theory of The Court Maine, analysis sover Alden v. finding waiver of state torical consent expressly 144 L.Ed.2d eign immunity when state it). (1999), Tribe it extended given But the choice between wherein Seminole waives powers Congress’s respect limit question on a constitutional was ruling court as presented ques below and a constitutional suits state well. not,

tion was we will rule on the issue courts Five circuit have concluded presented. decline to ad properly We Tribe, may not under Seminole newly presented whether dress the issue immunity validly abrogate state its as TSAC waived powers. relying on its Clause Mae’s result оf Sallie actions. At County Nelson v. La Crosse ‍​​​‌​​‌‌‌‌‌​​‌​​‌​​​‌‌​‌​‌‌​‌‌‌​‌​‌‌‌‌​​‌‌‌​​​​‌‍Disk See (In Nelson), torney re 301 F.3d Immunity Abrogation Sovereign B. (7th Cir.2002); Tax Mitchell v. Franchise The Tribe Framework Seminole (In Mitchell), 1111, 1121 re Bd. (9th Cir.2000); Hosp. Heart Court has addressed Sacred (In abrogations Pennsylvania re Sacred question of valid of state sov- Norristown 237, Norristown), in a 133 F.3d immunity Hosp. series of cases Heart ereign of (3d Cir.1998); PNL As v. Fernandez v. with Seminole Tribe Florida 243 began of (In Fernandez), Florida, 44, 1114, 123 LLC re Mgmt. 517 U.S. 116 S.Ct. 134 set Co. (1996). (5th Tribe, 241, Cir.), by 130 F.3d 243 amended L.Ed.2d 252 Seminole (5th 1138, Cir.1997); 1139 Schloss ruled that the Indian Commerce F.3d the Court (In Clause, “reg- berg Maryland authorizes to v. re Creative Gold Congress which D.C.), Washington, ... the Indian smiths ulate Commerce with (4th denied, Cir.1997), Tribes,” Const., I, 8, 3, 1140, § 1145-46 cert. Art. cl. does U.S. 1075, 1517, 140 L.Ed.2d abrogate the 118 S.Ct. Congress not to 523 U.S. (1998). pri relied These circuits have sovereign immunity. See Seminole 670 state Tribe, language broad marily at 1114. The on Seminole Tribe’s 517 U.S. 116 S.Ct. abrogating from state barring Congress ruled that Court Seminole Tribe first Article immunity pursuant in- to its adequately expressed its Congress However, immunity the from neither Seminole abrogate powers. tent to states’ I Court’s any Supreme In the of the id. at Tribe nor suit. See however, sovereign immunity cases ad the recent part inquiry, of its other second pow- abrogate Congress’s Clause attempting Court ruled that to dress Noatak, 775, 786, plan ers as understood in the of the Con- 501 U.S. 111 S.Ct. (1991). 2578, 115 engage vention. We in the Seminole Tribe L.Ed.2d 686 analysis, and we conclude that the text of Second, difficult, and more is the Constitution and other evidence of the question attempt whether Congress’s Framers’ intent demonstrate that under abrogate state immunity was I, Clause of Article section pursuant authority. to sufficient The stat 8, Congress abrogate has adopted pursuant ute at issue here was sovereign immunity. state I, Congress’s power under Article section inquiry The Seminole Tribe must 8 of the Constitution ... “[t]o establish First, proceed in parts. Supreme two subject Bankrupt uniform Laws on the requires abrogate throughout “to cies the United States.”1 If States’ Eleventh Amendment Congress abrogate cannot im from suit federal court ... Congress munity provision, under this the statute is must ‘unmistakably make its intention invalid and Hood’s suit barred. is ” clear in the language Supreme that, of the statute.’ Court has instructed when v. Dep’t Connecticut Income determining Congress whether may abro Hoffman Maint., 96, 101, gate 109 S.Ct. state sovereign immunity, courts аre (1989) 106 L.Ed.2d 76 (quoting Atascadero to look at original structure of the Scanlon, Alden, Hosp. State Constitution. See U.S. (1985)). 87 L.Ed.2d 171 (“[I]mmunity 119 S.Ct. 2240 from suit is a question There is no here that aspect fundamental sovereignty 106(a) has done so. Section of the Bank which enjoyed the States before the ratifi that, Constitution, Code states “[notwithstand cation of the they and which ing assertion of sovereign immunity, ... today except by retain as altered sovereign immunity abrogated plan as to a of the Convention or certain constitu governmental amendments.”). unit to the extent set forth tional The Eleventh respect this section with ... [section] Amendment will neither undermine nor 106(a)(1). § 523.” U.S.C. any Subsection bolster regarding pur conclusion (a)(2) degree then sets forth the poses Convention, to which because that sovereign immunity is abrogated restore, for ac amendment sought only to not § involving tions 523: may change, “The court the structure established at hear and arising determine issue apparently Convention that was distorted respect application to the of such sections Court’s decision Chis governmental (2 Dall.) units.” Georgia, U.S.C. holm v. 106(a)(2). Alden, “a legislative This is clear L.Ed. 440 722- U.S. at 23, statement.” Village v. Native 119 S.Ct. 2240. Blatchford argue 1. prevented Hood does not that the statute was to be or remedied and the means passed adopted under 5 of the City Fourteenth Amend- to that end.” Boerne v. of ment, Flores, 507, 520, 2157, recog- which the Court has U.S. 521 117 S.Ct. provides (1997). adequate nized basis for abro- 138 L.Ed.2d 624 Courts that have gation sovereign immunity. agree of state See addressed this issue the Bank Tribe, 59, Seminole designed 517 U.S. at 116 S.Ct. remedy Code was not vi See, only appropriate 1114. Section 5 authorizes olations of the Fourteenth Amendment. legislation designed remedy e.g., Hosp. violations of Sacred Heart Norristown v. of (In Pennsylvania the Fourteenth Hosp. Amendment's substantive re Sacred Heart of Norristown), 237, provisions, (3d congru- and there must be “a 243-44 Cir. 1998). proportionality injury ence and between the Protective Comm. v. Bondholders Text Vanston The 2. Constitution’s 237, Green, 67 S.Ct. 329 U.S. the Constitution’s Beginning with (1946) (Frankfurter, J., concur L.Ed. power to text, I the gives Article matter, language an initial this ring)). As two issues: laws over make “uniform” concurring Frankfurter’s from Justice Granting and naturalization.2 was inconsistent opinion Vanston power the to make government the federal in that case. Justice majority opinion the extent, is, at least to some uniform laws that the Frankfurter reasoned Vanston pow the retaining with states inconsistent The claim was invalid under state over that issue. creditors’ er to make laws importance of law, nothing noted the for the bank Supreme Court so there was early on: uniformity provision enforce; long Congress the ruptcy court to as under state law certain- treated all claims created peculiar terms of state, Congress is not au- the uni uniformly, regardless deserve notice. of ly laws, opera- merely pass thorized had satisfied. formity requirement been uniform, but to of which shall be Vanston, 172-73, tion at 67 S.Ct. See subject on the uniform laws establish (Frankfurter, J., Howev concurring). This the United Stаtes. es- throughout er, no rea majority Vanston found is, uniformity perhaps, of tablishment whether state law had creat inquire son to incompatible legislation, with state claim, the asserted any ed valid because subject to which the acts part with federal bank claim was inconsistent may extend. congress thus could not be as ruptcy policies and (4 Crowninshield, 17 U.S. Sturges v. of its status under regardless serted — Wheat.) 122, 193-94, Vanston, 4 L.Ed. 529 at 163- state law. See U.S. majority’s rea 67 S.Ct. 237. On discussing what the uniformi- It is worth do more than federal courts must soning, “uniformity” pro- ty provision is not. The uniformly; courts treat state laws federal not, suggests as the Fifth Circuit vision is “ bankruptcy law. If enforce federal Fernandez, must requirement ‘a In re uniformity guide as to what any Vanston is nothing uniformity’ and more.” geographic much Fernandez, uniformity requires requires, thеn (quoting 123 F.3d at In re However, even if Justice pow F.3d at 1145-46. arguing that the Clause powers, binding, Article I statement er is no different from other were his Marshall’s dissent urges Marshall's State us to follow Justice weight the Fourth Circuit bear cannot ‍​​​‌​​‌‌‌‌‌​​‌​​‌​​​‌‌​‌​‌‌​‌‌‌​‌​‌‌‌‌​​‌‌‌​​​​‌‍Dep't v. Connecticut dissent Hoffman, Jus- passage puts In that Hoffman on it. Maint., Income 109 S.Ct. whether, given discussing tice Marshall was J., (Marshall, dissent L.Ed.2d 76 recognized jurisprudence of the time wrote, "I see ing), Justice Marshall in which abrogate Congress's power im- Congress' under the no reason to treat Clause, Con- munity the Commerce under differently [than Clause the then- gress a similar under Clause], for both power under the Commerce Bankruptcy Clause. current version plena provisions give Congress constitutional was that there no Justice Marshall concluded activity.” ry power national economic over Bankruptcy Clause to think that reason Cir Id. at 109 S.Ct. 2818. The Fourth Hoffman, gave Congress less See power. interpreted to mean that when the cuit 2818. He had no in Seminole Tribe ruled Supreme Congress gave whether it reason to consider Congress not use the Commerce Clause could nothing find in the more power. We thus sovereign immunity, abrogate power to state the tex- that would overcome dissent necessarily the Hoffman it indicated Framers created for tual distinction that See In re similarly power was weak. Clause D.C., powers. Washington, uniform Creative Goldsmiths of by and naturalization laws the state gov- more than Justice Frankfurter’s concur- ernments, incompatible grаnt is with the suggests. rence pass a power congress to uniform laws Nor, demon following as the discussion obvious, subjects, on the same from the strates, I, a does Article section 8 reflect consideration the former would be congressional policy favoring mere unifor frequently contradictory; dissimilar and mity across state borders. Unlike Florida systems whereas the are directed to be Prepaid Postsecondary Education Ex uniform, only by which can rendered be so Bank, College Savings pense Board v. power body the exclusive one to form 144 L.Ed.2d them.” Id. at 545. (1999), in which the found legislative preference uniformity that a for authority The was understood to be ex- prohibi could not override a constitutional grant clusive because lesser would abrogation tion on the of state purpose. have grant’s original defeated the immunity, id. bankruptcy system The before 1789 was case question involves the whether a con marked chaos. Because each state had uniformity requirement stitutional itself laws, discharge Pennsyl- different of a abrogate authorizes state sov might vanian’s debts have no effect on his ereign immunity. Maryland, debts in and the interests out-of-state creditors could be subordinat- Understanding 3. The Framers’ ed to system in-state creditors. This was Power ineffective, only not in that it did not allow understood, initially As it was Bank- bankruptcy debtors the fresh start represented seek, ruptcy policies ripe Clause the states’ total but manipu- also for lation, grant power legislаte of their on bank- in that it give Pennsylva- would uniform, ruptcy. assign order for laws to be nia creditor an incentive to in- his everywhere. the laws must be the same terest the debtor’s estate to someone in uniformity That Maryland, making would be unattainable if debtor no better off pass However, could their own laws. Alexan- after than before. der Hamilton gov- justification stated the federal grant exclusivity for the jurisdiction” ernment had “exclusive system, where was not mere desire to have one granted Congress the Constitution a system but that rose above individual power noted, to make uniform laws. Joseph Story “This must states’ interests. As exclusive; necessarily be because if each there were fears that each state would power presсribe State had bankruptcy system DISTINCT frame a that “best RULE, interests, there could be no pursuits” UNIFORM suits its own local RULE.” Federalist No. at 155 or that “by was marked undue domestic (Alexander Hamilton) (George Carey preferences Joseph W. & Story, favours.” 3 2001). eds., James McClellan The earliest Commentaries the Constitution (1833), similarly interpreted §§ cases in The Founders’ exclusive, power noting as that laws could B. (Philip Ralph Constitution Kurland & 1987). eds., if single agent Indeed, be uniform setting were Lerner bank- issuing policies them. Associate Justice Bushrod on the state level would Justice, Washington, sitting as Circuit rea- enable states to favor in-state creditors Prince, way soned this F. similarly-situated Golden over out-of-state credi- (C.C.D.Pa.1814), writing, Cas. 542 “That By granting tors. to Congress pass bankrupt the exercise of the exclusively, prevented the Constitution Commentaries, defeating bankrupt- Story, at from Thus runaway states interpretations uniformity the later cy’s goals. provision creating power as exclusive not understanding this Although in the federal reflect government adminis- eventually exclusive power the federal was than an necessity trative rather under- acceptance that gave way to an states standing expressed in contrary to that The could, of federal legislation, in the absence Hamilton, Story, Federalist No. 32. As pass bankruptcy, development laws on interpreters early and the other make way understanding no undermines clear, uniformity provision was intend- at the time of the Convention that grant power tо to the federal ed exclusive Congress exclusive. did not was government. pass bankruptcy act until its first repealed and was to it unable Ceding Sovereign 4. The States’ enact until legislation further 1841. See Immunity Skeel, Jr., David A A. Debt’s Dominion: course, possible Of it ceding is Bankruptcy Law in America 25 History of sovereignty Bankruptcy some with the (2001). In absence of a federal bank Clause, the legislative states ceded their code, rely were forced states to immunity powers but not their from suit. structures, their and in own 1819 the Su out, early amici point As the states Su Crowninshield, preme Sturges v. limited preme Court decisions that states’ Wheat.) (4 (1819), 4 L.Ed. U.S. powers to did not receive the legislate ruled prohibit that the Clause reception same hostile the Court’s acting only ed frоm where states Georgia, decision in Chisholm already acted. Id. 193-96. Howev (Dall.) 419, (1793), which L.Ed. 440 un er, Sturges non-exclusivity interpreta immunity, dermined state re original tion on the was based less under suggest ceived. This could standing of the Convention than on the legislate immunity and the from suit system necessity having place some aspects sovereignty were distinct when not enact Congress could minds, early that the Americans’ and deci legislation. recounting After the concerns cede to the aspect sion to one federal over state laws that to the renegade led government imply not itself a sur does clause, exclusivity uniformity Joseph render of the other. Story Sturges’s non-exclusivity noted that that the suggests Federalist states interpretation bywas immunity alоng shed their from suit by judicial firmly established decisions. together their when the legislate As now to ob this doctrine seems have agreed Clause’s acquiescence, it general tained does provision. passages uniformity Two are necessary not rea seem review the relevant. The Federalist No. Ham- opinions the different soning, on which ilton as fol- discussed founded; are as a although, ques new lows. tion, probably open it as much is one, sovereign- which ever It is inherent in the nature of controversy, as has given judicial argumentation. ty, not to amenable to the suit rise to be This subjects But it individual its consent. is upon all such seems de without sense, prac- general adopt practical general the sound max sirable to im, mankind; exemption, ut tice of and the as reipublicae, Interest sit liti finis sovereignty, um. one of attributes enjoyed by government every now sovereignty ceding have ceded includes the Unless, therefore, state in the union. immunity from suit. We conclude that immunity there is a surrender of this in No. 32 does in fact refer to the ceding of convention, plan of the it will remain sovereign immunity. Hamilton’s cross-ref- states, danger with the and the intimat- in erence to this discussion No. 81’s discus- merely ed must be ideal. The circum- of ceding sovereign immunity only sion can necessary produce stances which are that, Framers, in suggest the minds of the sovereignty, an alienation of state were ceding sovereignty by the methods de- considering discussed in the article of in implies ceding scribed No. 82 taxаtion, repeated and need not be here. as discussed No. 81. There is (Alexander explanation no other for his cross-refer- The Federalist No. Hamilton). ence No. 81. Thus The taxation, Federalist No. The article on 81 and No. 82 suggest the states which identifying Hamilton refers as ceded their immunity by granting Con- circumstances which states can be said gress power to make uniform laws. sovereignty, “alienatfe]” their is The Federalist No. 82. 5. The Ratification Debates plan only

[A]s the of the convention aims partial consolidation, aat union or Contrary to the amici sugges- states’ governments clearly state would retain tion, interpretation is consistent with rights all the of sovereignty they which First, the ratification although debates. had, not, by before and which were amici are correct that debating those act, exclusively delegated to the United proposed objected Constitution’s merits States. This delegation, exclusive or states, certain against suits amici rather sovereign- this alienation of state point objection to no such specifically tar- ty, would exist three cases: geted against enforcing federal bankruptcy where the in express constitution terms Rather, against laws the states. the bulk granted an authority exclusive to the speakers III, objected to Article union; instance, granted, where it in one section which allows suits between union, authority an and anoth- See, state and citizens of another state. er, prohibited the states exеrcising from (Jonathan e.g., 3 Elliot’s Debates 533 Elliot authority; like and where it granted ed., 1836) (statement 2d ed. of ‍​​​‌​​‌‌‌‌‌​​‌​​‌​​​‌‌​‌​‌‌​‌‌‌​‌​‌‌‌‌​​‌‌‌​​​​‌‍James Mad- authority union, an to the to which a ison); (statement id. at of Patrick authority similar in the states would be (statement Henry); id. at 555-56 of John absolutely totally contradictory and Marshall); (statement see id. at also repugnant. Mason) George (objecting juris- to federal (Alexander diction over suits between state and for- The Federalist No. at 155 state, citizens, Hamilton). eign subjects). or Although specifically Hamilton offered the debaters’ relative silence over sover- example naturalization as of this third eign immunity the bankruptcy provi- sovereignty, alienation of because the necessarily sion does not indicate their aс- of a uniform to the federal quiescence, it does undermine the notion government is inconsistent with reten- object- that those states; ratifying the constitution tion of that in the same jurisdiction ed to federal over the states reasoning applies to bankruptcy. See id. such cases. question is whether Hamil powers ton’s identification of the uniform The amici also cite the New York examples categories as in which states and Rhode Island conventions as condi- necessity vesting of this tribunal with understanding on an tioning ratification to which a not sue the the decision of controversies private persons could that debates, ratification the party.”). although the a So the states. Like state shall be ambiguous are ratifiсation resolutions a expressed opposition lack of could reflect New York and’ Although debate, front. both in careful it could gap an otherwise preference a that expressed Rhode Island acceptance ratifiers’ that also reflect the states in be allowed to sue citizens never bankruptcy system could because a federal court, ambigu- are the resolutions federal systems’ ills if it previous cure the they believed that regarding ous whether applied uniformly to all creditors and debt- actually prohibited such the Constitution ors, the Clause must stated that New York’s resolution suits. Congress abrogate the to the states’ in favor of absolute sover- preference its immunity. with the immunity was “consistent еign Debates 329 Elliot’s said Constitution.” III. CONCLUSION Resolution). Island, (New Rhode York however, preference expressing while regard Much of the evidence immunity, did favor of absolute plan ambigu the of the Convention is ing an to make by calling so for amendment However, the Court has ous. at preference law. See id. 335-36 that the evidence of the made clear best Resolution). (Rhode There would Island sovereignty Framers’ intentions on state if, as no need for such an amendment be the comes from the text of Constitution suggested, the Constitution New York See, v. e.g., The Federalist. Printz point. Again, clear on this already were States, 898, 918-21, 117 521 U.S. United the states’ intent is regarding this evidence 2365, In 138 L.Ed.2d 914 S.Ct. ambiguous. deed, heavily Seminole Tribe itself relies in the state ratification engaging Those on The Federalist No. 81. See Seminole raising their debates were meticulous 13, 116 Tribe, at 70 n. S.Ct. 517 U.S. see, clause-by-clause, e.g., 3 Elli objections Here, text and 1114. the Constitution’s (statement of Patrick ot’s Debates 543 No. in The Federalist Hamilton’s reference (“No objection Henry) [federal is made sovereignty abrogating 81 to the means of disputes between cit cognizance of courts’] that, with suggest No. 82 The Federalist state.”), but none of the izens of the same Clause, granted the states objected subjecting the states debaters abrogate state sov Congress bankruptcy. This lack federal suits immunity. The ereign states’ puts suits bank opposition of recorded by plan “altered Con was thus in the same cate the states against 713, 119 Alden, S.Ct. vention.” 527 U.S. constitutionally-approved with other gory clearly exercised Congress sovereign immunity, such as limits on 106(a). Accordingly, § power in 11 U.S.C. by to suit provisions subjecting states immune from suit under is not example, or to government, for federal 523(a)(8). U.S.C. See, e.g., United between the states. suits way in no undermines conclusion 621, 639-40, This Texas, States separate sov dignity of the state as (1892); L.Ed. 3 Elliot’s S.Ct. instance in which (statement This is not an ereign. Pen of Edmund Debates 549 parties to private dleton) (“The Congress has enabled impossibility calling sov will, against into court their “haul” states jurisdiction of an ereign state before Car Mar. v. South state, propriety see Federal Comm’n other shows Auth., proof claim olina State Ports The actual was filed n. 152 L.Ed.2d 962 Sallie Mae court on (2002), but an instanсe in which assignment November 1999. The granted precisely protection proof has of claim form one was filed they sought. later, a traditional law Unlike month on December 1999. The suit, in which a state is forced to defend assignment was effectuated with notice against wrongdoing, itself accusation objection any par- TSAC and without from “is, bankruptcy process shortly speak ty. Although is there no claims docket or adjudication in ing, an of interests claimed record, register only claims in the that is Gardner, a res.” 67 S.Ct. practice because it is standard in that dis- 467. If the state wishes to assert its inter trict not to have a claims docket or claims res, may prefers est it do so. If it register Chapter bankrupt- a no-asset to, decline, may not it аnd the debtor will cy change and it does not the fact that a bankruptcy still need to convince the court proof of claim was filed. repayment that will constitute an “undue argument TSAC’s first it that it was 523(a). hardship.” § See U.S.C. Sallie Mae—not the state —who filed the Convention, At the Constitutional claim, proof of and Sallie Mae does not granted Congress to ab- authority have the to waive Tennessee’s

rogate sovereign immunity their under Ar- sovereign immunity. Although Sallie Mae I, 106(a), § ticle section 8. In 11 U.S.C. claim, proof proof filed the of it was a of used states a claim on a debt owned TSAC. TSAC they sought. benefit had We AFFIRM voluntarily to guarantee undertaken the denial of motion to TSAC’s dismiss and loans, accepted Hood’s student assign- REMAND bankruptcy to the сourt for ment of the debt from Mae. Sallie proceedings. further assignment was made filing before the of circumstances, the claim. Under these I KENNEDY, Judge, concurring. Circuit think it is clear that voluntarily TSAC Because I conclude that TSAC has invoked bankruptcy jur- the federal court’s sovereign immunity by filing waived its isdiction and waived its immuni- claim, I majority concur with the ty. panel bankruptcy juris- that the court has (in argument TSAC’s second the alter adversary proceeding. diction hear this native) filing proof is that of claim join panel’s opinion I cannot and I thus immunity constitutes waiver of its from judgment only. concur jurisdiction bankruptcy over the normal It is well-established that when a state adjudication, but not for an “undue hard proof bankruptcy adju- files a of claim in a ship” proceeding under U.S.C. dication, “it it immunity waives other- 523(a)(8). Although Supreme might adjudi- respecting wise have had decision in Court’s Gardner New Jer cation of the claim.” Gardner v. New sey clearly that filing proof holds of Jersey, 329 U.S. 91 claim waives a state creditor’s L.Ed. 504 immunity respect with to normal dis charge proceedings, argues On November an authorized agent Servicing Corporation, of Mae proceeding required by Sallie the adversarial original bankruptcy regulations separate holder of Hood’s student loan federal debt, signed assignment proof bankruptcy of of and distinct from the normal transferring discharge proceeding. claim form the debt to TSAC. majority I with the Although agree “un of The determination disagree.

I not normally should not reach issues inextricably interrelated we hardship” is due court, we discharge proceeding such the normal raised before immunity exceptions of certain recognized that the waiver have Rose v. to the other. See Pinney Transport one extends Dock and Co. rule. (In Rose), re Dep’t Educ. States Corp., United v. Penn Central Cir.1999) (state’s (8th submis F.3d 926 (6th Cir.1988), may that we reach we held claim waives its proof sion presented if with sufficient an issue it “is hardship” adjudication); “undue the court to clarity completeness” for v. Burke Dep’t Revenue Georgia State has the issue. The resolve (11th (In Burke), F.3d 1313 Cir. re that the decision to deviate from the held 1998) immuni proof of claim waives (filing primarily a matter “left general rule is a bank action to enforce ty adversarial appeals, the courts of the discretion of against a state stay court’s order of individual be exercised on the facts sufficiently it related ‍​​​‌​​‌‌‌‌‌​​‌​​‌​​​‌‌​‌​‌‌​‌‌‌​‌​‌‌‌‌​​‌‌‌​​​​‌‍dis because is Singleton Wulff, v. cases.” Eight As the Circuit charge proceeding). 2868, 49 L.Ed.2d 826 96 S.Ct. Rose, text of the in In re “[t]he noted Moreover, long has these bankruptcy code makes clear not decide con- recognized that we should whole; part larger of a procedures are both questions when their resolution stitutional exempts educational the same section case. unnecessary to the outcome of the is discharge establishes general debt from Louisiana, v. Alexander hardship as the ex ground of undue (not- (1972) 31 L.Ed.2d 536 F.3d at ception exemption.” to the avoiding decision of ing the “custom of provi statutory of the 930. The structure unnecessary to the issues constitutional hardship” is a sion reveals that “undue us.”). also of the case before See decision indeed, only defense—to the defense— (2002) INS, 670, 687 Bejjani v. exempting stu general privilege of state’s possible, a court (noting that “where bankruptcy dis dent loans from normal in order to ground rule on a narrow should proceedings. charge question.”) While avoid a constitutional claim, Moreover, proof of filing raised in the of waiver was not the issue of the attempted advantage to take TSAC court, respect to bankruptcy the facts with power to ex- bankruptcy federal court’s in dispute, claim are not filing general disсharge empt student loans from to establish upon relied and the documents Further, if there been proceedings. bankruptcy from the those facts are estate, could have assets in the case, In this the waiver court’s records. Having attempted in those assets. shared clarity presented with sufficient question powers of the federal to benefit from the issues be- completeness to resolve therefore, court, must, it ac- having without to reach fore this court court’s to decide whether cept the questions raised complex constitutional hardship exception protects Hood from parties. exemption. loan See general student Co., 288 U.S. Irving Trust New York (1933) 77 L.Ed. 815

(“If in the participate a state desires bankrupt, of a she must submit

assets the con- appropriate requirements by

trolling power.”).

Case Details

Case Name: In Re Pamela L. Hood, Debtor. Pamela L. Hood v. Tennessee Student Assistance Corporation

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Feb 3, 2003

Citation: 319 F.3d 755

Docket Number: 01-5769

Court Abbreviation: 6th Cir.