United States v. Texas

PETITIONER: United States et al.
RESPONDENT: Texas et al.
LOCATION: City Council of Hialeah

DOCKET NO.: 91-1729
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 507 US 529 (1993)
ARGUED: Mar 01, 1993
DECIDED: Apr 05, 1993

James C. Todd - on behalf of the Respondents
Thomas G. Hungar - on behalf of the Petitioners

Facts of the case


Media for United States v. Texas

Audio Transcription for Oral Argument - March 01, 1993 in United States v. Texas

William H. Rehnquist:

We'll hear argument first this morning in No. 91-1729, United States v. Texas.

Mr. Hungar.

Thomas G. Hungar:

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

This case involves the question whether the United States retains its long-standing common law right to collect prejudgment interest on debts owed by state and local governments.

The case arises in the context of the Federal Food Stamp Program.

Under that program the United States distributes food stamps to participating states for issuance to eligible individuals.

States like Texas that choose to distribute food stamps through the mail are contractually liable to the United States for a portion of the value of the food stamps that are lost or stolen in the mail.

In 1986 and 1987 the United States asserted claims against Texas amounting to over $400,000 for losses arising out of the State's issuance of food stamps in the mail.

Both the district court and the court of appeals upheld the validity of those claims, but the court of appeals also held that the United States was not entitled to collect prejudgment interest on the State's debts.

We submit that the court of appeals erred in reaching that conclusion.

As this Court has repeatedly indicated, an award of prejudgment interest is in keeping with fundamental principles of fairness and equity and serves to insure that neither party to a dispute benefits or suffers from a delay in payment.

For those reasons the right of the United States to collect prejudgment interest from the states and from local governments has long been recognized as a matter of Federal common law.

Respondents argue that Congress intentionally abrogated that long-standing common law right when it enacted the Debt Collection Act of 1982, but the language and purpose of that act and traditional canons of statutory construction require rejection of respondents' argument.

The language of the Debt Collection Act does not address the question at issue in this case.

The act says only that states are not persons for purposes of the mandatory prejudgment interest and delinquency penalty provisions of 31 U.S.C. section 3717.

Standing alone, that exclusion from the scope of section 3717 does not suggest that Congress intended to go further and to abrogate the existing common law remedy.

The common law remedy is discretionary and flexible and allows courts to weigh the interests of the state better in determining whether and to what extent to award prejudgment interest.

Anthony M. Kennedy:

If the state had just refused to pay, Mr. Hungar, and the United States had sued the state, which was not the case here, would it have had a choice to proceed under the Federal common law or under the Debt Collection Act, or does the Debt Collection Act not provide some substantial cause of action?

Thomas G. Hungar:

In this case the United States would not have had the choice to proceed under the Debt Collection Act because the Debt Collection Act's prejudgment interest remedy expressly excludes the states.

Anthony M. Kennedy:

I mean for the substantive amount owed, for the principal amount owed.

Thomas G. Hungar:

Well, the Debt Collection Act doesn't create a cause of action.

It just, it sets forth certain remedies and certain specific contexts for the Federal Government's debt collection efforts.

It's not even a comprehensive scheme in that respect.

Anthony M. Kennedy:

All right, so there's no substantive liability under... substantive cause of action created under the Debt Collection Act?

Thomas G. Hungar:

Well, where the... that's correct.

Anthony M. Kennedy:

For the principal sum.

Thomas G. Hungar:

That's correct, Your Honor.

The substantive cause of action comes from the Food Stamp Act.

Anthony M. Kennedy:

Would the... and is that the common law cause of action that the United States would proceed under in this hypothetical case where the United States is initiating the suit?

Would the United States then have a choice to say well, we'll proceed under the statutory cause of action or under the Federal common law, or are they the same thing?