United States v. Miller
Oral argument transcript · No. 23-824 · October Term 2024 · argued December 2, 2024 · the petitioner won
Decision: votes, opinion and citations · Official transcript (PDF) · Argument audio at the Supreme Court
Advocates
- Yaira Dubin, Assistant to the Solicitor General, for the petitioner
- Lisa S. Blatt, Washington, D.C., for the respondent
Transcript
From the Court's official transcript; speaker labels as in the transcript, with advocates' full names from its list of appearances.
Chief Justice Roberts: We'll hear argument next in Case 23-824, United States versus Miller. Ms. Dubin. ORAL ARGUMENT OF YAIRA DUBIN ON BEHALF OF THE PETITIONER
Yaira Dubin: Mr. Chief Justice, and may it please the Court: The Bankruptcy Code get -- grants trustees an array of avoidance powers, including the power to avoid fraudulent transfers under Section 548, subject to a two-year federal lookback period. This trustee's claim is time-barred, so he's relied on a different code provision, Section 544(b). But 544(b) has no application here. That provision looks to whether a real-world creditor can avoid a transfer under state law with a longer lookback period. Rather than leave that right to one creditor, Congress authorized the trustee to pull it into bankruptcy to benefit all creditors. But 544(b) doesn't come into play Official 1 unless a transfer is already voidable under state law; 544(b) simply allows the trustee to piggyback off that existing vulnerability. In practice, that means 544(b) has a two-level structure. The trustee must first identify a creditor with the right to avoid the transfer under state law. If so, he can step into the creditor's shoes and avoid the same transfer under 544(b). But, if not, he has no one's shoes to step into and he can't use 544(b) to circumvent the code's two-year lookback period. Here, any creditor's attempt to avoid these federal taxes under state law would obviously be barred by sovereign immunity and other obstacles. The trustee's parallel 544(b) action should therefore fail on the merits. Respondent's main argument is that Section 106(a) alters that analysis. But 106(a) waives immunity at the federal level for 59 bankruptcy code provisions. 106(a) plainly does not waive immunity for a state law claim outside bankruptcy. And 106(a) likewise does -- makes clear that it does not alter the substance of the identified code provisions. Rather, it Official 1 waives immunity so that those provisions can be applied to sovereigns according to their terms. And, here, 544(b) by its terms allows a trustee to avoid a transfer if and only if a creditor could avoid that transfer outside bankruptcy. Nothing in 106(a) alters that requirement. The trustee's contrary theory misreads 106(a), and it misses the basic design of 544(b). I welcome the Court's questions.
Justice Thomas: Could 106 be written in a -- in a way that you can get around the immunity problem at merits level at -- under 544?
Yaira Dubin: I think it could be, and I think the way you would do it would be to say something like, in actions under the identified sections, governmental units should be treated like private parties in like circumstances. There actually is an analogous bar -- provision like that in the code under the Federal Tort Claims Act. Congress did write something like that to make sure that the United States could be liable under state tort law under the terms set forth in that Act. Official 1 But I think that sort of bakes in this idea that Congress would have wanted that result, that Congress would have wanted the United States to be liable under a provision like 544(b) on the merits. And that goes to the fundamental premise of 544(b), which is that 544(b) exists in the code in order to mirror liability that exists outside of bankruptcy. And I don't think there's any reason to think that Congress would have wanted to expose the IRS to liability under state law through a provision that only does what already exists outside of bankruptcy.
Justice Barrett: Counsel, what federal causes of action, besides maybe the FDCPA, might a trustee be able to assert via 545 -- 4 -- 544(b)?
Yaira Dubin: That's probably the best example of what the trustee could assert vis-a-vis 544(b), but, usually, 544(b) isn't used against the federal government, which I think is where I -- I take that --
Justice Barrett: Yeah.
Yaira Dubin: -- that's where you're going with this. Official
Justice Barrett: Yeah.
Yaira Dubin: But we don't think that's a problem with our interpretation because 106(a) waives immunity as to 59 sections by section, not by subsection, and the waiver has an important role to play as to 544(a) vis-a-vis the United States. And that's because, under 544(a), waiving immunity allows the United States -- allows the trustee to prime a tax lien against the United States if it's not properly filed. And that can have a huge consequence for the distribution of the estate to unsecured creditors. So --
Justice Gorsuch: Ms. --
Justice Barrett: Well, I was just -- oh, can I -- just one more.
Justice Gorsuch: No. Go ahead, please.
Justice Barrett: Let me ask you that just about states. It's a slightly different question but kind of the same realm. The state amici say that if we construe this -- if we -- if we construe it as the trustee wants, it's going to raise a constitutional question about Official 1 whether Congress can abrogate state sovereign immunity under the bankruptcy clause. Is Katz your answer to that?
Yaira Dubin: I think Katz is the answer to that, but I also don't think that anything in this case requires the Court to reach that constitutional question. I think there are various ways in which the code brings in state law, and as long as it brings in state law uniformly, in general, that is sufficient. But, here, the problem isn't that there's some constitutional obstacle to bringing in state law. It's that the way in which 544(b) operates is only to bring in state law when that transfer was already vulnerable under state law. So it's a problem on the merits.
Justice Barrett: Thank you.
Justice Gorsuch: Ms. Dubin, I'm -- I actually wanted to follow up on the -- the first question that Justice Barrett asked you, and I'm -- I understand your response is that the waiver in 106 will still do work with respect to 544(a) even if it does no work with respect to 544(b). Is -- is that the gist of your -- your Official 1 answer?
Yaira Dubin: With a small correction. It does -- definitely does work as to the United States with respect to 544(a). It also does work with respect to any sovereign that has exposed itself to state law outside of bankruptcy, and some states have done that under 544(b).
Justice Gorsuch: Sure. Okay. But 106 waives sovereign immunity for the federal government with respect to all of 544. It doesn't single out (a). And I think the gist of your argument is that, as you read 544(b), 106 is effectively rendered a nullity. What's -- what's your response to that?
Yaira Dubin: Sure. So two points on that. The first point is that the way that 106 operates with respect to 544(b) is defined by the limitation in 106(a) and the nature of 544(b). So 106(a) is a waiver of immunity as to those 59 code provisions that you referenced, but it specifically says in 106(a)(5) that nothing in this section shall create any substantive claim for relief that doesn't Official 1 otherwise exist.
Justice Gorsuch: No, it doesn't create a new cause of action. I -- I grant you that, but that's 544(b), is what your friends on the other side would say, right?
Yaira Dubin: So it says both that it doesn't create any substantive claim for relief and it doesn't create any new cause of action. But, critically, that takes us to 544(b), which is, what does 544(b) do? And 544(b), what it does is it says that the trustee can mirror an existing state law right. So this transfer is already vulnerable --
Justice Gorsuch: Well, it doesn't say that. It talks about voidable. It doesn't talk about void. It says voidable. What do you do with that?
Yaira Dubin: Sure. So voidable under applicable law by an actual creditor means that you look to the state law or to the law that's being invoked and see whether that transfer could be avoided under that law. And when you look to Utah law here, the way that a transfer is avoided, like in all states, is by bringing an avoidance action against a particular Official 1 defendant. And Utah law, the applicable law being invoked here, makes clear that the identity of the transferee matters. You can't avoid a transfer, for instance, against someone who takes in good faith. So it's critical to understanding the applicable law --
Justice Gorsuch: Yeah, but that --
Yaira Dubin: -- who the defendant is.
Justice Gorsuch: -- that doesn't apply -- the good-faith purchaser rule doesn't apply here, right?
Yaira Dubin: Right, but I'm -- I'm talking about what 544(b) does. And I think what 544(b) makes clear, by looking to whether someone actually had this right outside of bankruptcy, is that what it's doing is saying this transfer already could have been effected outside of bankruptcy, so we'll allow the trustee to invoke that for the benefit of all creditors.
Justice Gorsuch: If I understand what you're saying -- and I'll let you go in a second --
Yaira Dubin: No. Official
Justice Gorsuch: -- I promise -- is that essentially, the trustee steps into the shoes of a -- of a -- of a normal creditor, and that's how you read 544(b). I don't see that in -- in -- in those -- that language isn't there. It does exist in some other statutes, which is notable. And we've got a very old case written by Oliver Wendell Holmes no less, Moore versus Bay, that says sometimes a trustee's powers to avoid property transfers can transcend the rights of the creditor in whose shoes he might otherwise step. What do we do about that?
Yaira Dubin: Sure. I'd like to address Moore versus Bay and then I'd like to return, if I can for a minute, to the text of 544(b). As to Moore versus Bay, that is a venerable case, as you mentioned, and what it means is that the trustee has the power to avoid a -- when he is avoiding a transfer, to recover more than just the amount that that creditor could have avoided outside of bankruptcy.
Justice Gorsuch: Exactly.
Yaira Dubin: That is an exception, but it is an exception that's baked into 544(b). Official 1 544(b) was understood to incorporate that exception, but when it did so, it made clear that in every other way, the trustee's rights are coterminous with that actual creditor's.
Justice Gorsuch: Where do you get that in the --
Yaira Dubin: And, critically, in the Moore versus --
Justice Gorsuch: Yeah. Where do you get that in the language?
Yaira Dubin: In the Moore versus May -- in the Moore versus Bay situation, what you have is a transfer that is already voidable and the question is just the extent of recovery. Of course, we don't have that here. You get that from the language from voidable under applicable law by a creditor holding an unsecured claim. That creditor holding an unsecure -- unsecured claim is referring to an actual creditor. What Congress was concerned about in 544(b) was a real right that exists outside of bankruptcy. And there's a reason for that. It's because the other federal avoidance powers convey all the ways that Congress wanted to give Official 1 federal rights to avoidance. 544(b) does something different. It recognizes that sometimes out there in the real world, an actual creditor has that right. And Congress picked that up with requiring an actual creditor in 544(b).
Justice Gorsuch: Thank you.
Yaira Dubin: But I wanted to also address the point that you said where you said that we think that this is what the text means. It's not what we think the text means. It's how this provision, 544(b), has been interpreted for over a century. It is uniform case law --
Justice Gorsuch: Well, that -- that's why we're here, right?
Yaira Dubin: No. We're here on the 106(a) question. We're here on --
Justice Gorsuch: Well, how the two interact, yeah -- yeah.
Yaira Dubin: Well, kind of. All of the cases in the split on 106(a) are all asking how does 106(a) affect that actual creditor requirement. None of them are challenging the actual creditor requirement. If you look at all those cases, for Official 1 instance, DBSI, the case that started this split in the Ninth Circuit, everything about that case acknowledges this. Everyone agrees 544(b) operates by looking for an actual creditor. The question is, when the -- when the defendant is the United States, how does 106(a) affect that analysis? Are you supposed to disregard sovereign immunity that would exist in an actual creditor's suit? Everyone accepted that as a premise and that -- because that is how 544(b) has always been understood.
Justice Gorsuch: That's right. Thank you.
Justice Jackson: Ms. Dubin, and -- and you -- you say this actual creditor requirement, which everyone acknowledges exists in 544(b), is there for a reason. And I've been struggling with that, and I want your reaction to -- to this. Is it because Congress was making a policy choice related to its concern about the potential disruptive nature of avoidance? So the general trustee avoidance power has a two-year statute of limitations because, when you come in and you void a previously existing Official 1 transaction involving innocent third parties, that's like a big deal. That's causing a lot of disruption in the market. And so, ordinarily, a trustee can only do that for two years after that transaction has occurred. There's no such limitation in the 544(b) world in terms of timing, but maybe -- maybe -- this is my theory -- the -- the relevant limitation is this actual creditor requirement, that what's happening there is the trustee gets the avoidance power but only to the extent that an actual creditor could have affected the same kind of disruption in the market by bringing this kind of action on his own. What do you think about that?
Yaira Dubin: I think you have it exactly right, but I would add one piece to it, and it's why does Congress care that an actual creditor has that right in the real world? And it's because that transfer could be invalidated in the real world as to that transferee. So all Congress is doing is saying that the trustee, instead of leaving that right to one creditor alone, he is going to vindicate Official 1 the principle of equality among creditors, equality of distribution, bring it into the bankruptcy and that transfer can be avoided for the benefit of all creditors. But, absent that situation where this transfer is already vulnerable, Congress's policy judgments about repose, about who should be able to avoid a transfer govern, and 548 governs, other than in that situation.
Justice Barrett: Counsel --
Justice Kagan: Can I take you --
Justice Barrett: -- you say at a foot -- oh, go ahead. I think this will be quick. You say at a footnote in your brief -- and this follows up on Justice Jackson's question -- that the way this would work for the actual creditor who actually had the claim in the real world is that if the bankruptcy estate is closed and that person is actually still holding the claim, that they could then pursue it, assuming that it was still available. How often does that happen?
Yaira Dubin: I think it happens. I don't know -- I can't give you exact numbers, but it certainly can happen. It's not some Official 1 fantasy. Of course, if the actual creditor has a right that the trustee can invoke and it's used in 544(b), then there will --
Justice Barrett: Then it's gone.
Yaira Dubin: -- no longer be the right outside of bankruptcy. But, if, for instance, the trustee doesn't take advantage of that right or runs the statute of limitations within bankruptcy, then the actual creditor will regain the right when the bankruptcy closes.
Justice Barrett: And it's the same for if that -- if the -- if the transferee has the money and then someone -- if the actual creditor runs and grabs it before the trustee has a chance, then the trustee can't get it because, presumably, there's preclusion that would apply?
Yaira Dubin: That's right.
Justice Kagan: Can I take you back to the distinction between 544(b) and 544(a) that you're drawing? And as I understand the difference between the two sections, it's 544(b) concerns an actual creditor and 544(a) concerns a hypothetical creditor. Official 1 Why wouldn't sovereign immunity play similarly with respect to both those provisions? So, to the extent that sovereign immunity is always going to bar a 544(b) action, why wouldn't it do the exact same thing with the hypothetical creditor in a 544(a) action?
Yaira Dubin: Sovereign immunity will operate in the same fashion whenever what the Bankruptcy Code provision is asking you to look to is whether an action could be viable outside of bankruptcy in the real world. But 544(a) doesn't require that. And I think a really good example of that is the tax lien that we've been talking about. 26 U.S.C. 6323 says that a -- that a tax lien that isn't properly recorded isn't valid against a judgment lien creditor. It simply isn't valid. No immunity required. The trustee is allowed to step into that shoes of that judgment lien creditor under 544(a). So he now has that -- the lien is not valid against him. How does 106(a) help him? 106(a) helps him enforce that. He can now prime the United States. He now has priority over that tax lien. There's Official 1 no issue of immunity outside the bankruptcy proceeding, and 106(a) removes the immunity within the bankruptcy proceeding. This is done quite a lot. It really, the way it manifests in -- in practical terms is, usually, when we have a tax lien that's not properly recorded, we will file as an unsecured creditor because we know the trustee can prime the lien. Of course, if 106(a) wasn't there, that wouldn't be the case.
Justice Kagan: Got it.
Justice Sotomayor: Just curious, why did the trustee not act within the two years under 548 here?
Yaira Dubin: He was too late by the time he was appointed. It was too -- it was more than --
Justice Sotomayor: Oh, it was too late.
Yaira Dubin: And it wasn't just the appointment. At the time the bankruptcy was filed in 2017, these transfers were in 2014, the two-year lookback period had already expired. And that goes to the concerns Justice Jackson was talking about, which is this repose Official 1 that the federal statute bakes into it.
Justice Sotomayor: All right. Thank you.
Justice Barrett: And, as a practical matter, is that what 544(b) gets you that you don't get under 548, that, you know, the two-year statute of limitation and the -- in 548 versus some state -- states have longer lookback periods?
Yaira Dubin: That's exactly right. In most situations, the terms of 548 are basically very similar to the terms in the state law and the Uniform Fraudulent Transfer Act and its successors. You're basically looking for whether a transfer was given for a reasonably equivalent value and whether the debtor was insolvent. And those terms are essentially very similar in 548 and in the state laws being incorporated through 544(b), but, as you say, several states -- many states have adopted longer lookback periods or longer limitations periods, four years or even six years. So that would be why the trustee is using 544(b). The trustee can do so if an actual creditor could have done so outside of Official 1 bankruptcy because that transfer was vulnerable, but he can't do so where no actual creditor already had that right. Then he's stuck with 548 and he would be stuck with 548 in this case.
Justice Kagan: I mean, just taking a step back, Ms. Dubin, there is something a little bit peculiar about the argument, right, saying 106 waives sovereign immunity and what happens as a result of that is you can hale the trustee into court, and then the trustee gets to court and it turns out he always loses. So what -- what was the point of the thing?
Yaira Dubin: Sure. So two points on that. On the first point, he loses because of the nature of 544(b) because of the merits. I understand your --
Justice Kagan: I get that. It's just like, why does that matter to him or why would it have mattered to Congress, more to the point? Like, why would Congress have gone to this trouble of waiving sovereign immunity if the trustee was always going to lose anyway as a result of the substantive question in the suit? Official
Yaira Dubin: Yeah. So this goes to my second point. 106(a) is not a waiver about 544(b). 106(a) waives immunity with respect to 59 code provisions. It is a general waiver.
Justice Kagan: Yeah. Do you think you would have the same argument if it was just a 544 waiver?
Yaira Dubin: I think this would be a much harder case if it was just a 544(b) waiver. I don't think it would be a hard case if it was a 544 waiver because of the work that it does in 544(a). I think, if you had the same waiver written with respect only to 544(b), you would have this question as to why Congress wrote a waiver that doesn't have practical effect as to the federal government.
Justice Kagan: I mean, but, if I understand the argument that you're making, you're saying, well, because Congress included so many things, we don't have to take any one of them particularly seriously.
Yaira Dubin: That is not at all our position. Our position is --
Justice Kagan: Because it doesn't Official 1 sound all that good. (Laughter.)
Yaira Dubin: Yes. That's -- so that is not our position, and let me explain why. First of all, 106(a) identifies each of the 59 provisions not by subsection but by section. So it has to have meaningful effect as to each section, and it certainly does have meaningful effect as to 544(a). When Congress was identifying sections for which the waiver of immunity would operate, of course, it would include Section 544. But I think it is also crystal-clear that Congress would not have thought that that waiver of immunity would expose the IRS stub -- substantive state liability under 544(b), and that's because Congress specifically said in the waiver that nothing in this section creates any substantive claim for relief that doesn't otherwise exist. And everyone has always known that the way 544(b) operates is only by pulling in existing state law liability, and everyone knows that the IRS is not subject to existing state law liability. Official 1 So, when Congress wote -- wrote a waiver that included 544, I think it is very clear that Congress did not think that that waiver would have the effect of altering substantive liability as to IRS that could never exist outside of bankruptcy.
Justice Kavanaugh: On -- on what Congress might have been thinking, the other -- the other side says that your position will create a playbook for fraud, that you pay your personal tax debts with core -- corporate funds and let the IRS then, in their words, hide behind sovereign immunity that would short-change creditors. I want to make sure you respond to that.
Yaira Dubin: Thanks. I appreciate the opportunity to do that. I think that argument and those considerations cut the opposite direction. The trustee's position here would allow these insiders, the wrongdoers here, to go free. In his world, he recovers this -- this money from the IRS. He then cannot go after the insiders because he's entitled to only a single satisfaction under the bankruptcy's provision -- Bankruptcy Code's provision. Meanwhile, we Official 1 can't go after the insiders either because the statute of limitations has expired. And that will be ever more likely when you're using a longer limitations period to go after these transfers. By contrast, under our view of the world and how this is supposed to work, when you're outside the lookback period, you should be going after the insiders. And you have claims to do that because they are the wrongdoers here. They used corporate funds to pay their own debts. So you should be able to go after them for corporate misappropriation, breach of fiduciary duty, and all of the -- those claims that come from insiders taking corporate money. Here -- and we find this a little bit inexplicable -- the trustee did go after the insiders, but one case was dismissed for failure to prosecute, and one was settled, and we assume that settled for this because that would obviously violate the double satisfaction rule.
Chief Justice Roberts: Just -- Justice Thomas, anything? Justice Alito? Official 1 Justice Gorsuch?
Justice Gorsuch: One quick question. Let -- let's suppose that the money didn't go to the U.S. Government to but -- but to a private party. Along the way, the trustee, in your view, could recover for that?
Yaira Dubin: If there was an action against the private party. Obviously, private parties also have defenses. Let's assume, instead of the United States here, it was a bank and the bank took in good faith for a mortgage that it was owed, then you wouldn't have a claim against the bank. You might have a claim against an insider that arranged that for some benefit --
Justice Gorsuch: Yeah.
Yaira Dubin: -- to himself, and you would be limited --
Justice Gorsuch: That's what I'm talking about. Yeah.
Yaira Dubin: -- in bankruptcy.
Justice Gorsuch: Yeah. You could -- you could pursue that person?
Yaira Dubin: So long as he doesn't have a defense outside of bankruptcy. Official
Justice Gorsuch: Yeah. Okay.
Chief Justice Roberts: Justice Kavanaugh?
Justice Barrett: Just one question about what work 106(a) does for 544(b) if the -- if you prevail. I mean, your position would be, well, it's still doing work vis-à-vis the states, right? And is it odd -- I mean, just kind of walk me through this double layer thing. I mean, as I understand your argument, it's that 544(b) has a nested cause of action in it under applicable law, so you're standing in the shoes of the creditor pursuing someone under state law. If under state law you could recover that money from a governmental entity that would otherwise have state sovereign immunity, then you have a claim that's been nested by virtue of the under applicable law, but because the vehicle through which the trustee is asserting that cause of action is 544(b), you still need a separate abrogation of the state sovereign immunity to move forward and that's the work that 106(a) is doing?
Yaira Dubin: Yes. That's right. Let Official 1 me try to say it back to you and see if you think that you agree.
Justice Barrett: Okay.
Yaira Dubin: The work that 106(a) is doing as to 544(b) in that situation is the same work it's doing as to the other avoidance provisions that are referenced in 106(a), which is these are federal code provisions. They would not normally apply to a sovereign absent a waiver, abrogation of immunity, so you would, let's say, take 548, the federal fraudulent transfer provision. Normally, you could bring that against a private party, but there's no indication you could bring that against the United States or against that state sovereign.
Justice Barrett: Mm-hmm.
Yaira Dubin: (a) allows the trustee to assert that cause of action against a sovereign, absolutely, the federal --
Justice Barrett: Yeah.
Yaira Dubin: -- cause of action. You're right to say that the way 544(b) works is by looking to what would have happened under state law, whether there's a viable avoidance action outside state law. And that's where that Official 1 state's waiver of sovereign immunity comes into being, which is that that state has exposed itself to fraudulent transfer liability in its own courts. The trustee can now mirror that inside the bankruptcy.
Justice Barrett: But, absent 106(a), under the way that you're viewing this, the trustee could not proceed under 544(b)?
Yaira Dubin: That's right, and that's the purpose of 106(a)'s waiver as to the 59 provisions. It's to allow those federal code provisions to be applied, invoked, enforced against sovereign entities. That's the work it's doing.
Justice Barrett: So the other side says, well, that's pretty weird because then you're looking for two waivers of sovereign immunity or an abrogation of sovereign -- two abrogations of waiver and an abrogation that you have to double-team in order to go. You want to respond to that?
Yaira Dubin: Yes. Thanks. I don't think that our position is asking for two waivers. To the contrary, what our position is resting on the premise of is that when Congress Official 1 made a provision like 544(b), which turns on liability that exists outside the code, it doesn't mean to affect that by waiving immunity inside the bankruptcy proceeding. So we disagree with the premise that Congress wanted to accomplish this thing. But you're right to say that if Congress wanted to accomplish it, the way to do it would be it has to do something about 544(b). And the answer would be to alter -- the most obvious answer would be to alter the way 544(b) operates. And instead of operating on the basis of an action that's actually viable outside bankruptcy, which, again, is not our interpretation -- it is the uniform understanding for over a hundred years of 4 -- 544(b) and its predecessor provisions -- would be, instead of requiring that, it would say something like, in 544(b), transfers to the United States are avoidable to the same manner and the same extent as transfers to a private party, similar to what Congress did in the FTCA context.
Chief Justice Roberts: Justice Jackson? Official
Justice Jackson: I think the thing I found interesting in the exchange you just had with Justice Barrett is that she approached the analysis by starting with 544 and you started with 106(a). And I wonder if that might be the sort of -- to the extent there's any disconnect, and I don't think there is, but the framing is slightly different. You say we need the waiver of sovereign immunity to start to allow for the trustee to bring an action. And then, to determine whether or not that action can proceed or is successful or whatnot, you go to 544, which says you have to allow -- the trustee can proceed only to the extent that he could -- that the -- a actual creditor could outside of bankruptcy, and sovereign immunity there can do the work to prevent the trustee from proceeding. Is that how you're viewing this?
Yaira Dubin: I actually don't think it matters where you start. I think that where --
Justice Jackson: Okay.
Yaira Dubin: -- where Justice Barrett started was perfectly fine too.
Justice Jackson: Okay. Official
Yaira Dubin: This is more just conceptually trying to understand what's going on here as sort of the whole code, what is Congress doing here. And 106(a) absolutely waives immunity as to these federal code provisions. It doesn't matter whether you do that at the end of the analysis or at the beginning of the analysis. But, when it does that, it specifically says it's not altering the substance of those provisions. So what do you do as a court adjudicating an action brought under one of these provisions? You go look at what are the substantive terms. For most of them, the substantive terms don't implicate something happening outside of bankruptcy. But 544(b) works differently, and it's long -- been understood to work differently. You have to go look at what's happening outside of bankruptcy. And nothing in 106(a) suggests that Congress meant to affect what's happening outside of bankruptcy or that requirement that you look to what's happening outside of bankruptcy. Essentially, what the trustee is Official 1 asking for here, and it's a little hard to put it into words, but we both agree that 106(a) waives sovereign immunity at the federal level. We also both agree that 106(a) does not waive immunity at the state law level. So what she's asking for is that when you look at 544(b)'s actual creditor requirement, you close your eyes or you disregard sovereign immunity that hasn't been waived, that continues to exist. And that's where the theory is wrong and it's why the 544(b) claim fails on the merits.
Justice Jackson: Thank you.
Chief Justice Roberts: Thank you, counsel. Ms. Blatt. ORAL ARGUMENT OF LISA S. BLATT ON BEHALF OF THE RESPONDENT
Lisa S. Blatt: Mr. Chief Justice, and may it please the Court: 106 waiver with respect to 544 means that trustees can avoid fraudulent transfers inside bankruptcy even though sovereign immunity applies outside bankruptcy. "With respect to," even read very narrowly, means directly relating to 544. And the waiver that concededly applies Official 1 to the trustee's claim has the same direct relationship to the incorporated state law elements. No textual or logical distinction exists between the two. 106(a)(2) also lets courts hear any issue respecting 5 -- 544's application to governments, so courts can thus hear these claims without regard to sovereign immunity. Congress waived immunity knowing that 544 has always required trustees to step into creditors' shoes under state law. By waiving immunity, Congress clearly expected trustees to sue governments by relying on state law. Congress could not have plausibly intended to waive immunity only to see it smuggled in through the back door under the guise of applying state law. Nor is it plausible that Congress has ever waived immunity but only contingent on a second waiver. No such statute exists in the U.S. Code, nor does any statute contain a double waiver. Congress spoke expressly when it wanted to give the IRS special treatment and to make exceptions for fraudulent transfers, but it Official 1 did neither for the IRS in 544. The government's position overrides these choices and allows the IRS to keep assets that every other transferor would have to return. That result would prevent the trustee from recouping this money and paying it to the bus drivers and the mechanics and the vendors, who certainly gave All Resort more value than the IRS did. All -- the government's position finally destores -- destroys creditor equality. Where governments are creditors, like they are here, the government gets to keep the fraudulent transfer and its share of a much smaller pie. I welcome the Court's questions.
Justice Thomas: What do you do with your analysis -- under your analysis with 106(a)(5)?
Lisa S. Blatt: (a)(5)?
Justice Thomas: Yeah.
Lisa S. Blatt: Well, I think it says on its face that it doesn't create liability that doesn't otherwise exist under this title. And the government concedes that the trustee, I think it said it six times, the trustee has a cause of action to which sovereign immunity has Official 1 been waived under 544. It's just contesting whether it went to the incorporated elements. And there's no logical distinction how 105 is not implicated to that waiver, but somehow it's implicated to the waivers extending to the elements. It also just says otherwise existing under this title or non-bankruptcy law, and everyone concedes that the trustee has a cause of action but for one defense and one defense only, and that's sovereign immunity, which is the very defense that 106 waives. And I wanted to get to the 544(a) point because the government does not dispute that 106(a) does absolutely no more work under 544(a) than it does under 544(b), meaning 544(a) incorporates state law. Absent a second waiver of immunity, which the government says accurately exists under -- I don't know if it's 28 U.S.C. but 2610, the -- the quiet title, there is no state law where a bona fide purchaser or bon -- a bona fide creditor could avoid the lien. So both under (a) and (b), the government has its two-waiver theory. 106(a) is just kind of irrelevant. And in terms of the Official 1 idea that this applies to 59 sections, if you could put your shoes, pun intended, in the form of Congress, who overruled the Supreme Court's decisions in two of them, you're asking Congress to go back again. And in Hoffman, you said to Congress: You were too scattershot because you didn't list the code provisions. It just would have applied to a hundred. Here, Congress listed all 59. And another thing that's interesting just about making Congress do this again, the government doesn't dispute that its position would make Congress have to go through and add a second waiver on all the provisions to which the state law is incorporated -- and we identified many -- and they don't dispute that one of them is 547(b). And that's the very same issue in Hoffman. So, if you rule against us, you're really telling Congress after all, they still need to go back and do it a third time and maybe a fourth time because, in the government's view, the state sovereign immunity will always creep in.
Justice Jackson: But, Ms. Blatt -- Official
Lisa S. Blatt: Yes?
Justice Jackson: -- I guess I -- I mean, I understand the need for two waivers here, but isn't that a function of Congress's policy choice to incorporate state law as the requirement of 544(b)?
Lisa S. Blatt: That's --
Justice Jackson: You seem to be accepting that Congress was, in 544(b), allowing for the trustee to stand in the shoes of the actual creditor, but you started off by saying the trustee can do more, essentially, by virtue of 106(a) than the actual creditor. And I feel like those two things are inconsistent.
Lisa S. Blatt: With respect, no. So, as -- as Justice -- first of all, the waiver of sovereign immunity with respect of 544 just on its face textually applies to the elements, to the same extent grammatically, logically that it applies to the claim. You can't waive a claim without waiving the elements. But, in terms of what Justice Gorsuch said, there's two very important caveats to this actual --
Justice Jackson: No. No, no, no, I'm Official 1 sorry. Sorry. Before you go to the second part, I don't understand that. I mean, I thought the waiver of sovereign immunity was a threshold issue that didn't tell us anything about the merits of whether or not you win the action underlying it. So we have this initial question, can you even bring this action? And then, when you bring it, the court goes on to adjudicate the merits, which is what the elements go to.
Lisa S. Blatt: Right, without regard to sovereign immunity, which is 106. In the government's view, Congress --
Justice Jackson: But -- but there's a -- there's a theory in which sovereign immunity is just doing the work of allowing you to bring the lawsuit to begin with.
Lisa S. Blatt: Only to lose.
Justice Jackson: Well, sometimes that happens.
Lisa S. Blatt: Always it will happen because no law, tribal, foreign, federal, no law anywhere waives sovereign immunity with respect to fraudulent transfers.
Justice Jackson: But 544(b) is bigger Official 1 than the government. So, you know, it -- it -- there could be other --
Lisa S. Blatt: Well, 106 only relates to the government.
Justice Jackson: Yeah.
Lisa S. Blatt: You're just saying 106 was a way -- 106 application to 544 in all of its applications, (a) and (b) was a waste of time because sovereign immunity will always be incorporated under state law. And the point I was trying -- which is just a -- a -- a -- with respect, it's a dumb statute. Why would Congress waive immunity only to see that there's no way to bring it, unless --
Justice Jackson: Ms. Dubin says that (a), they -- those -- those claims go forward all the time.
Lisa S. Blatt: They can't go forward, which she concedes, without a second waiver of immunity. And there's only two. There's the federal government and then the four states' generic waiver -- four states --
Justice Sotomayor: I -- I'm sorry, there's an action against the -- the people who Official 1 engaged in the fraudulent transfer. So 544(a) -- (b) is not useless.
Lisa S. Blatt: It's useless as to governments.
Justice Sotomayor: Well, but why does that matter?
Lisa S. Blatt: Because 106 is a statute.
Justice Sotomayor: It's not -- it's not useless. You agree that under 544(b) incorporates some state law defenses, like the statute of limitations.
Lisa S. Blatt: All of them. And this is my second point.
Justice Sotomayor: That's all -- all of them.
Lisa S. Blatt: No, to state law --
Justice Sotomayor: Except you're saying all of them --
Lisa S. Blatt: Except for one.
Justice Sotomayor: State sovereign immunity?
Lisa S. Blatt: No, because that's waived by 106. If I -- that would be even weirder to have Congress --
Justice Sotomayor: That -- that Official 1 brings us to the constitutional -- that -- that's brings us to the constitutional question. But, if 544(b) requires an actual creditor, correct, who can bring the claim, so if there's no creditor who can bring the claim because the statute of limitations has passed, correct?
Lisa S. Blatt: Correct, that the actual creditor requirement assumes that all state law elements are met --
Justice Sotomayor: So --
Lisa S. Blatt: -- with exception of one. And the other thing I was going to make -- because the -- it is conceded under state law, Robin Salazar here, the actual creditor, could not recover more than her $55,000, so there's an absolute state law bar.
Justice Sotomayor: So he can -- he can -- he can --
Lisa S. Blatt: The trustee can get --
Justice Sotomayor: -- sue the people, the insiders, who made this fraudulent transfer, correct?
Lisa S. Blatt: Right, and he tried. It was not dismissed for failure to prosecute until it settled. Official
Justice Sotomayor: Well, it -- it -- I'm -- I -- I don't know why, but he could have.
Lisa S. Blatt: He did.
Justice Sotomayor: He did? One of them he settled with. The other, I don't know what he didn't do --
Lisa S. Blatt: He went bankrupt.
Justice Sotomayor: He went bankrupt.
Lisa S. Blatt: They took over --
Justice Sotomayor: But it -- I'm not -- I'm not --
Lisa S. Blatt: -- 2 million out of the estate.
Justice Sotomayor: -- sure why we're going to have to incorporate 106(b) into the state law defenses and say that --
Lisa S. Blatt: I think we're saying incorporate the waiver of sovereign immunity into the only way the trustee can bring this claim, which was relying on state law. The other just --
Justice Sotomayor: All right. Thank you, Ms. Blatt.
Justice Gorsuch: Ms. -- Ms. -- Ms. Blatt, if -- if -- if -- if I might just Official 1 turn us to 544(b), where I think, you know, the rubber meets the road, and the view on -- and I think it's common ground that you -- the trustee steps into the shoes of -- of the creditor. And then the question is, what does this voidability language mean? And one view is, well, you've got to look at to whom the transfer was made. I think that's the government's view, that -- that that matters.
Lisa S. Blatt: Yeah, I don't -- the statute doesn't say that.
Justice Gorsuch: If I might.
Lisa S. Blatt: Yeah.
Justice Gorsuch: We're almost there. The government says: Well, okay, you step into the shoes of the creditor and you look at the identity of the transferee. And, here, because the transferee is the government, you're out of luck. Your argument, as I take it, is the statute doesn't say that. It says you ask whether the transfer is voidable by the creditor --
Lisa S. Blatt: Correct.
Justice Gorsuch: -- and -- and -- by Official 1 the -- by the debtor here, whoever he is, and is it voidable. And that transfer is voidable because it was done unlawfully, fraudulently. And if when Congress wants to identify the -- the transferee and make a difference there, it does so. For example, it protects good-faith purchasers in some other statutes. Have I got the gist of the dispute accurately there?
Lisa S. Blatt: That's correct. And, Justice Sotomayor, what's critical to understand is the government's view is that the trustee illegally went after the insiders because they too would be able to assert sovereign immunity. Their view is the trustee, because this went to the United States, it will always block any transfer because -- the United States, there's no way to ever get at this money.
Justice Barrett: Ms. Blatt, am I --
Lisa S. Blatt: So a trustee, if it ever goes to the IRS, which has over 10 years to seek -- 10 years, which is a lot longer than the four-year statute of limitations to go after tax liability and is a lot more capable than I would Official 1 say the bus -- the -- the -- the bus drivers and the workers who work for this estate, the trustee is not here for his personal benefit --
Justice Barrett: Ms. -- Ms. Blatt, can I ask --
Lisa S. Blatt: -- but to get money to people who need it.
Justice Barrett: -- can I ask you a follow-up to Justice Gorsuch's question? How is it -- so I -- I -- I get that the statute doesn't mention the transferee, but how is -- does that make 544(b) different from 544(a)? Because isn't the suit you're asserting somewhat hypothetical rather than actual if you're just imagining the claim existing kind of in the ether?
Lisa S. Blatt: Yes. So the actual -- because that's the -- the creditor, there has to be an actual creditor, but it doesn't matter that -- who the transferee was. So the transferor here was All -- All Resort, the debtor, but the statute just requires by the creditor. It doesn't say as to who the defendant would be. And so -- and just because there's got to be a way under state law Official 1 to go after all the wrong parties, a creditor in Robin Salazar's shoes could always go after both All Resort that was bleeding assets, the wrongdoers, Bizarro and Cummins, and also the United States.
Justice Barrett: But don't -- doesn't -- I mean, you -- you concede, right, that other defenses would be available? Besides sovereign immunity.
Lisa S. Blatt: State law defenses.
Justice Barrett: State law defenses. And how can you know what those defenses would be if you weren't considering who the transferee was?
Lisa S. Blatt: Well, so the -- because they -- the defenses that I know of and that the cases are talking about are things like stuff that runs to Robin Salazar, like collateral estoppel, like if she had already brought the claim, or res judicata or laches. So it's not the -- there are statutory defenses about good-faith transferees, and those would be actual defenses that would go to recovery. But, in just pure voidability under Utah law, and this works with all fraudulent Official 1 conveyance, you're just looking at the elements, whether the transfer is voidable. The recovery is a separate issue both under state law and federal law, like how you go and get the money. But the actual voidability just goes to the transfer. That's why we -- and this Court has recognized it's in the nature of an in rem proceeding.
Justice Gorsuch: So you can have --
Justice Barrett: Okay. Last --
Justice Gorsuch: I'm sorry. No, please.
Justice Barrett: Oh, sorry. Just -- just last question. You said before that when you're thinking about whether 106(a) has any work to do for 544(b), that there is no state that you're aware of that has waived sovereign immunity in these -- in this fraudulent transfer context.
Lisa S. Blatt: Correct.
Justice Barrett: So that it would be a dead letter? You're sure about that?
Lisa S. Blatt: It's not a dead letter as to the four states that waived immunity generically. So -- but it is a dead letter Official 1 because those are a two-year period, and they can already be sued under 548. So the government concedes --
Justice Barrett: Well, but there was a difference about when the statute was enacted?
Lisa S. Blatt: For sure.
Justice Barrett: Yeah.
Lisa S. Blatt: But, today, it's a dead letter as to all governments.
Justice Barrett: Except for the four? And -- and -- and that's only because of the way --
Lisa S. Blatt: Except for --
Justice Barrett: Put aside the -- but let's see. The timing issue, we're talking about a question of statutory interpretation. The time --
Lisa S. Blatt: Yeah, it had a one-year impact for -- you know, until it was amended --
Justice Barrett: Okay.
Lisa S. Blatt: -- to -- to two years.
Justice Barrett: But, during that one year, there were four states?
Lisa S. Blatt: There were four states.
Justice Barrett: Okay. Official
Lisa S. Blatt: But, boy, Congress did a lot for so and so it did a -- a lot of work for so little effort, and it's only because there's a generic waiver. But, as a practical matter, which I was saying is so ironic, is that Congress would say we are abrogating, abrogating very clearly sovereign immunity, but it's only contingent on the sovereigns who we just abrogated for them agreeing to our waiver. And that is a -- just a case I've never heard of that says that --
Justice Barrett: Well, I mean, states could do it in the future too.
Lisa S. Blatt: Yes. It's like a statute with a contingent remainder. I just don't know of many statutes that are like here's a waiver and we hope that everyone else will -- will -- will get on, you know -- just there's no statute like that that's contingent. It's bad enough to try to get a waiver when you have a clear and ambiguous waiver and Congress acted to say, notwithstanding, it's -- it's abrogated, and then they list all 59 case -- 59 sections and the government says, yeah, but you need a second waiver if you ever have to rely on state law. Official 1 And I do think it's significant that no case of a century is talking about a federal defense. And I think their preemption argument kind of shows how strange it is because they're saying Congress wanted the trustee to rely on state law, but we incorporate a federal law defense when, normally, the government -- your cases would just say you look at that as implied repeal. You're in a -- you're interpreting a federal cause of action and everyone concedes all elements of state law are met, hook, line, and sinker. The only defense that's lacking is the one defense that was waived in the statute, sovereign immunity.
Justice Kagan: I guess I'm not sure about the nature of the argument, if -- if you're conceding that there were these four states and that there could have been more in the future and Congress wants zero states, why Congress wouldn't have done exactly this. Like, well, four states is four states too many. It's not 50 states, but it's more than zero states. And who knows, the four might go up to 10. And we're -- you know, so we're concerned about this. Official
Lisa S. Blatt: I -- I mean, I just -- I feel bad for Congress that they tried to do the best they could and you're going to say it's not good enough when they said "with respect to" in the broadest -- the government doesn't even have an argument that the immunity, the waiver, is not with respect to the state law elements. They don't even have an argument. They just say, well, sovereign immunity would block the claim even though sovereign immunity is waived with respect to the claim. It -- literally, the statute says sovereign immunity is waived with respect to 544(b). It has a claim. It has an elements.
Justice Kagan: But this waiver of sovereign immunity is not supposed to affect the substance.
Lisa S. Blatt: It's not supposed to affect the substance unless the claim otherwise exists. And, again, the only thing lacking here is sovereign immunity. They're not -- we're not talking about a defect under state law.
Justice Jackson: But -- but, Ms. -- Ms. --
Lisa S. Blatt: We have a fraudulent Official 1 transfer.
Justice Jackson: -- Ms. Blatt, I guess just conceptually, here -- here's what I'm struggling with, and maybe you can help. It seems to me that the result of your view is that the trustee can recover money from the estate under this particular circumstance in a way that no actual creditor could because you concede that all actual creditors bringing a lawsuit against the United States for recovery for these fraud -- this fraudulent transfer would be barred by -- by sovereign immunity. So --
Lisa S. Blatt: No. If --
Justice Jackson: No?
Lisa S. Blatt: No. Just if you -- if you're just putting aside -- remember, we have that alternative argument that you never had to sue the United States. You could --
Justice Jackson: No, I understand.
Lisa S. Blatt: But putting aside that --
Justice Jackson: Putting aside the alternative argument --
Lisa S. Blatt: -- you would -- we -- of course, we agree that sovereign immunity applies outside of bankruptcy, which is why it makes it Official 1 so strange for you to hold that --
Justice Jackson: No, but let me tell you what I think is strange, and then you can respond.
Lisa S. Blatt: Okay. (Laughter.)
Justice Jackson: All right. So -- so we have a situation in which the trustee is recovering this money, putting it in under circumstances in which no actual creditor could. Ms. Dubin says: But think about the work of 544. What 544 was really about, she says, is making sure that an actual creditor who would otherwise be able to get this money for himself is actually essentially barred from doing so and the money goes into the estate and split -- is split up among creditors, that the work of 544 is to give the trustee the ability to execute the claim that the actual creditor would otherwise have been able to in a way that undermines bankruptcy principles. So why isn't she right about that? If we think about what 544 is really about, then it seems to me to undermine your view that we should be reading 106 to allow for the trustee Official 1 to recover money that an actual creditor would not have been able to recover.
Lisa S. Blatt: I -- I think you're just saying Congress didn't pass 106. There's a waiver of sovereign immunity --
Justice Jackson: No, no, no. I'm talking about the principles behind --
Lisa S. Blatt: Okay, but 5 -- 544 has -- has a waiver of sovereign immunity that the government concedes six ways to Sunday is written into 544(b).
Justice Jackson: And what Ms. Dubin says --
Lisa S. Blatt: If I could just finish my answer. I know what Ms. Dubin said.
Justice Jackson: Okay.
Lisa S. Blatt: If I can just finish my answer.
Justice Jackson: All right.
Lisa S. Blatt: Ms. Dubin agrees that 540 -- 544(b) has the words in there sovereign immunity is hereby abrogated. I think she's saying either Congress didn't put it in the right place -- I don't know where she should have put it -- Official
Justice Jackson: She's saying --
Lisa S. Blatt: -- or that it was a poor choice.
Justice Jackson: -- that it's with respect to a subsection of 544, not the whole thing. We're --
Lisa S. Blatt: Oh, no. She thinks it's in 544(b) too because she just says it's sitting there and waiting to be, I don't know, impregnated by another waiver of sovereign immunity.
Justice Jackson: No, no, no. 106(a) absolutely refers to the Section 544. It's in there.
Lisa S. Blatt: Correct.
Justice Jackson: We see it. She says the work that that's doing is -- with respect to 544(a), not (b). And, in fact, when you think about what 544(b) is actually doing, it is inconsistent with an argument that sovereign immunity is supposed to be not taken into account and that the actual creditor bar is not supposed to apply to the trustee. So she -- she's -- she's giving work to 544 in 106(a). It -- she says it relates to Official 1 544(a) and that it really can't logically apply to 544(b) when we understand what 544(b) is doing.
Lisa S. Blatt: And the government's -- reply brief is completely silent on our argument that 106 has the -- sorry, state law has the exact same relationship under (a), under (b). It's incorporated. And absent a second waiver of sovereign immunity, there is nothing -- there is no work that 106(a) does except as operate as a venue provision. It does no work as to waiving sovereign immunity as to the underlying claim, because she concedes 544(a) can never be used by a hypothetical creditor without a second waiver of sovereign immunity. So, under all of 544, it operates as a contingent waiver.
Justice Jackson: Isn't that what she's also saying with respect to (b)? She's saying there's no second waiver here, and you need it.
Lisa S. Blatt: Correct.
Justice Jackson: So you have to -- no, but, I mean, I think that makes her argument consistent. She's saying -- Official
Lisa S. Blatt: It's definitely consistent.
Justice Jackson: Right. She's saying 544(a) can go forward despite 106 because there's a second waiver. Here, there's not, so there shouldn't be.
Lisa S. Blatt: And all I'm saying is that there's no case nor any statute that has a waiver of sovereign immunity, certainly not with respect to a section, that's -- can -- that says we waive it as to the claim, but if you can -- you can only bring the claim and succeed on it if there's a second waiver. And after Congress made this very broad after this Court twice narrowed it, it just would be a strange thing, especially when state law's also incorporated in the very provision at issue in Hoffman, the preferential, which also relies -- it's the same -- it's the same thing. It wasn't --
Justice Jackson: Thank you.
Lisa S. Blatt: Okay. I'm -- if there are no questions --
Justice Kavanaugh: You can continue.
Lisa S. Blatt: Oh, I -- I -- oh, the one Official 1 thing on the 548 and 544, it's true this is beyond the two-year period, but let's just not forget that 544 is supposed to apply to everybody. It applies to every transferee. And it would be particularly odd to say: Well, Congress waived sovereign immunity with respect to both the two-year period under 548 and the generally four-year period under 548, except for the IRS, that they are -- they are except, even though every other transferee, and I guess with respect to all other governments, tribes, et cetera, don't get that two-year lookback period. And, as here, the -- the trustee had no choice because it had already -- the -- the -- the -- the -- the bankruptcy petition was filed after the two-year period had expired, and so the trustee acted promptly going after all -- all available assets. In terms of your question about how often are there creditors left over, if the trustee's doing his job, the answer should be none because the trustee is taking whatever claim, even if it's $5, and going after every single transferee within the time period. And Official 1 every transferee would have to give back this money. And just in terms of the equities, the notion that this is not a roadmap for fraud, if the IRS had just given back the money, they would have had six years to go after these people. They just fought the case under sovereign immunity, but they will always have 10 years. And this has a four-year statute of limitations. The IRS -- excuse me. The government itself has a six-year fraudulent transfer statute, so they have two years longer than all the states does. I think that's all I have if there are no --
Chief Justice Roberts: Thank you, counsel. Justice Thomas? Justice Sotomayor? Thank you, counsel.
Lisa S. Blatt: Thank you.
Chief Justice Roberts: Rebuttal, Ms. Dubin? Official 1 REBUTTAL ARGUMENT OF YAIRA DUBIN ON BEHALF OF THE PETITIONER
Yaira Dubin: Thank you, Mr. Chief Justice. Justice Jackson and Justice Barrett, you were both asking about 544(a), and I just want to clarify something. 544(a) does not require a second waiver of sovereign immunity. 26 U.S.C. 620 -- 6323 gives the trustee -- gives a hypothetical judgment lien creditor the right to prime a federal tax lien that isn't properly recorded. There's no suit required to do that. It just means that that tax lien is not valid against that hypothetical judgment lien creditor. The trustee can then step into the shoes of that judgment lien creditor. Again, no waiver of immunity required. And that is all encompassed within 544(a) and 26 U.S.C. 6323. Where 106(a) comes into being is to allow the trustee to effectuate that right within the bankruptcy proceeding to bring an adversary proceeding to do things to make sure that it is enforcing the priority of that lien. Second, I wanted to come back to Official 1 Justice Barrett's question about the defenses that a transferee could raise. This is in the red brief appendix at 9a, which is also Utah Code 2569. Those, the good-faith defense is a defense to a transfer, not -- to avoidance, not to recovery. The third thing is that the trustee said that, in our view, you can't go after the insiders. That is not correct. You absolutely should go after the insiders and can go after the insiders. Our point is that going after the insiders in an avoidance action doesn't affect the rights of the United States. It just affects the transfer vis-à-vis the insiders. Justice Gorsuch, you asked a few times about the argument that 544(b) looks and requires an actual creditor. That is the trustee's alternative argument, but on the primary argument, everyone agrees, all the circuits have agreed, it is the uniform practice for over a hundred years. And, in fact, this trustee has always pointed to a suit against the United States as the predicate for the 544(b) action. We don't think there's Official 1 any reason to reach the alternative argument in this case, but if you do, for the reasons we explained in our reply brief, it's wrong. Finally, stepping back and moving to the primary argument, there's been a bunch of questions about 544(b) and, like, what Congress would have wanted here. And the point that we've been making is that 544(b) has always been understood as a provision that brings liability that already exists into the Bankruptcy Code. There's no reason to think that when Congress generally waived immunity as to 544 and specifically said that it was not affecting the substance of those provisions that what it actually was doing was creating new liability that had never existed against the United States under state fraudulent transfer law. Finally, on 106(a), we think we have the much better reading of the text of 106(a). The trustee's reading essentially hinges on the words "with respect to," which cannot bear that weight. And if you -- if you add in the clear statement rule, we think we certainly should prevail on the text. But we have obviously been losing. We've lost this case in three courts, Official 1 and I think the reason is that there's some intuition that there's something strange about what's going on here, that somehow our reading renders 106(a) an empty gesture as to 544. But that's not right for the reasons -- we've discussed today. Under our reading, 544(a) has meaning, important meaning, as to the United States, and 544(b) has meaning as to any sovereign that's waived its sovereign immunity from a fraudulent transfer action, as four states have done. But the trustee is right that his reading would mean that 544(b) would have more effect as to the United States. But I submit that that's a bug, not a feature, of the trustee's reading. I don't think that Congress wanted to expose the United States to fraudulent transfer liability based on the terms set by state law, and I think we know that from the text of 106(a). But Congress also passed a federal fraudulent transfer provision in Section 548, and it selected a two-year lookback period. And there's every reason to think that Congress intended that lookback period to apply to the Official 1 IRS, not indeterminate limitations periods set by 50 states. We ask that you reverse the judgment below.
Chief Justice Roberts: Thank you, counsel. The case is submitted. (Whereupon, at 12:18 p.m., the case was submitted.)