Ransom v. FIA Card Services, N.A. - Oral Argument - October 04, 2010

Ransom v. FIA Card Services, N.A.

Media for Ransom v. FIA Card Services, N.A.

Audio Transcription for Opinion Announcement - January 11, 2011 in Ransom v. FIA Card Services, N.A.

Audio Transcription for Oral Argument - October 04, 2010 in Ransom v. FIA Card Services, N.A.

John G. Roberts, Jr.:

We'll hear argument first this term in Case 09-907, Ransom v. FIA Card Services.

Mr. Burke.

Christopher P. Burke:

Thank you, Mr. Chief Justice, and may it please the Court:

In 2005 when Congress passed the Bankruptcy Act, it made a policy decision to limit judicial discretion on a case-by-case basis in the area of reasonable and necessary expenses.

It did so by creating a formula that entails an aggregate set amount of expenses for an individual.

Now, Congress could have created this from scratch.

It could have used an arbitrary figure.

But instead, there are figures that the IRS already had, based on Census Bureau statistics, that said nationwide, in a certain area, an individual would spend this much a month on average.

In the case of Mr. Ransom, that's approximately 2500 a month.

Forgetting about how it's divided up, if I had 100 people come in and answer the following five questions the same way Mr. Ransom did, and that's age, location, household size, gross income, and if you have a vehicle, how many, they would all get $2,500 standard aggregate deduction, which works out to $150,000 over a five-year period.

Now, the crux of this is whether or not courts are allowed to dig in and cut out pieces of the standard aggregate amount.

Samuel A. Alito, Jr.:

Why is that the crux of it?

Congress made reference to the local standards, right?

Christopher P. Burke:

Yes.

Samuel A. Alito, Jr.:

And were the -- was the commentary in the Collection Financial Standards in existence at the time when Congress enacted this provision?

Christopher P. Burke:

There was a Collection Financial Analysis that was in place, and it was noted in 1998 as a prior version of the bill that ultimately wasn't passed.

Samuel A. Alito, Jr.:

And that explains what the IRS understands the local standards to mean; isn't that right?

Christopher P. Burke:

I would disagree with that.

I would say -- well, it would -- it would explain what the IRS means, but that's where I would end it, because the IRS standards are used to collect taxes.

They are discretionary.

They--

Samuel A. Alito, Jr.:

Well, I understand that, but Congress decided to make reference to the local standards in this bankruptcy provision, didn't it?

Christopher P. Burke:

--Standards.

Samuel A. Alito, Jr.:

Yes.

Christopher P. Burke:

It didn't go beyond that.

Samuel A. Alito, Jr.:

And this -- and at the time when it did that, there was official IRS commentary regarding the meaning of those standards, correct?

Christopher P. Burke:

For the IRS to use in collecting taxes.

Samuel A. Alito, Jr.:

And your argument is that Congress intended to adopt the standards promulgated by the IRS, but not the IRS's interpretation of the standards.

Christopher P. Burke:

Correct, not their methodology or interpretation.

Ruth Bader Ginsburg:

Doesn't the chart say "ownership costs"?