Case Info: United States v. Miller | Case No. 23-824 | Date Argued: 12/2/24 | Date Decided: 3/26/25

Link to Docket: Here.

Background:

The Bankruptcy Code permits a bankruptcy trustee to avoid any prepetition transfer of the debtor's property that would be voidable "under applicable law" outside bankruptcy by an actual unsecured creditor of the estate. 11 U.S.C. 544(b)(1). The applicable law may be state law. Elsewhere, the Code abrogates the sovereign immunity of all governmental units "to the extent set forth in this section with respect to" various sections of the Code, including Section 544. 11 U.S.C. 106(a)(l). The court of appeals below joined a circuit split in holding that Section 106(a)(l) permits a bankruptcy trustee to avoid a debtor's tax payment to the United States under Section 544(b), even though no actual creditor could have obtained relief outside of bankruptcy in light of sovereign immunity, the Supremacy Clause, and the Appropriations Clause.

Question Presented: Whether a bankruptcy trustee may avoid a debtor's tax payment to the United States under Section 544(b) when no actual creditor could have obtained relief under the applicable state  fraudulent-transfer law outside of bankruptcy.

Holding: Section 106(a)’s sovereign-immunity waiver applies only to a §544(b) claim itself and not to state-law claims nested within that fed­eral claim.

Result: Reversed.

Voting Breakdown: Justice Jackson delivered the opinion of the Court, joined by Chief Justice Roberts, along with Justices Thomas, Alito, Sotomayor, Kagan, Kavanaugh and Barrett.  Justice Gorsuch filed a dissenting opinion.

Link to Opinion: Here.

Oral Advocates:

• For petitioner: Yaira Dubin, Assistant to the Solicitor General, Department of Justice, Washington, D. C.
• For respondent: Lisa S. Blatt, Washington, D. C.

Website Link to Opinion Summary: Here.

Apple Podcast Link to Opinion Summary: Here.