United States Trustee v. John Q. Hammons Fall 2006, LLC: Congressional Intent in Determining Remedies for Violations of the Bankruptcy Clause Uniformity Requirement

United States Trustee v. John Q. Hammons Fall 2006, LLC: Congressional Intent in Determining Remedies for Violations of the Bankruptcy Clause Uniformity Requirement

Legal Sidebari

United States Trustee v. John Q. Hammons
Fall 2006, LLC: Congressional Intent in
Determining Remedies for Violations of the
Bankruptcy Clause Uniformity Requirement
June 26, 2024
On June 14, 2024, the Supreme Court issued a 6-3 decision in United States Trustee v. John Q. Hammons
Fall 2006, LLC that specified the appropriate remedy for individuals affected by the Court’s 2022 ruling
in Siegel v. Fitzgerald. In Siegel, the Court had held that the Bankruptcy Judgeship Act of 2017 violated
the uniformity requirement of the Constitution’s Bankruptcy Clause by requiring higher disbursement
fees to be imposed under certain circumstances on certain debtors in judicial districts administered by the
Department of Justice (DOJ) United States Trustee (UST) than in judicial districts administered by the
Federal Judiciary’s Bankruptcy Administrator (BA). The named plaintiff here, John Q. Hammons Fall
2006, LLC, paid approximately $2.5 million more in bankruptcy court fees by filing in a judicial district
administered by the UST rather than in a BA district. In a decision written by Justice Jackson, the Court
held that the appropriate remedy for the disparity in fees under the 2017 statute is to require “prospective
parity,” that is, uniformity in future cases. Justice Gorsuch, joined by Justices Thomas and Barrett, argued
in dissent that “a refund is the traditional remedy for unlawfully imposed fees” and that the Court should
not base its decision regarding the appropriate remedy solely on what the Court believed Congress would
want.
Because the Court focused on Congress’s intent in holding that prospective parity is the appropriate
remedy for this violation of the Bankruptcy Clause’s uniformity requirement, this case may be of interest
to Congress when drafting legislation and, in particular, when considering whether to legislate any
specific remedial relief. Additional information on the Bankruptcy Clause, the uniformity requirement,
and Hammons is available at the Constitution Annotated online.
The Constitution’s Uniformity Requirements
Article I, Section 8, Clause 4, of the Constitution provides that Congress shall have power “[t]o establish .
. . uniform Laws on the subject of Bankruptcies throughout the United States.” In 88 out of 94 federal
judicial districts, bankruptcy cases are administered under the UST program, which is funded through fees
Congressional Research Service
https://crsreports.congress.gov
LSB11184
CRS Legal Sidebar
Prepared for Members and
Committees of Congress

Congressional Research Service
2
paid by debtors who file cases under Chapter 11 of the Bankruptcy Code. In the other six federal judicial
districts, bankruptcy cases are administered through the BA program, which is funded through the
Judiciary’s general budget. To ensure that fees charged by the UST and BA programs are uniform,
Congress provided in the Federal Courts Improvement Act of 2000 for the Judicial Conference of the
United States to have debtors in BA jurisdictions pay fees equal to those imposed in the UST
jurisdictions.
Congress modified the UST fee structure in the Bankruptcy Judgeship Act of 2017 (found at 28 U.S.C. §
1930(a)(6)(B)). The BA program, however, did not implement the new fee structure coincident with its
implementation by the UST program. As a result, the fees in BA districts were lower than the fees in UST
districts. In the Bankruptcy Administration Improvement Act of 2020, Congress addressed the disparity
by requiring the Judicial Conference to conform the fees paid in the BA districts to those paid in the UST
districts. In 2022, the Supreme Court held in Siegel v. Fitzgerald that the Bankruptcy Judgeship Act of
2017 violated the constitutional requirement of uniformity by allowing the UST and BA jurisdictions to
implement the new fees differently. The Court did not address the appropriate remedy for debtors in UST
districts who had been charged the higher fees, but remanded the case for further consideration.
The Hammons Case
Hammons concerned the appropriate remedy for a UST debtor—in this case, Hammons—that had paid
fees in excess of what it would have paid had it filed in a BA district. The United States Court of Appeals
for the Tenth Circuit had held that Hammons should receive a refund of the excess amount it had paid.
The UST challenged the Tenth Circuit’s judgment, arguing that a plaintiff who establishes a constitutional
uniformity violation is not automatically entitled to retrospective relief. Rather, the UST argued that
prospective relief, which would require only that all debtors uniformly pay the higher fees going forward,
would implement Congress’s intended result in increasing the fees under the Bankruptcy Judgeship Act.
Alternatively, the UST argued that, if retrospective relief is required, the appropriate remedy would be
collection of additional fees from debtors in BA districts rather than refunds to debtors in UST districts.
In its June 14, 2024, opinion, the Supreme Court reversed the Tenth Circuit and held that “prospective
parity”—uniform fees going forward—is the appropriate remedy for the violation of the Bankruptcy
Clause’s uniformity requirement. In reaching its judgment for the UST, the Court stressed that the
constitutional violation was not that the UST fees paid by Hammons were too high, only that there was a
disparity between the UST and BA fees. The Court further observed that the disparity between the BA and
UST fees had been “short lived and small.”
Identifying legislative intent as the “touchstone for any decision about remedy,” the Court examined the
UST fee structure, observing that Congress had intended for the UST to raise fees so that the program
would be self-funded. Consequently, the Court reasoned, granting Hammons’s request for a refund would
“significantly undermine Congress’s goal of keeping the U.S. Trustee Program self-funded.” The Court
further noted that there would be practical problems in providing for refunds because many of the debtors
had been “liquidated or otherwise ceased to exist.” Turning to the alternative relief suggested by the
UST—that the BA fees be retroactively increased—the Court observed that, when Congress had required
the Judicial Conference to conform the BA fees to the UST fees, it had specified that the fees be equalized
only on a prospective basis. Like the problems posed by refunding UST fees, the Court noted that
retroactively collecting BA fees also presented problems, as “[t]he Government would be forced to extract
fees from funds that might already be disbursed, inevitably prompting additional litigation and even the
unwinding of closed cases.” In light of these concerns, the Court concluded that “Congress would have
wanted to impose equal fees in all districts going forward.” The Court, however, cautioned against using
congressional intent as an “entirely unchecked guide” when determining remedies for constitutional
violations, noting the role of “due process and other constitutional protections” in making such decisions.

Congressional Research Service
3

Justice Gorsuch wrote in dissent, joined by Justices Thomas and Barrett, that Hammons was entitled to a
refund because it had made $2.5 million in overpayments to the UST that were “exacted in violation of
the Bankruptcy Clause.” Among other things, Justice Gorsuch disputed that the Court’s “only proper role
is to speculate about—and then give effect to—the course of action Congress would have taken to address
the constitutional injury its fee regime imposed if it had been warned in advance.” While noting that an
argument could be made that refunds, rather than prospective parity, better reflected congressional intent,
Justice Gorsuch stated that the Court should have applied “[t]raditional remedial principles” to
Hammons’s case and that, for centuries, the appropriate remedy for erroneous duties and taxes has been
refunds.
Considerations for Congress
Congress may find Hammons of interest when drafting legislation where remedial considerations might
come into play. While the majority and the dissent disagreed as to the degree to which congressional
intent should inform determinations of the appropriate remedy for a violation of the Bankruptcy Clause’s
uniformity requirement, they also reached different conclusions as to what Congress would have intended
with respect to the appropriate relief.

Author Information

Jeanne M. Dennis

Senior Counsel and Specialist/Legal Programs and
Initiatives

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
LSB11184 · VERSION 1 · NEW