Justice Scalia Won't "Ransom" His Principles to Grant Justice Kagan a Unanimous First Opinion That Looks to BAPCPA's "Text, Context, and Purpose" to Support a Dubious Result

When reading recent US Supreme Court opinions interpreting BAPCPA, the statute's manifest flaws are the "elephant in the room" (origins of phrase here), and Justice Kagan's recent opinion for the Court in Ransom v. FIA Card Services , N.A, No. 09-907, 2011 WL 66438 (Jan. 11, 2011), is no exception.  She professes on behalf of the 8-1 majority to employ a traditional approach that looks to the "text, context, and purpose of the statutory provision at issue."  (Op. at 1.)  But it's really all fiction, because the text is convoluted, the context is manufactured, and the purpose presupposed. 

In his last two lone bankruptcy dissents, Justice Scalia calls out the elephant in the room, even refusing in his latest dissent to be coerced (or better, ransomed) to join the bored and uncaring majority by a Chief Justice who shrewdly assigned this first (and traditionally unanimous) opinion to Justice Kagan, presumably in hopes of compelling Justice Scalia to stop his backbiting and join the team that finds sense in nonsense.

So the Court in Ransom held, seemingly innocuously so, that when determining the "disposable income" that a chapter 13 debtor has available to pay creditors over the 5 year life of a plan, the debtor has no deductible "car ownership cost" expense that can be shielded from creditors if he owns a car but does not make loan or lease payments on it.  While this decision may make eminent practical sense when considered in a vacuum by mandating that a debtor shield from creditors only actual payments and not theoretical payments drawn from an IRS manual, it is the Court's reliance on "text, context, and purpose" that disappoints here because--as shown below--none prove the point.

For what bankruptcy judge or professional really believes that BAPCPA merits application of the rule that every word in a statute "carries meaning"?  (Op. at 8.)  Certainly Justice Scalia doesn't.  (Dissent at 2, "The canon against superfluity is not a canon against verbosity.")  And I doubt most readers of this blog do either.  (See, e.g., here, here, here, here, here, and here.)

And is the Court properly confident that BAPCPA's "context" mandates that a debtor "should be required to qualify for a deduction by actually incurring an expense in the relevant category"?  (Op. at 8.)  The "expense" that the Court mandates the debtor incur to be entitled to a "car ownership" deduction is in fact nothing more than a "debt" under a loan or lease that the statute itself unequivocally states can NEVER qualify as a deduction.  (See § 707(b)(2)(A)(ii)(I), "Notwithstanding any other provision of this clause, the monthly expenses shall not include any payments for debts.").  No problem, Justice Kagan writes, because "any friction between the two likely reflects only a lack of attention to how an across-the-board exclusion of debt payment would correspond to a particular IRS allowance."  (Op. at 15.)  And we're supposed to believe that "meaning, context, and purpose" can be found in Congressional "lack of attention"?

Finally, Justice Kagan writes, the Court's conviction in the correctness of the result is "strengthen[ed] [by] consideration of BAPCPA's purpose ... of  ensur[ing] that [debtors] repay creditors the maximum they can afford."  (Op. at 9.)  But I thought discretion in bankruptcy judges was precisely what BAPCPA was designed to eliminate!   See In re Pak, 343 B.R. 239 (Bankr. N.D. Cal. 2006) (Tchaikovsky, J.) ("BAPCPA did severely limit judicial discretion for above-median-income debtors").  And isn't "ensuring that debtors repay creditors the maximum they can afford" through statutory gymnastics just another way of exercising judicial discretion on the grandest of all scales?

In the end, I prefer Justice Scalia's reluctant dissent and side with his conclusion that "the Court's interpretation does not, as promised, maintain 'the connection between the means test and the statutory provision it is meant to implement.'"  (Dissent at 5.)  "Our job," he reminds all, "is not to eliminate or reduce [BAPCPA's] oddities, but to give the formula Congress adopted its fairest meaning."  (Id.)  While I expect every member of the Court would agree with that statement, I also expect many more lone dissents by Justice Scalia as BAPCPA's many splits wind their way up the chain.  But Justices Brennan and Marshall relentlessly dissented in every death penalty case, and Justice John Marshall Harlan was the lone dissent in Plessy v. Ferguson too.  Better to "stick to your guns principles" (dead phrase's origins here) than to compromise them for a false unity.

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Woe to Justice Kagan!  Forced in her first opinion to find Congressional meaning in a hastily-designed and poorly-crafted statute as to which (at least according to the highly-regarded US Bankruptcy Judge, Frank Monroe) "those responsible for ... passing ... did all in their power to avoid the proffered input from sitting United States Bankruptcy Judges, various professors of bankruptcy law at distinguished universities, and many professional associations filled with the best of the bankruptcy lawyers in the country as to the perceived flaws in the Act."  (Discussed here.)  Fittingly, Justice Scalia refused to "Ransom" his principles, and so thwarted the Chief Justice's calculated designs, while most unfortunately dishonoring a Justice who deserved (albeit in another case) a unanimous first judicial opinion. 

And BAPCPA's sad and unintended consequences thereby continue unabated.  (See others here, here, here, and here).

Thanks for reading!

© Steve Jakubowski 2011

Written By:Francis On January 23, 2011 4:45 PM

Great post! Erudite and insightful as usual.

Written By:George E. Bourguignon, Jr. On March 29, 2011 6:34 PM

Very interesting take on the United States Supreme Court's Ransom decision. To watch the issue percolate up and see the majority of the Circuits finally be contradicted by the US Supreme Court shows just how much controversy there can be over statutory interpretation.

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