A bankruptcy case involving a Utah transportation firm has sparked an unusual divide between Supreme Court Justice Neil Gorsuch and his colleagues on the bench.
According to Newsweek, Gorsuch stood alone in his dissenting opinion on Wednesday in United States v. Miller, a case that examined the powers granted to bankruptcy trustees under federal law.
The 8-1 decision, authored by Justice Ketanji Brown Jackson, centered on the interpretation of bankruptcy code sections and sovereign immunity in fraudulent transfer cases. The case emerged from All Resort Group's 2017 Chapter 7 bankruptcy filing, where shareholders allegedly misappropriated $145,000 in company funds to pay personal federal tax liabilities.
The lone dissent adds to Gorsuch's increasing tendency to break from the majority this term. His dissenting record now stands at three opinions, matching Justice Jackson but trailing behind Justice Clarence Thomas. In matters concerning court orders, Gorsuch has separated himself from the majority 12 times, second only to Thomas's 15 instances.
Recent cases have highlighted Gorsuch's independent stance on various issues. He notably aligned with liberal justices in a minority opinion regarding a Louisiana death row inmate's stay of execution request. His vocal positions on TikTok's potential U.S. ban and immigration law surrounding birthright citizenship have also drawn attention.
The Utah case showcased fundamental differences in statutory interpretation between Gorsuch and his colleagues. While the majority focused on practical implications, Gorsuch maintained a strict textualist approach to the law.
Justice Jackson's majority opinion determined that while Section 106(a) of the Bankruptcy Code removes sovereign immunity for federal causes of action under Section 544(b), it doesn't extend to underlying state-law claims. The majority expressed concern with Gorsuch's interpretation, suggesting it would alter the fundamental elements of a Section 544(b) claim.
In his dissenting opinion, Gorsuch argued that the majority conflated separate issues. He emphasized that the existence of a valid fraudulent transfer claim should be considered independently from the government's ability to raise sovereign immunity as a defense.
Former federal prosecutor Neama Rahmani provided insight into the diverging perspectives. He noted Gorsuch's consistent adherence to originalism and textualism, even when it places him in solitary opposition.
The majority of justices took issue with Gorsuch's interpretation of the bankruptcy code. In her opinion, Jackson specifically addressed the dissent's attempt to reframe Section 106(a) as merely waiving an affirmative defense.
Gorsuch defended his position with characteristic determination. In his dissent, he wrote:
The Court worries that my line of thinking would 'modify the elements of a §544(b) claim.' More exactly, the Court observes that, if a creditor sued the government directly under Utah's fraudulent-transfer statute, the government could interpose a successful sovereign-immunity defense, and the creditor would lose.
The case highlighted broader questions about the scope of bankruptcy trustees' powers and the intersection of federal and state law in bankruptcy proceedings.
The Supreme Court's 8-1 decision in United States v. Miller resolved a complex bankruptcy dispute involving Utah's All Resort Group and $145,000 in misappropriated funds. Justice Neil Gorsuch's solitary dissent, grounded in his textualist interpretation of bankruptcy code sections, stood in stark contrast to the majority opinion authored by Justice Ketanji Brown Jackson. The ruling definitively settled questions about bankruptcy trustees' ability to avoid tax payments to the federal government under specific circumstances, particularly when no actual creditor could obtain relief under applicable state fraudulent-transfer law outside of bankruptcy.
