| Venue: | SCOTUS |
| Facts: | Art I, § 8 empowers congress to establish uniform laws on Bankruptcy. Wallace's Bookstores did business with some colleges that are "arms of the state" before it went bankrupt and was sent to court-appointed liquidating supervisor Katz. |
| Posture: | Katz sues in bankruptcy court to recover some transfers made to the colleges when it was insolvent. The colleges move to dismiss on sovereign immunity grounds. Motions denied by bankruptcy court. 6th Cir. Ct. App. affirms the denial, saying congress has abrogated state sovereign immunity in bankruptcy proceedings. Appeal. |
| Issue: | Is Congress's attempt to abrogate immunity in 11 U.S.C. § 106(a) valid? |
| Holding: | We don't actually need to decide that. Affirmed. |
| Rule: | In the plan of the Convention, the states obviously agreed not to to assert sovereign immunity defenses in proceedings pursuant to "laws on the subject of bankruptcies." |
| Reasoning: | Bankruptcy jurisdiction is usually in rem, and that's way
less of an affront to state interests than other kinds of suits.
There's the Bankrupcy clause, which pretty obviously reflects a grant to congress of the power to subordinate state interests to the goal of uniformity in this area. And uniformity is indeed a thing to be desired-- if various sovereigns are all laying claim to the same debtor's assets, there will be confusion galore. The Bankrupcy clause doesn't limit it self to in rem matters, either-- it's the whole subject area. |
| Dicta: | Thomas (dissenting): It is settled doctrine that nothing in Article I
overrides the principle that the states are immune from suit by
private individuals for monetary relief. Ever since Hans,
we've been clear on the thesis that when the US judicial power
was established, jurisdiction over suits against unconsenting states
was simply not contemplated. Sure, congress can enact legislation
that governs the citizens, but that's different from saying it can
pre-empt sovereign immunity. Finally we've got the Full Faith and
Credit clause to ensure that one state's bankruptcy judgments
will be respected by others.
Also, Ex Parte Young is a big deal, and we've repeatedly affirmed that habeas prtitions against a state official are allowed. But the fact that we used to allow federal habeas releif to debtors in state prisons has nothing to do with whether the Bankruptcy clause authorizes suits against states for monetary damages. |