Central Va. Community College v. Katz - Oral Argument - October 31, 2005

Central Va. Community College v. Katz

Media for Central Va. Community College v. Katz

Audio Transcription for Opinion Announcement - January 23, 2006 in Central Va. Community College v. Katz

Audio Transcription for Oral Argument - October 31, 2005 in Central Va. Community College v. Katz

John G. Roberts, Jr.:

We'll hear argument next in Central Virginia Community College versus Katz.

Mr. Thro.

William E. Thro:

Mr. Chief Justice, and may it please the Court--

This case involves a conflict between two constitutional values.

On the one hand, Congress has the sovereign power to make laws which apply to everyone, including the States.

On the other hand, the States have sovereign immunity from all aspects of suit.

In the past, this Court has reconciled this conflict by drawing a line between sovereign power and sovereign immunity.

States are bound by Federal law, but the States are immune from monetary damages for violations of those laws.

In the bankruptcy context, this line means the States are bound by the discharge decisions, but that the States are immune from the trustee's attempts to augment the estate through monetary judgment.

Sandra Day O'Connor:

Can you tell us how often States are creditors in bankruptcies around the country?

Do you have any idea?

William E. Thro:

There is some information to that effect in the amicus brief of Ohio and every other State of the Union, Justice O'Connor, but my recollection is that the States are creditors in probably the majority of bankruptcies around the country.

Sandra Day O'Connor:

So, if you're correct, how would the result you want affect all the other creditors in these bankruptcies?

William E. Thro:

It would have some impact on the other creditors, in that you would not be able to augment the estate by collecting a monetary judgment from the State.

Sandra Day O'Connor:

And probably, on your theory, States can disregard the automatic stay that issues--

William E. Thro:

No, not at all--

Sandra Day O'Connor:

--when a bankruptcy--

William E. Thro:

--Your Honor.

Sandra Day O'Connor:

--commences?

William E. Thro:

No.

Under our... under our theory, the... theory, the States are bound by the automatic stay.

The States are also bound by--

Sandra Day O'Connor:

How is that, on your theory?

William E. Thro:

--Well, because--

Sandra Day O'Connor:

Why wouldn't the sovereign immunity extend to that?

William E. Thro:

--The automatic stay is an exercise of sovereign... of the sovereign power of Congress, just as the discharge decisions of a bankruptcy court are an exercise of the sovereign power of Congress.

The States are bound by the discharge decisions.

States are also bound by the automatic stay.

Where we draw the line is where the trustee attempts to get a monetary judgment as a means of augmenting the estate, which is what is happening with this case.

Anthony M. Kennedy:

Well, why don't we say that that's the exercise of the sovereign power of commerce, just... of Congress, just like you said?