00:00:00.009 - 00:00:21.200

Um, Good morning and thanks to everyone for coming. I'm Craig Olett from the Wilmer Hale and I am from the Education Committee of the Fourth Circuit from the college. And so on behalf of the Education committee, uh, I want to say thanks to everyone for coming.

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I hope that this is entertaining, informative, interesting, um, um, thanks in particular. Um, to Chris Meyer from the college for coming all this way, um, and joining us, um, obviously to the faculty. Um, Um Certainly want to thank my uh other members of the education committee,

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David Cooney and Michael Bernstein for the assistance in putting this together. I should, as always, say thank you. Um, to, to Beth Wiggins from the judicial center and in case there's anyone who doesn't know this, anything that goes well logistically happened that way because of Denise's

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work. Um, I don't, I think most of you know that already, but in case there's anyone who wasn't aware of that, um, um, and obviously, um, uh, thanks to the folks at Covington who have hosted us and given us use of this terrific space and. To

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that effect, um, I'm gonna turn the mic over for a moment to my friend Mike Baxter. Thank you. Welcome to Shay Covington. We moved here almost exactly 2 years ago this week, and I'm delighted to welcome the friends and fellows of the American College of Bankruptcy.

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This room is known as the Rough Auditorium, and it was so named not because of its physical condition, which you can see is pristine. Uh, but it was named to honor our late partner Charles Roth. Uh, Chuck was, uh, the served as US attorney for the

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District of Columbia. He was president of the DC bar. He was corporation counsel for the District of Columbia and White House counsel to President Clinton, and he later successfully defended President Clinton in his impeachment trial. Um, again, I want to welcome all of you, uh, to

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this event. Thanks. Thanks. So the, the, the theme of these two panels that we're going to do this morning is, is, so in the first panel, and I'll introduce the panelists in 2 seconds though, you all know who they are, will be a discussion of the

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JI case in particular that was argued. Earlier this month in the court, and we hope to use that as sort of a launching pad to talk more broadly about bankruptcy appeals and how they are like and unlike other appeals and so that's that's the gist of

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what we what we plan on covering. um, so your first panel is going to be about the JI case. It is true that the case was argued early this month. It is under advisement. If you happen to learn something interesting in this panel and you run

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into a Supreme Court justice in the supermarket, please keep that to yourself. The idea here is not to do anything that ends up affecting the case, but just to have an interesting conversation. Um, we hope this is interactive. Um, really appreciate Chris Landau who argued against

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Danielle in the case coming. Um, and, um, you know, do want to make clear that this is intended just to be interesting and nothing more than that. um, so Bob Long will be um moderating this panel. Bob is a terrific and renowned appellate lawyer here at

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Covington and the members of the panel, um, Judge Carrey from the District of Delaware, David Cooney. Uh, from Wyford and Taylor, who filed a very interesting amicus brief on Chris's side of the case, um, um, uh, on behalf of a number of professors and my colleague

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Danielle Spinelli who argued on on what we consider our side of the case on behalf of the petitioner truck drivers. So that's enough words for me. Let me turn it over. Denise, what did I miss the program is being videoed. Got it. So if anyone wants

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to chime in, I guess this is a portable mic, so I'll hold on to it, but try not to speak into it. And um, if anyone wants to chime in to signal and I'll pass this to you, and that's enough words for me, so when I

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turn it over to Bob. Well, good morning everybody. Uh welcome to Covington and Burling. It's great to spend this time with you this morning. For those of us who love Supreme Court cases and appellate cases, it's just such a treat to uh talk about one for

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a few hours when you don't have all the angst and the pressure of. Having to try to win the case for your client or having to decide it correctly if you're the judge, so for me this is like a busman's holiday, you know it's it's fun,

00:05:01.660 - 00:05:20.959

but again sort of coming from that perspective as the ignorant appellate generalist, I'm guessing probably everybody in the audience knows. A lot about this case and probably more than I do, but since Danielle, you were one of the oralists, one of the lawyers who argued just

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in case there's somebody who's not completely up to speed on this case, could you just sort of set the stage for a minute? What's this? What is this case about? What what is the issue? So The issue is whether there are any circumstances in which estate

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assets can be distributed to creditors in violation of the normal priority scheme, and the way it came up is that. Um, Jedvik, who is the respondent, is a trucking company that filed for bankruptcy in 2008. I immediately before it filed, it closed its plant and fired

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many of its employees without notice, um, including our clients who are a class of truck drivers, um, under the, the state equivalent of the Warren Act, our clients had claims for. You know damages back pay essentially resulting from the failure to give the required notice um.

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In the bankruptcy case, essentially, Jbek ended up being liquidated to pay its secured creditors. The main asset of the estate that's relevant here was a fraudulent transfer action against um. Against the participants in an LBO that preceded the bankruptcy and the unsecured creditors committee was given

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the right to prosecute that action, um, it did so and eventually you know when the state was running low on cash that suit was settled um and it was settled in such a way that um. Administrative claimants were paid and Some unsecured claimants were paid, general

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unsecured creditors, but our clients who had priority claims under 50784 and should have been paid before the general unsecured creditors in our view were not paid. Did they happen to get anything as a result of first aid orders? They did. They did, um, I mean, obviously

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those are separate claims but they did get, they did get paid on those claims, um. So, you know, so the question and then the case was dismissed. It was you know, essentially a structured dismissal. And so the question is, is that or is that not permissible?

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So now we have, we wanted to have balanced. uh, David was uh involved on the other side of the case. Is there anything you want to add or just right at the outset here you wanna reserve for I, I like, I think we should jump right

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into the heart and soul of this case. Look like David Dewait did you it was, it's clear to me that nobody really knows what the Javit case is all about, and that, and that includes the Supreme Court. There are at least 3 interpretations of what this

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case was about. They There was the public perception that this was a structured dismissal case, which petitioners denied in their opening brief in footnote 2. And then there was a discussion about whether or not you could do a settlement which which violated the priority scheme which

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became sort of the the early on statement of the issue and then later became structure dismissal and the court got offended, but the real issue I think in the case. That I think Chris, you argued is whether you can ever have any pre-planned distribution in a

00:09:04.090 - 00:09:24.580

settlement that ever violates any of the priority scheme and what the court started getting into, but we don't think they fully understood this case implicates everything from the moment the case begins until the end. So the public saw this as a dismissal case, but it was

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really a birthing case, and we looked at the first day motions and and you know argued essentially or wanted to argue that if this case stands for the broad proposition that you can never have a settlement, you can never have a distribution. That violates priority, then

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all of the uh first day motions, including the doctrine of necessity, will go away. So I, my theory of the case is that this is another Stern v. Marshall and that the court will say, you know, this case has a very limited application and it'll turn

00:10:05.039 - 00:10:20.729

out to have a monumental application. Because if you look at some of the early briefing, they say, well, if you can't do this, you can't do cross collateralization, you can't do the uh pre-petition uh critical vendors uh and there's a government, the government argued that right,

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so you can't do and, and then just the final word because the doctrine of necessity was the elephant in the room and nobody really wanted the court to get into it. So Danielle politely said, well, you don't really have to get into it. And the solicitor

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general said, Well, we think if you rule our way it would abolish it, but you don't have to get into it. And I'm sitting there like an amicus. I mean, I want to raise my hand and say excuse me, but you are into it. And so

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I, I, my job as amicus, you know, I'm a wannabe, not don't have their enviable position. My job is to be the prophet. And so my prophecy is, this is Stern v. Marshall in terms of its broader significance, it's gonna be huge. And I think the

00:11:07.000 - 00:11:21.330

Solicitor General made it clear if they get the ruling they want, they're going after the doctrine of necessity next. Those are two rather I will say it's unusual to start off with just kind of a range finding question, you know, what are we talking about get

00:11:21.330 - 00:11:38.010

such a disparate view? We, we maybe we give Danielle a chance to reply that Judge, do you want to present the judicial view before we let the other advocate reply to this? What, what, what are we basically dealing with here? or is it uncertain until the

00:11:38.010 - 00:11:57.650

court tells us? Well, first, I'll start with the disclosure. I have approved structured dismissals. Um, both before and after the Third Circuit's decision, which affirmed. Um, the bankruptcy court and the district court's decision permitting the structure dismissal in JIC. Uh And my approach to those is

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um to tell the parties when it appears clear that there's not going to be a confirmed plan and a conversion will result in nothing for a Chapter 7 trustee to administer. Uh, and a straight dismissal, a clean dismissal, however you want to describe it. Leaves parties

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with a mess that I think in fairness, the court can and should try to clean up, but I also tell the parties. Um, although the absolute priority rule, at least in my view, doesn't apply to those situations because we're dealing with the settlement, not a confirmation

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of a plan. Keep in mind the absolute priority rule and try not to be. Um, too abusive with it, I guess might be the way to say it. Um You know what, I, I, I've said this, Danielle's heard me say it and Craig's heard me say

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it. A fair argument can be made. That Congress never intended. The the rule which governs settlements to be a trapdoor out of a chapter 11. In fairness, the code says there are 3 ways out. Confirmation of a of of a plan which is the most elegant

00:13:01.349 - 00:13:21.320

exit, I think, conversion to chapter 7 liquidation or dismissal. Um, but a body of law has grown up actually in a, in a fairly uniform set of standards for approving settlements has developed in our circuit and in others. So in, in my mind, there is an

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element of fairness that the judge considers in terms of deciding how and whether to dismiss a case when the parties have come to some kind of deal, um, so. I guess what I would say in short is I'd recognize the issues that the petitioners have raised,

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and they're valid. Um, but When you know today there'll be no congressional correction or action, OK? And who knows, as David says, what the Supreme Court will say and what the ramifications of that will be. It seems to me it's a, it's a principled, practical way

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to fix an exit which leaves the least amount of damage that you can under the circumstances. But Judge Carey, before we get to Danielle's rebuttal. Don't, don't you agree? It seems to me. As a threshold proposition, can we agree this is not a structured dismissal case

00:14:14.450 - 00:14:33.140

because the public is walking around. This case was about whether absolute priority applies to structure dismissals. You said it's not a structured dismissal case, and the court had some concern about what was the issue before it, and the circuit split was on distribution and settlements. That

00:14:33.140 - 00:14:48.549

was that was the split that made them take the case. It's really going to come down, I think, David, to a question of whether Before confirmation of a plan, can you have any distribution of the state assets whether it's under a settlement, under a 363 sale,

00:14:48.559 - 00:15:05.059

which all of the cases, many of the cases I see are, are now, um, but I, I'm unable to predict. How the court will answer the question and of course, they can fashion the question any way they like, um, not that they'll take liberties, but It's

00:15:05.059 - 00:15:20.349

up to the court. So I mean I, I, I don't agree with David's view of the the breadth of this case and I think that the, the issue of what is the question presented was a bit overblown. I mean the, the issue before the court is

00:15:20.349 - 00:15:42.885

was this order lawful. And the question that's implicated by that is can you take a state assets um when there's no reorganizational purpose for deviating from priority and distribute them in violation of priority um on the theory that somehow that produces a better outcome for some

00:15:42.885 - 00:16:02.809

creditors and you know I think that in order to resolve that question there's absolutely no need that the court needs to reach. For instance, critical vendor orders which are done on the theory that they are necessary for the debtor's reorganization and will thus result in, you

00:16:02.809 - 00:16:17.250

know, more money going to creditors higher up the chain. I mean this what happened here was not about that at all. It was, look, we have this asset how are we going to divide up the proceeds of the asset? Um, we're not reorganizing, we're we're liquidating.

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And I, I think the court understands that and I think the court will will not write its opinion in a way that will, you know, eviscerate the doctrine of necessity they're usually pretty careful not to address issues that they don't have to address and I, you

00:16:32.559 - 00:16:46.080

know, I think we made it, I mean, at least I tried to make it pretty clear in the briefing and argument that, you know, we believed those orders are completely distinguishable and that the court just doesn't have to go there in order to answer this question.

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I mean I totally agree the court, to be clear on my point, the court is not going to touch. Overtly, the doctrine of necessity. And, and they picked up on that, or at least you reading the transcript, you they sort of got that. But the solicitor

00:17:02.359 - 00:17:18.989

general also was very clear, if they get the ruling they want. They said very plainly this case would would impair the doctrine I don't think that's what I don't I don't I to be fair, I don't think that's what um they argued um I think the

00:17:18.989 - 00:17:38.239

assistant what the assistant said is, you know, the US trustee as an institution, you know, generally opposes structured dismissals I'm sorry, generally opposes critical vendor orders but that the court did not need to reach it in this case that this case did not. Necessarily implicate that.

00:17:38.250 - 00:17:53.500

That is, I mean, that's how I understood. You know, there was no discussion surrounding what I think could have been an important issue, and that is. What's the value of the asset that was given up? OK, I don't know anything about the, the specifics, but it's

00:17:53.500 - 00:18:11.599

this classic. Brought every time, fraudulent transfer claim arising out of an LBO. Now, it did survive a motion to dismiss, right? Um, but, uh, there was no determination in the bankruptcy court. As far as I know, no one asked for it, uh, about the value of

00:18:11.599 - 00:18:29.479

the asset and One thing I think I won't speak for my colleague. Um, it seems to me that nobody viewed the asset as being worth very much even though committees bring those claims all the time. Do you have a view about that? Well, I mean, I,

00:18:29.560 - 00:18:43.719

I think all we know is we know a few things. We know the claim was settled for $3.7 million. We know that at the time it was settled, the estate was running low on funds and so the committee had an incentive to, you know, to settle

00:18:43.719 - 00:18:59.739

and and get this done. Well, the case was 4 years old and there was nowhere else to go, right? I mean, it had to end, correct, that's right, um, so you know, as to. You know what would have happened if there were more resources to litigate

00:18:59.739 - 00:19:19.619

the fraudulent transfer claim and what were the merits of the claim, um, you know, I haven't looked closely enough at it to know but yes but um you know. Certainly this is a situation in which the the company was incredibly over levered and pretty much immediately

00:19:19.619 - 00:19:38.300

collapsed so I don't think this was a frivolous uh claim but you know there as you're right, there was no assessment of precisely what the value was other than that the settlement amount was reasonable and that you know that wasn't something that our clients were challenging.

00:19:40.430 - 00:19:55.140

Well I think that goes to, I think the court actually I think the first question. Justice Sotomayor asked you was, if we reverse, are you gonna sue, so. In other words, you know, is this really your question. What do you get, if we give you a

00:19:55.140 - 00:20:10.229

victory, what are you gonna do with it? I don't think they know what to do with the fact yet. That the fraudulent conveyance claim may or may not have had value because there's there's, again, there's two views on, on that issue. One, Justice Breyer's view, there's

00:20:10.229 - 00:20:27.300

a priority scheme 54321. That was the way he expressed it. You're proposing you can go 12345. Where's the code so you can do that. That's independent of whether there was any value or not to be saved. I mean, so the, the strident argument that I think.

00:20:27.849 - 00:20:43.589

I was implicitly arguing against was that you do have to ask your question. You do have to say what's in it, who's hurt, who's benefited, who's that's sort of the equitable, I forget the expression that that they use, but you know, where somebody's benefited, nobody's hurt.

00:20:44.000 - 00:20:58.310

Yeah, the, the, the Pareto optimal solution, which, uh, to be clear, this was not our clients were harmed by this. Well, I'm not sure that I know, but it was argued, but I don't know if the court. It was clear one way or the other and

00:20:58.310 - 00:21:14.030

I don't know they knew yet what to do with that if they thought it was true. I mean, there was, the thought was there's a binary proposition, whether you're benefited or not, we can't do this because you're 12345, not 54321. That's what Breyer said. And, and

00:21:14.030 - 00:21:27.540

they may not make a finding determination. Well, in this case, there was no value, so it's OK. But, but I think that's where most of us want them to come out. They want a little bit pragmatic. My view was we wanted, I wanted fair and equitable

00:21:27.540 - 00:21:44.099

defined. Historically, the way it's always been fine, which is a very elastic flexible doctrine. So if absolute priority or fair and equitable applies, it applies in a very elastic way. I think that's consistent with what you're suggesting. It is now just before we came in, Danielle,

00:21:44.180 - 00:21:59.599

you were saying you think this case really is more about policy considerations and statutory interpretation. Oh no, that's not what I intended to say. What I, what I, what I was, what I was saying is. Um, I, I think this is, uh, an interesting case to

00:21:59.599 - 00:22:15.229

discuss because it's not, it's not a case that focuses on one piece of text. It's a case about the entire structure and purpose of the code. There's no question it's a statutory interpretation case. Um, it's just not the kind of statutory interpretation case where you can,

00:22:15.479 - 00:22:29.954

you know, take one piece of text and scrutinize it and decide. What it means, um, because there is no one particular piece of text that addresses this and that's why, you know, when I started out saying there's nothing in the code that permits this, Justice Breyer

00:22:29.954 - 00:22:43.795

immediately came back at me and said, Well, what prohibits it? And you know, so that's, that's the question can you draw from the structure of the code and inference that this is either permitted or prohibited. So how do you, how do you describe the um statutory

00:22:43.795 - 00:23:01.729

construction rule that the court's going to apply? I don't, I don't know. Is it a plain meaning thing or is it something else? Yeah, this is, um, Craig actually suggested this as we were talking about ideas for this panel, and I think Justice Kagan really this

00:23:01.729 - 00:23:18.810

at one point in the oral argument, so maybe I'll just read what she said and then ask for the different views. Justice Kagan said, Here are two different kinds of bankruptcy schemes. One scheme just says every time you distribute assets you have to follow the following

00:23:18.810 - 00:23:38.920

order 12345. That's it. You just have to follow that order. That's one bankruptcy code. Here's another bankruptcy code that says presumptively. You have to follow 12345, but if there's a Pareto superior solution, in other words, a solution in which some people are made better off and

00:23:38.920 - 00:23:55.780

nobody gets a worse outcome, if there is such a solution, you can go with that, and that might be a completely sensible bankruptcy provision for Congress to have enacted. The question is whether Congress did enact it. And what you can point to in that bankruptcy code

00:23:55.780 - 00:24:17.069

that suggests that the continual statement that it's just 12345 is subject to a kind of equitable exception for Pareto's superior outcomes. So maybe David will start with you I thought that was. I, I love Justice Kagan. I thought it was a very unhelpful observation. Well, now

00:24:17.069 - 00:24:35.640

you know, arguing with the judge usually because you know it's too deeply philosophical. And um it, it really poses a question in the court. Struggles with doesn't really fully understand the code because they've never seen bankruptcy up front and close, so they have a very, very

00:24:35.640 - 00:24:48.619

difficult time getting it. You know, Judge Stuart Bernstein in New York once told me, I think this semi answers the question. I said, but doesn't the law provide X, Y, and Z? But that's just the default rule. And, and, and we do what we need to

00:24:48.619 - 00:25:05.920

do. And, and, and that's the second example, you know, the second code that that there's a code of default rules, but the bankruptcy courts kind of, you know, work it out, you know, some way that makes sense. But I, I just don't think her question. Helps

00:25:05.920 - 00:25:23.520

us understand the answer. The riddle here, we had a bunch of overlapping statutory sections and no one really knew. I don't think the court knew it was 507, 349, 1129B 363B. You know they were coming and going. They didn't know what section controlled and we grappled

00:25:23.520 - 00:25:34.829

with that, you know, at the moot court if I'm allowed to say this, you know, we said, as everybody says in your mood, first question you're going to get asked is where's the code provision. And, and, and they asked that and, and everybody had, you know,

00:25:35.099 - 00:25:51.319

there were 5 different answers. So you couldn't put it together unless you took a really long 100 year look at the whole doctrine, you know, where did fair and equitable come from, where did absolute priority come from, how flexible was it applied, and we took a

00:25:51.319 - 00:26:06.589

look at that, you know, in the brief I did. I wanted to give the court some historical perspective that if, if you look carefully at absolute priority, the commentators and the scholars have hated the doctrine. And and and it got, you know, it got submerged as

00:26:06.589 - 00:26:20.079

the code developed and, and now we have this sort of this, you know, reemerging notion that no, it's got to be 54321. So I would tell Justice Kagan if I had been answered, asked, but I would have taken me a week to think about the answer,

00:26:20.689 - 00:26:33.189

which is what makes me different than you because you're better. I would have said, look, you know that there's a code as written, there's the code as applied, there's a code that looks back historically and understands where it came from and what it's trying to do.

00:26:33.839 - 00:26:53.079

That's a deeply flexible code. an equitable and absolute priority have deep, equitable, flexible routes. And I would say that's the code we live with and and that's where you find the answer to this kind of question. Well, Judge Ambro and I were talking about that in

00:26:53.079 - 00:27:07.170

the train on the way to DC yesterday, and he brought up the phrase that was decided in the, in the oral argument that that is it's a statute that should have play in the joints, and that's what you're talking about right exactly. Yeah, and, and you

00:27:07.170 - 00:27:22.040

know I agree that the bankruptcy code has play in the joints and it has to. I think the question is whether what we're talking about here is play in the joints or actually, you know, breaking the spine and. I mean, I think you know my my

00:27:22.040 - 00:27:39.599

view of the code is just a bit different, which is that you know it's a statute like other statutes. Congress set down specific rules to guide what happens in bankruptcy court. There are situations, you know, where in the intrus disease bankruptcy courts have to make judgment

00:27:39.599 - 00:28:00.719

calls and there is room to um. You know Use principles of equity in making those judgments, but that there is not, you know, an equitable exception to absolute priority, which is really the fundamental structure of the code. And I think judges would tell you that they

00:28:00.719 - 00:28:15.099

don't think they should live in a world where they are free to decide, well, whatever's fair, there has to be some standard to be applied and I wonder, I mean I. The title of our session is Lessons learned from this case. I wonder if one lesson

00:28:15.660 - 00:28:33.780

may be when we see what the court ends up deciding that the sort of coming at this from the perspective of someone who is steeped in bankruptcy law really has internalized all of these provisions and how they fit together this can sometimes almost be a disadvantage

00:28:33.780 - 00:28:52.380

at the Supreme Court because the justices are not steeped in it. They have been doing these statutory interpretation cases by starting with the statutory language, often ending with it, and you know that sort of argument which may be just deeply persuasive to someone who has lived

00:28:52.380 - 00:29:11.119

with the system for years can can really fall on deaf ears at the Supreme Court I think that was the advocacy challenge about this case for both sides is, you know. This is a case about drawing inferences from the you know the the overall structure of

00:29:11.119 - 00:29:28.550

the code as well as you know as well as its specific provisions and it it it is difficult to to make that kind of argument persuasively when you know your audience doesn't have the same sense you do of of the way the bankruptcy code is structured

00:29:28.760 - 00:29:46.180

um you know which is something that I think just. At least for me, it took a very long time to develop, um, and So, yeah, I mean, I think that's. It's a very challenging situation and you know, I'm not sure. You know whether we did the

00:29:46.180 - 00:29:59.530

best job we could, but that certainly was what we viewed as the advocacy, let me probe a little deeper because it seems to me you have sort of a problem that's almost the other side of the coin of the problem that your opponents have. They're looking

00:29:59.530 - 00:30:21.229

for sort of a. Easy hook statutory hook to hang their argument you have this uh problem. I would say that look, there's practical, very practical issue here sometimes the best possible outcome is gonna be one of these structured dismissals where you don't follow absolute priority. Nobody's

00:30:21.229 - 00:30:32.709

really gonna be hurt by that. Some people are gonna be made better off. It makes a lot of sense. And you know it seems to me you had a couple of ways to deal with that. You sort of tried both you tried to say, well, really

00:30:33.239 - 00:30:47.449

uh we we were made worse off. It's not true that we we were hurt by this and we were having a little discussion back and forth about how realistic is that there was some of the oral argument and the other was to say. You know, too

00:30:47.449 - 00:31:05.060

bad. You know that if that's a problem, that's something Congress needs to fix. The Supreme Court shouldn't, and I think both are true. I mean there's I mean, each, each approach had some difficulties, but I do think fundamentally both were correct. I mean, first, I mean

00:31:05.060 - 00:31:24.650

our clients were harmed because their right to pursue Sun and CIT on account you know to recover on what everyone agrees, um, were their valid Warren Act claims was taken away from them. What the value of that right was, um, I think it's clear that the

00:31:24.650 - 00:31:40.060

value is greater than 0, but it's, you know, exactly what it was is hard to determine, but I don't think that should matter. I mean one thing that. One thing that struck me when I was preparing for the oral argument and going back and reading through

00:31:40.060 - 00:31:56.859

all of the, you know, foundational priority cases was it was argued over and over in those cases this isn't hurting anybody. The the creditors who were excluded wouldn't have gotten anything in a different in a different scenario you know they wouldn't have gotten anything in a

00:31:56.859 - 00:32:15.329

liquidation or um you know in the Os case where. You know, some family farmers wanted to keep an equity interest in their farm, um, and, and shut out the the unsecured deficiency claim of their mortgage holder. You know they said look this has value to us

00:32:15.329 - 00:32:31.479

it has no value to the bank none at all and the and the court's response was that's not the inquiry we're not going to engage in that um whatever value there is goes it has to be distributed in order of priority and we don't look at

00:32:31.479 - 00:32:46.680

how much what the value is and then decide that it's OK to, you know, to give it to unsecured creditors because it wouldn't benefit the creditors above them in priority. Does that really make sense though? I mean, your opponents, you, you tried or somebody on your

00:32:46.680 - 00:33:00.640

team there's even an Article 3 problem there at some point. Yes, that's a good point. I think, I think, I think it was raised in some of the briefs that Dick Lee, who's at Saint John's, wrote a brief and he started out by saying if you

00:33:00.640 - 00:33:16.099

don't have damages, you don't have a cause of action. You know, kind of a nice appellate. I think he was, he was trying to do. The court something they could grab onto because we were we were looking for the perfect statutory answer which didn't exist. So

00:33:16.099 - 00:33:27.800

how about this? How about the lack of damages? Look, I will predict and by the way, there's a a lot right about both sides of the argument here. This is a very difficult case. I don't think the court is going to find. That there was value

00:33:27.800 - 00:33:44.189

in what what was taken away from from the drivers because the findings below supported that there was no value and I don't think they're going to overturn the factual determination and I think as Chris pointed out in the oral argument. You know they had the the

00:33:44.189 - 00:33:57.550

judge said you'd have to have your head examined to take this fraudulent conveyance case on a contingency. I think that appeared in every brief. Nobody stood up and said, Wait a minute, Judge, we will. So you know I think we have to accept the findings of

00:33:57.550 - 00:34:16.198

this case are there was no value. So now we're back to another pragmatic, oh goodness, so there's absolutely no value as found conclusively there was a suggestion that the oral argument that in fact the Uh, former employees had conceded in the courts below that there was

00:34:16.198 - 00:34:26.599

no value, but they said all we wanna do is get the law right, and I think, you know, Justice Alito almost fell out of his chair. He said, what you're just here, you know, we're not doing advisory opinions, you know, if you didn't have any pragmatic

00:34:26.599 - 00:34:41.000

and you were struggling to find them, no, we're gonna, we want the law to be right. And I thought what we all do, well, look, there is some value to what we do in the federal courts that it be viewed as fair, OK, there is. It's

00:34:41.000 - 00:34:57.909

so important, and I don't think you can minimize that. Well, so which way does that cut though on the? Does that mean, does that mean you can go into court without standing and say it has to do with making principled decisions. Well, I, I, yeah, right,

00:34:58.229 - 00:35:13.719

so we can't disagree with that. Well, I still think look, it seemed to me I do think the I don't think the court's going to get to the issue of value. Right or wrong, I don't think they're going to wade into that. I think they're gonna

00:35:13.719 - 00:35:26.610

decide either value or not, this is wrong or right. I don't, I don't think they're going to base the decision on we find there was something of value they gave up. I think they're just gonna say you can or you can't do it, and we're not

00:35:26.610 - 00:35:39.300

gonna take away that right and and and guess whether or not you know they would have gotten some value out of it. But I mean just to go back to what I think. I think this case is very consequential. I don't want to give up on

00:35:39.300 - 00:36:00.760

what I think is a very vital point here. If you go back and look at the first day motions, which we did, the drivers got a, I think they got a. Uh, critical vendor payment of $6 million on day one. That payment primed all of the

00:36:00.760 - 00:36:21.229

all the administrative creditors in the case. Those administrative creditors included everybody who hadn't yet shown up. Everybody who hadn't yet provided goods and services to the estate, all the future claimants. So we had a massive priming. Going on on day one that totally took the priority

00:36:21.229 - 00:36:39.770

system of 507 or whatever and just brushed it aside because that's the way bankruptcy courts do business. And you know, in my view that I was dumbfounded that the drivers who were the major beneficiary of a distortion of priority were now arguing but we have to

00:36:39.770 - 00:36:58.149

have it at the end and more important for the system, and my view is, you know what's going to happen later. Someone's going to notice that the critical vendor motions are priming all the administrative claimants and that that's a distortion of the priority system. And, and

00:36:58.149 - 00:37:12.830

they're gonna wonder whether we can do that anymore. So Danielle, do you want, you've already said a little bit the, you know, the first day motions and the critical vendor motions sort of emerged in the case you, as I read it your side said, well, that's

00:37:12.830 - 00:37:31.070

we're not saying that those are have to follow the absolute priority scheme and I think. That seems like a sensible strategy this is a very controversial issue, right? I mean, yes, it happens all the time. It happens in bankruptcy court every day typically it's consensual and

00:37:31.070 - 00:37:46.439

in that case there's no problem. I mean we don't, you know, we're not saying that the priority scheme has to apply even if. Creditors agreed to different treatment, um, you know, the whole point of the code is that you negotiate, but you negotiate against the backdrop

00:37:46.439 - 00:38:01.989

of the absolute priority rule, and you can agree to a departure from priority. So I mean, David, David's correct and I think it's an interesting point that you know that kind of first day order does potentially prime administrative creditors who don't yet exist. I mean, at,

00:38:02.080 - 00:38:18.270

you know, on the first day there aren't any so so I mean that's that's an interesting. Question and it is, it is a potential priority deviation, but the creditors who were there, the secured creditors agreed to this. So, you know, I don't think the payout that

00:38:18.270 - 00:38:34.209

the drivers got on the first day really is relevant to anything. What we're talking about is nonconsensual priority deviation. Is it really true? I ask out of ignorance that with a critical vendor order, if one secured creditor says I object that's a good point. Well, could

00:38:34.209 - 00:38:50.780

I finish. You know, as I was saying, it's very controversial because it, it when they're nonconsensual they do depart from priority and so you know I mean the Kmart case which happened about 10 years ago was an example of a case where, you know, I think

00:38:50.780 - 00:39:08.050

the debtor just went a little crazy and tried to pay, you know, a large percentage of its pre-petition trade creditors and uh and you know actually did draw objections and. You know, when it got up to the 7th Circuit, um, you know, they wrote a very

00:39:08.050 - 00:39:25.189

interesting opinion where they didn't ultimately resolve the issue, but, you know, pointed out that this really is extremely problematic because of the way that it does depart from the priority scheme and so I think that's an issue the court the court telling the bankruptcy judge that

00:39:25.199 - 00:39:38.709

the the record didn't support the relief that was granted, not that there was a problem with the type of relief. But I like, I want to address your point. It seemed to be one of the issues that was raised in an oral argument. was whether or

00:39:38.709 - 00:39:54.570

not consent is the dispositive distinguishing factor because the argument was you don't have to worry about what happened here on the first day because that was by consent. But the question you raised I think is extremely important. Look, on the first day motion, you could hypothetically

00:39:54.570 - 00:40:13.850

have a dozen creditors object. It's a motions practice. And the judge has got a book of first day motions you know that's this big 1 or 2 or 3, and so there's no legal standard, it's business judgment and the absence of consent is no prohibition whatsoever

00:40:13.850 - 00:40:29.699

to approve a deviation with the laxis of standards. Well, that's the question, right? I mean that is what happens, but the question is, is that what should happen? And that's a question that I think the court probably someday will have to take up, but not today

00:40:29.699 - 00:40:47.656

because it's not presented by this case. And and you suggested a whole second line of distinguishing these critical vendor orders. You said, you know, that's it's right at the beginning. There's a. possibility that everybody will be made better off by keeping the that's the underlying rationale

00:40:47.656 - 00:41:03.511

for the, you know, potential priority deviation is that this will enable the reorganization. That's why it's called the doctrine of necessity because it's supposed to be necessary to the reorganization. It will, you know, make the pie bigger. It will end up giving everybody. Including the creditors

00:41:03.511 - 00:41:20.951

higher up, a higher recovery, so it's not a situation where all you're doing is transferring value from a higher priority creditor to a lower priority creditor. It has a very different purpose. It seems to be less than totally convinced that 90% that's analytically impossible. Look, you

00:41:20.951 - 00:41:34.760

cannot make a prediction on day one that if we take $6 million out of the pot or any money out of the pot. That 2 years from now when we get to distributing the assets, the pro rata distribution is going to be improved. It is, it

00:41:34.760 - 00:41:51.959

is worse than idle specular. It is an impossible determination. Well, I think of it, David, on one level as an aspirational exercise at best. So you know, it's like, um, when, when scholars have looked at, we have the 363 argument that I thought Chris Chris made

00:41:51.959 - 00:42:06.620

at at at the oral argument. That you know we really ought to think about this. This is really a use of state assets under 363B and there it's a business judgment test, but you always in bankruptcy, you always have a valuation problem. You never know whether

00:42:06.620 - 00:42:22.070

when you give away one asset, what is the ultimate outcome going to be a year later on valuation? Are you increasing or decreasing? There's no analytic there's no logarithm for that. We can't figure it out. So it is aspirational at best, but at the end of

00:42:22.070 - 00:42:36.010

the day there's no certainty. We don't know what we're doing, so it's just. You know, and I think they did make clear not to beat this to death. This case is not about just what happens at the end. This is not a structured dismissal case. It's

00:42:36.010 - 00:42:50.409

not a dismissal case. It's a settlement distribution case at any time in the case, whether it's a month into the case or 2 years into the case, and the court is not unpredictable will not call this a structure dismissal decision. They're going to call this a

00:42:50.409 - 00:43:08.350

settlement distribution decision because that was the split. Well, I'll just say, I hope, I think for what every trial judge would say, and that is, whatever the court says, I hope it's clear enough. That I know what I'm supposed to do the next time the issue

00:43:08.350 - 00:43:22.979

comes up. So, uh, if I could, maybe we'll step back. I would think that one of the lessons that This group would like to take away from this case is how do I get my bankruptcy case into the Supreme Court? I mean this is a bit

00:43:22.979 - 00:43:37.409

of a rare bird, so, uh, maybe starting with Danielle did this case have Supreme Court stamped all over it from the beginning or were there some key I think so, but I mean, it's, you know, it's not because of any anything that we did. It's just

00:43:37.409 - 00:43:53.229

that there was a circuit split on the question and it and it also happens to be a very important question and so I, I mean I'm not sure there's any great. Trick to getting your case to the Supreme Court other than to, you know, represent someone

00:43:53.229 - 00:44:07.040

in the kind of case that they want to take, which is a case where there's a division of authority on an important issue, you know, among the courts of appeals. Well, I, I will tell you that if my colleague thought his decision was going to the

00:44:07.040 - 00:44:23.879

Supreme Court, he might not have issued a bench ruling and might instead have written on it. Yeah, I think. All right, so did you have any, do you think there were places at which this was made into a Supreme Court case or could have been kept

00:44:23.879 - 00:44:37.110

out of the Supreme Court, or do you agree? This was pretty much headed to the Supreme Court from the beginning. I mean certainly to be, you know, certainly Judge Shannon would have had no idea that this was how this was going to end up, and I

00:44:37.110 - 00:44:51.399

don't think anybody would. I think you know by the time it got to the 3rd Circuit, the way the issues were framed, you know. It was pretty clear to everyone in, you know, in the bankruptcy bench and bar that this was a very important case and

00:44:51.649 - 00:45:11.419

you know that it did implicate a pretty fundamental disagreement about how priority rules apply in in these situations. Some of these go quick. Some of these we do 20 minutes. Let's move on to a different topic, which is then this got very full treatment in the

00:45:11.419 - 00:45:32.350

3rd Circuit. Maybe the, the bankruptcy judge would have spent a little more time, but there are clearly some differences between. Presenting these cases at the Court of Appeals level and at the Supreme Court level, David, do you want to say some things about sort of what's

00:45:32.350 - 00:45:48.449

different about those two arenas. Um, First off, I have to full disclosure, I probably don't really know, but I would guess this. Judge Ambrose sits on the 3rd Circuit and he's deeply versed in bankruptcy law and so we're kind of blessed that we have one circuit

00:45:48.979 - 00:46:05.070

that is um. Got this supercharged bankruptcy expertise, so it's a wonderful place to appeal. I think all of us who do and I just do amicus work so. I think we all feel when you go to the Supreme Court, you know, they don't necessarily get it

00:46:05.719 - 00:46:19.530

and um Ken Klee told me once. Uh, he said, you know, he always, I think it was Ken, not Martin Beanenstock. Both of them said they always have lunch with the justices, so they have this inside track that we don't have, and they asked him once,

00:46:19.570 - 00:46:33.350

you know, are, are we getting it right? Because they're worried. I think they I think they have a perception. So that does mean when you go to the Supreme Court. I think you are worried that even though they've got these super brilliant law clerks who are

00:46:33.350 - 00:46:49.949

gonna pour through everything. That they're never gonna be able to get enough deep understanding so they're gonna be looking for I think a shortcut answer something that they can really grab onto that doesn't offend or turn the world upside down. And I don't know the circuit,

00:46:50.040 - 00:47:06.070

I think the circuit courts. I think they vary. I think the 3rd Circuit gives us fabulous results. We got the 9th Circuit that gives us something different. I'm more common on what it is, but it's different, um, so I don't know when you have a different.

00:47:07.090 - 00:47:18.719

I mean, I think that's an interesting question, but I'm not sure the answer is different for bankruptcy cases than it is for any other kind of case because both the court of appeals and the Supreme Court are generalists and so there's a sense in which you

00:47:18.719 - 00:47:33.639

face the same kind of advocacy challenge before both courts unless you happen to have a bankruptcy expert such as Judge Ambro, which is, you know, pretty unusual, um, you know, if you're not arguing to a panel with a bankruptcy expert on it, you have to do

00:47:33.639 - 00:47:50.169

the same kind of thing you would do in the Supreme Court and translate. You know what may seem like technical bankruptcy concepts into a language that that they can understand um the difference between you know litigating a case in the court of appeals and litigating a

00:47:50.169 - 00:48:04.770

case in the Supreme Court is that you know in in the court of appeals you, you are much more likely to be focused on the application of law to fact whereas at the Supreme Court, you know, they're not too interested in that and they you know

00:48:04.770 - 00:48:24.800

want. You know to dispute the pure legal question. I mean, from my perspective, the court of appeals judges, they're much more focused on precedent of their court of other circuits, and when you get to the Supreme Court, they will look at the circuit precedent if it's.

00:48:25.320 - 00:48:40.149

Right well reasoned and persuasive, but they're sort of less focused on it. Another thing that I always am amazed by I mean it's just the workload of many of the court of appeals judges. We had a lawyer at Covington for many years, Mike Boudine, who became

00:48:40.520 - 00:48:52.489

a first circuit judge and then the chief judge of the first circuit, and he, we all thought he was the smartest lawyer at our law firm and could sort of do anything very quickly. And he came to talk to us after he'd been a judge for

00:48:52.489 - 00:49:05.129

a while and somebody asked him, you know, what's the main thing he would tell us and he'd say we are so busy and he said you know we have so many cases and we have only so many hours in the day, said if you can show

00:49:05.129 - 00:49:21.340

me, I think his words or if you can show me a way out of the woods. I'm very likely to take that path because I've got You know 20 other cases that week or more, whereas at the Supreme Court they seem to have. I was on

00:49:21.340 - 00:49:39.270

a panel last week with Judge Watford on the 9th Circuit and talking about appeals, and I was stunned what he said to me and Judge Watford actually clerked the same time I did, he was the hardest working person in the building. He, you know, when I

00:49:39.270 - 00:49:53.949

thought I was ready to talk about a case because I've read the case in a few briefs, he would talk about it after he's like studied the record. He's really a workhorse. What he said is it's triage, um, that I, he said he decides in an

00:49:53.949 - 00:50:11.530

average week 30 cases. And so when you're briefing, right, how do you brief it so that the judge can read this case and 29 others to be decided that week and that you necessarily have to engage in triage that, you know, sometimes you can read it

00:50:11.530 - 00:50:27.399

really carefully. Other times you kind of have to skim through it and not look at all the cases and get comfortable that um life is imperfect. It's not I'm not on this panel, but um. observation that I was floored by. I'll give a quick example of

00:50:27.399 - 00:50:45.639

a case that I argued in the Supreme Court a few years ago was an ERISA case and it involved what are called employee stock ownership plans, and the basic question was, well, what if something bad happens to the company that the employees own stock in and

00:50:45.639 - 00:51:04.979

then the employees say, well, you know, you should have terminated this ESOP. It was a bad investment. And uh it's an interesting problem, you know, basically created because Congress wanted to encourage ESOPs up to a point and a number of circuits, including the Third Circuit I

00:51:04.979 - 00:51:18.860

remember had, I think probably the leading decision on this. It said, well, when we put all this together where we end up is there's a presumption that it's prudent to offer this investment and all the other circuits had done what the good circuit judges do. They

00:51:18.860 - 00:51:33.520

had read the other circuit opinions and they had. Added things somewhere a little bit different, but they basically worked within that. Sort of uh fabric of law that the Third Circuit had started to weave and we got up to the 3rd to the Supreme Court and

00:51:33.520 - 00:51:45.070

they said, Well, where does it say in the statute it's a little bit like this case that there's a presumption of prudence and the Supreme Court worked it out a different way. I want to say for the record that we claim victory in this case, which

00:51:45.070 - 00:52:02.729

was called 5th Third Bank against Dudenhoeffer because the court sort of Supreme Court substituted a sort of different set of. Rules that ends up we think being effectively a presumption but but that to me is an example of they just did it differently. They started over.

00:52:03.139 - 00:52:15.959

They didn't pay that much attention to what the court of appeals did, so I think that's a key point. When I first started doing this, you know, I had the Carter Phillips team. Teach me how to do an amicus brief and the first thing they said,

00:52:16.330 - 00:52:28.649

I want to go in and argue with the 3rd Circuit says this, the 9th Circuit says that. I said, No, David, forget all that. The court wants to know what have we said about this before and what is the ultimate right answer. And once I had

00:52:28.649 - 00:52:48.939

internalized the profound difference between, you know, squabbling with the circuit courts and trying to find the really most profoundly correct. It's a more gratifying exercise, and they're not going to go through and necessarily take apart all the circuit court. They're looking for the ultimately correct answer.

00:52:49.229 - 00:53:05.760

I think intellectually it's a different exercise and more gratifying as I read the transcript of the Supreme Court argument. Even with all the extensive briefing, I say to myself, an hour is divided among 3 speakers. How do you tell the story in that period of time,

00:53:06.159 - 00:53:25.000

you know. Where the most important parts of your story while being interrupted. It's it's very hard. I mean, I'm not sure I figured out how to do it yet, um, but. You know you just you need I mean ideally what what you try to do is,

00:53:25.570 - 00:53:40.810

you know, figure out what the few main points are that you really want to get across and you know try to get those points out while at the same time, you know, not treating the questions as an interruption but you know trying to actually engage in

00:53:40.810 - 00:53:59.870

a conversation with the justices that helps them, you know, understand that that addresses their concerns. I mean the questions really are. You know, the more important part in some ways because presumably you've laid out your story in in your brief, um, so it's it's a, it's

00:53:59.870 - 00:54:14.165

a, it's a challenging exercise. Did you, I mean, I'll, I said to Danielle and I'll say to the whole group, I thought your answers at the oral. were great. They were on point. They were short, which they sort of have to be because if they're not

00:54:14.165 - 00:54:29.879

then the justices interrupt you and you never get to give your answer. So, but even having said that, did you learn anything about oral argument from this? Are there lessons learned? From your from your end about how to do oral argument in a bankruptcy case or

00:54:30.129 - 00:54:48.459

or any case? I mean, I, I think I'm still digesting it. Um, uh, you know, I I definitely have been giving a lot of thought to how I could have done better and you know how. And there were things that I wanted to say that I

00:54:48.459 - 00:55:06.709

didn't get a chance to say. I mean, I'm not sure the case has sort of dramatically altered my approach to oral arguments, but. It's, it's a continuing challenge and I mean trying to address the concerns of 8 different people who are coming who are potentially coming

00:55:06.709 - 00:55:24.320

from very different places, you know, can be, can be very difficult. What about David or well your honor, what, what did you take away from the oral argument that, well, first off, I, in all honest, it's a pleasure to write the pleasure to watch great advocacy

00:55:24.320 - 00:55:42.090

on both sides and so Danielle really. Unfortunately, I read the transcript. I couldn't think of any regret you would have on the other side. I mean, the advocacy, I think was fabulous on both sides. I have, I have watched, I think, all of the 4 or

00:55:42.090 - 00:56:02.649

5 Supreme Court bankruptcy arguments in the last 2 years and um. I'm not taking away. You know, like a football game, some strategy that people would start using, they all have the same problem. The the court is leaning toward, you know, literal interpretation, plain meaning, and

00:56:02.649 - 00:56:21.959

everybody's trying to make their argument fit into a narrow statutory scheme and elaborate, you know, judicial legal system that doesn't necessarily lend itself to that, but I don't I don't think the oral advocacy. All honesty could get much better. I think everybody's doing, you know, what

00:56:21.959 - 00:56:35.429

they need to be doing. The question about the court will do what it needs to be doing, but I, I don't think. Yeah, I, I've read the transcript a couple of times now. I don't, I don't think anybody left out anything. I was there, I mean,

00:56:35.500 - 00:56:52.540

was there a failure to convey sort of what life is like in actual bankruptcy practice because it's impossible to do it it is very hard, you know, and I, I have the luxury. I mean, unlike the Supreme Court, when I hear oral argument on, uh, earlier

00:56:52.540 - 00:57:09.100

this week I had. Oral argument on competing motions for judgment on the pleadings in 4 different adversaries. The issues were similar, so I did it all at once. I spent about 2 24 hours. As to hear all the arguments, but I can decide whether I want

00:57:09.100 - 00:57:29.260

to hear another hour. Or half of that. Um Just so I can get to the place where I think I understand what's going on, um, but the Supreme Court justices don't. Usually give themselves that luxury. Uh, so I think I'm better off that way. And I'm

00:57:29.260 - 00:57:53.520

a little slower, so it takes more time for me to understand these things. I'm glad I have it. taught me that when the red light goes on you. So I asked Judge Ambrose last night at dinner. I said, um, I, I always my biggest fear in

00:57:53.520 - 00:58:06.280

watching oral argument is that Justice Breyer hypothetical, which runs on for 5 minutes, and nobody has a clue and my wife has always said to me, When are you going to do an oral argument? I said, not until Justice Breyer leaves the court. So I asked

00:58:06.280 - 00:58:18.030

Judge Amber. I said, What do you do if someone says, Your Honor, I just, I don't have a clue what you're asking me. And you said it was very lovely. Why don't you submit something to me in writing later? And I thought, wouldn't it be nice

00:58:18.030 - 00:58:31.709

if the Supreme Court would do that. Unfortunately, I thought Brier didn't give you any terrible, but I, I was at somewhere. His hypotheticals run on and you don't know. I don't have any idea what he's trying to get at. I just always imagine I'm back in

00:58:31.709 - 00:58:49.290

law school and that seems to help because they seem to be exactly like what Professor Brier would have asked in his classes. Um So I think one thing we have not talked about that we should is the role of the solicitor General. I remember reading something

00:58:49.290 - 00:59:07.745

that in the patent area which seems to me to have some analogies to the bankruptcy area because it's a specialized area of law. that actually the views of the solicitor General have a tremendous impact if you just looked at what the SG says in the patent

00:59:07.745 - 00:59:24.685

cases and then what the Supreme Court does, there's a very close correspondence. Is that sort of what goes on, you think in the bankruptcy area and if so, sort of, you know, how did you interact with the SG's office and I mean it's always a huge

00:59:24.685 - 00:59:43.659

benefit obviously to have the United States on your side. I mean this is the first time I've actually had that, but it's you know it's, it's obviously a blessing and it helps a lot because the SG's office has a kind of institutional credibility that other litigants,

00:59:43.810 - 00:59:59.139

you know, however respected the advocates are, you know, don't necessarily have and and so it's it's incredibly helpful in any case whether it's more helpful in bankruptcy cases than in other cases. You know, I suspect, I suspect that it is more helpful than it would be

00:59:59.139 - 01:00:15.780

in say a constitutional case where the justices have much more firmly fixed ideas about what the right answers are, but I don't know I mean I've never actually done any kind of empirical analysis to see how. What the SG's influence is in different categories of cases,

01:00:15.790 - 01:00:28.639

it's an interesting question. But there's a good in this case there happens to be a good example where the court actually did not care for the SG's point of view. The absolute priority rule when it got litigated on its merits in 203 North La Salle. The

01:00:28.639 - 01:00:46.209

Solicitor General has a long standing history of wanting the absolute priority rule to be absolute. And with no exceptions, including the new value corollary, they've spoken on that a couple of times, and the Supreme Court described their position as starchy. And um and and and to

01:00:46.209 - 01:00:59.040

get that they had to go back and they said, you know, you made a similar argument in another case and they quoted their, their views from a different doctrine. So I think sometimes and on an issue that touches this. The Solicitor General, first off, they do

01:00:59.040 - 01:01:14.520

a brilliant job of rewriting. I mean their briefs are just a joy to read no matter what side you're on. They lay out the bankruptcy scheme. It's such beautiful prose. It's really wonderful. Of course they're wrong, but it's so elegant but I think sometimes the court.

01:01:15.679 - 01:01:30.149

Perceives a pattern that you know you've sort of historically been against a flexible notion of bankruptcy jurisprudence and we take note of that we we think you've been a bit starchy and I, I think I mentioned that in my brief and I don't know that was

01:01:30.149 - 01:01:46.169

I right? I mean, I read their brief quickly, but I got a sense that maybe the position of the US in this case was driven largely by their role as creditor in bankruptcies and wanting to protect their. High priority so it seemed to be a little

01:01:46.169 - 01:01:58.850

bit of special pleading going on. Was there was I right to infer that or is that not right? Oh, I, I think, I mean, certainly that was is one huge reason why the United States had an interest in the case. Um, I mean they, they are,

01:01:59.030 - 01:02:12.360

you know, they're a priority tax creditor, but, uh, uh, you know, but I do think the US trustee's office also has institutional views on how the code should operate and that, you know, those are at play here as well, as David was saying. I think the

01:02:12.360 - 01:02:29.250

government missed a great opportunity. In the credit bidding case, the government stood up and they made one argument that If we can't credit bid, we can't raise money quickly enough so we can't protect our position. And once Justice Scalia heard that they'd be adversely affected, the

01:02:29.250 - 01:02:44.169

government's fisc would be hurt. He was persuaded that then you got to have credit bidding and just on that little tiny issue he seemed to be totally turned around and they didn't mention I don't think they argued their tax position. No, I mean they mentioned it

01:02:44.169 - 01:02:57.449

in the brief, of course, but I don't think it was they didn't pound and I think they should have, and I think the justices can be very persuaded by the tax position. Recently, the Delaware chapter of the Federal Bar Association hosted what they call the fireside

01:02:57.449 - 01:03:13.820

chat with Ted Olson. Um, who gave some very interesting insight about the SG's office, but the thing that one of the things that struck me was that traditionally it's very independent in terms of coming to the decisions that it makes. For example, I didn't get the

01:03:13.820 - 01:03:27.449

impression and maybe. Maybe it's true or not, but I certainly think that the impression that the White House often exerted a lot of Um, influence with the office to take one position or another. So one of the things I always wonder is how did they, how

01:03:27.449 - 01:03:44.370

did they come to what position? That they want to take and that I don't fully understand right I mean Bob is a better alumnus of the office there's a process that most of the alums think is a good one. I hope you will all agree. I

01:03:44.370 - 01:04:02.629

mean, basically in a case like this where I believe the court invited the views of the solicitor general. That would be notified to all of the parts of the executive branch that the Solicitor General's office thinks might have an interest, and they're all invited to submit

01:04:02.629 - 01:04:18.459

their views in writing. One of the important parts of the process is it should all be written down so you know you can justify your thinking. There will often be meetings about this. We often the SG's office will meet with the parties that you may have

01:04:18.459 - 01:04:35.229

had those meetings to have some direct discussion about the issues and the arguments and often the facts of the case and I'll make. could we see things in the record that we don't have and so then based on that the Solicitor General's office will put together

01:04:35.229 - 01:04:53.550

a position ultimately the Solicitor general decides it's it is possible for the attorney general or the president to intervene and you know you can read about cases where. You know, President Eisenhower was trying to write things into the briefs in Brown v. Board of Education, but

01:04:53.550 - 01:05:10.590

that's very, very rare, very rare for the Attorney General to get involved, and most of this just runs along with decisions being made. I mean, often the interest of the United States as a litigant or the financial interest of the US is an important consideration that's

01:05:10.590 - 01:05:29.320

pretty common. This case was slightly atypical in one respect, which is. In this case, the US trustee's Office participated as amicus in the Third Circuit, which itself would have required SG approval. So by the time we got to the stage in the Supreme Court of, you

01:05:29.320 - 01:05:43.770

know, having the court called for the views of the Solicitor General on the petition, it wasn't the first time they were looking at the case because they would have previously authorized the participation, um, so there was something of a rolling downhill element once you got got

01:05:43.770 - 01:05:59.500

there. And part of what I think keeps the SG's office at a high level of quality is they're in front of the court all the time. They know the court is watching them and they feel like if they ever lose that credibility, that will be gone

01:05:59.500 - 01:06:17.979

forever or very difficult to get back. So part of it is enlightened self-interest, I think on their part. But um we our time is nearly out so we give the this distinguished group are you willing to entertain questions from the from the floor if anybody if

01:06:17.979 - 01:06:40.620

they're. Anything you're wondering about this case? Feel free to ask. You've got a rare opportunity here. Thank you. So I don't have my copy of the code with me, but my recollection is that the absolute priority rule is in Section 1129 and that therefore it applies

01:06:40.620 - 01:06:59.399

only when a party is proposing to confirm a plan of reorganization. And So I'm thinking about what Bob said about a kind of a give the justices a path. This isn't the path that Danielle would go down, but maybe somebody would say that the absolute why

01:06:59.399 - 01:07:14.280

do you even have to compare the result to what would happen in a plan? Why do you have to find a Pareto optimal solution? There's no motion before the bankruptcy court to confirm a plan, so the absolute priority rule doesn't apply. Congress could have written the

01:07:14.280 - 01:07:35.590

absolute priority rule. You know, 1919 or or uh. What is it 1112 that covers dismissals and so why is the absolute priority rule even an issue here? Yeah, I mean, and I think that's, that's part of the argument that Chris made pretty effectively, you know, which

01:07:35.590 - 01:07:53.090

is, look, this is the. The rule that you're talking about in chapter 11 only appears in 1129 which goes to the requirements for confirming a plan and I mean my response to that is that's true, but a plan is the way to distribute assets to creditors

01:07:53.090 - 01:08:09.510

on account of their pre-petition claims um there is no other way that's contemplated. By chapter 11 and so the question then is, can you come up with another way that doesn't then follow that you know the the really careful and strict priority scheme that's set out

01:08:09.510 - 01:08:24.589

in 1129 and I think you know I mean that's that's sort of the question is, is what what inference do you draw from. The provisions of 1129, do you say, well, clearly that's limited to plans and it doesn't affect anything else or do you say, well,

01:08:24.609 - 01:08:42.419

look, this is how Congress intended assets to be distributed and therefore we have to take that into account when we're evaluating some alternative method. I think your question raises, I think the public perception of this case was the question you just raised 1129 be applied to

01:08:42.419 - 01:08:56.450

a structure dismissal. I don't think the court is going to frame it that way. I think they came to see that there's some unclear historical relationship between the fair and equitable doctrine and then the subset of that, you know, absolute priority or the other way around,

01:08:56.459 - 01:09:15.688

and they're very. Somewhat confused on that But the real the fair and equitable test is really what they're trying to decide whether or not that's applicable to the settlement process. I don't I don't think there's any way they're going to say 1129B applies because I think

01:09:15.688 - 01:09:29.290

they know it doesn't, so they're going to look back. They're they're going to borrow 507 or they're going to look at fair and equitable historically and and figure out. But they're not gonna know exactly what the handle is. It's not, there's no clear handle unless they

01:09:29.290 - 01:09:55.149

do the 363B argument. Which was argued, you know, very effectively, and Justice Breyer said I thought she used 363B to sell a suit. I thought that was a little dismissive. I'm sorry he said that by the way. I Danielle, I know you didn't go there oral

01:09:55.149 - 01:10:11.649

argument, but would you go so far as to say that you can't do a structured dismissal at all? You mentioned that there are only three ways out conversion, dismissal, or confirmation. Uh, I, I wouldn't say that, um, there's no authority for that, I mean, I think

01:10:11.649 - 01:10:25.220

the phrase structure dismissal sort of covers a multitude of things and some of those things might be fine. I mean, the problem that we had with what happened here was the priority violation, not the fact of the structured dismissal. So I mean there may well be

01:10:25.220 - 01:10:41.160

situations where. You know, there's not going to be a plan and it. You know, doing a liquidating plan is too cumbersome or it just can't be done because you can't get the consent of the administrative claimants and converting to Chapter 7 sort of seems like a

01:10:41.160 - 01:10:55.625

waste of time and the parties, you know, agree that we're going to do this quicker. Easier way of disposing of the case and I, I don't see why that would be problematic at all. So uh you know our, our position has never been you can't do

01:10:55.625 - 01:11:10.930

a structured dismissal. It was simply, you know, you can't have an alternative method of distributing assets that violates priority. I will just say very quickly I don't want to take the time of the audience. One question that I didn't read all the briefs, but I sort

01:11:10.930 - 01:11:26.589

of wanted to know as someone who was learning was what happens if you don't have a confirmed Chapter 11 plan, you don't convert to Chapter 7, and you simply dismiss and go back to the pre-petition world, sort of what happens to all the assets that have

01:11:26.589 - 01:11:39.859

been kind of under control? Is it just. You know, free for all and a big mass, essentially, yes, I mean, what, what, what is supposed to happen is that you basically try to bring everything back as much as possible to the pre to the pre-bankruptcy state

01:11:39.859 - 01:11:56.310

of affairs, and that is a free for all. I mean that's what bankruptcy is designed to. Would, but if you, if, if you decide, look, bankruptcy isn't going to work here, um, then, then yeah, the assets, you know, by and large there's a for cause exception

01:11:56.310 - 01:12:09.770

that we discussed in the briefing and argument, which is interesting, but you know, by and large the idea is you go back to your pre-bankruptcy state, which means you know creditors can take a first come, first served approach to the assets and really in when a

01:12:09.770 - 01:12:28.839

dismissal is asked for, nobody really wants that. Well that that raises, you know, the, the final problem with bank all bankruptcy appeals, you're always trying to unscramble an egg. That's almost almost impossible to do. So all these appeals have this painful reality to them that you

01:12:28.839 - 01:12:40.819

can never get back to where you want to be. I've said to others, I'm just happy if the case should come back to the bankruptcy court that I will not be the judge. So trying to figure out what to do to that effect, if I could

01:12:40.819 - 01:12:59.345

just close with one quasi-person story. So my first big bankruptcy. That I've worked on was our firm was debtor's counsel in the Iridium case and and I was asked by Bill Perlstein, who many of you know who was the head of our firm's bankruptcy practice for

01:12:59.345 - 01:13:14.979

many years. I was a mid-level associate just learning bankruptcy, and he calls me to his office and says, Can you begin work on a couple of first day motions, including a motion. To seek approval to pay critical vendors and file a motion to seek to pay

01:13:14.979 - 01:13:29.160

the priority wages of employees and priority tax claims and the like, and he hands me a handful of forms and I go to my office and I start trying to figure out how to write this motion and I'm struggling with it because. It all begins with

01:13:29.160 - 01:13:48.725

the premise that there's something in the code that says you can't take this property of the estate and distribute it on account of prepetition claims, and I go to his office and say, where does the bankruptcy code say essentially thou shalt not take. Yes, and that's

01:13:48.725 - 01:14:03.725

that's the full circle aspect and it gets even better. And so Bill gives me a couple of answers, none of which was satisfactory, and he says, why don't you call your our Delaware counsel who can help you with that. So I reach out and I pick

01:14:03.725 - 01:14:19.810

up the phone and I call our Delaware counsel who was filing the case, and I asked him this question. And the answer he gave actually was actually very much like the answer Danielle gave at oral argument, which was no, it's a structural prohibition. It comes from

01:14:19.810 - 01:14:35.169

if you look at the case was filed, there's 541, there's property of the estate. It's then protected under the automatic stay. Then when you when you want to use it, there's court supervision under 363, and none of that would make any sense if you could just

01:14:35.169 - 01:14:48.640

take it and throw it around. And the punch line that story is that lawyer who I called was our Delaware counsel was, I was a mid-level associate at our firm. He was a brand new partner at Young Conaway at the time. Uh, his name was Brendan

01:14:48.640 - 01:15:06.479

Shannon. Um, um, so in any event, um, he also said, oh by the way, judges have flexibility to do what they feel like doing, um. In any event, with that, I guess I want to say thanks to this panel, and I think we now have a

01:15:06.479 - 01:15:33.060

15 minute break and come back at 11:30, so thanks thanks to everyone. Thank you. Good job. Thank you. Oh my apologies, right? What, what, guess what? What did he say? Very nice. in a way to know so much more about how this works and to have

01:15:33.060 - 01:17:22.100

these you know judges who parachute in. Oh Yeah absolutely thank you you're a very excellence. No, I mean, it must have been nerve-wracking to have somebody in the audience. Yeah Thank you. So you I Peel

01:17:22.100 - 01:24:03.770

away the layers of the It Yeah, I think that helps It only It's OK. That's But you know Easier said than done. Right. get

01:24:03.770 - 01:43:16.049

back on the menu. Oh, I Yeah that I Care. Oh Pardon Memphis, Tennessee. OK. How do you pronounce your name? Sher Sri Srinivasan.

01:43:16.250 - 01:43:36.089

Good Bill Srinivasan. It's not when you say it, it's not as difficult as it appears. Yeah. In the so we can have we can have a time to City and I think. You think which is the rest? Oh please, come on. And I, and I really

01:43:36.089 - 01:43:53.359

thought you were a man of judgment. Uh, you tell me. OK, Tom, what's called the big book I can just hold it, whatever you think, or even put it on the, put it on the table. As long as you don't think you're gonna drag it somewhere.

01:43:53.729 - 01:44:16.839

I'm not going anywhere. So Tom has brought a huge book of information over here and you've got papers. I've got one piece of paper to remind me about one case. That's all. I know nothing about the subject matter, so. Early one for a long time. I,

01:44:16.919 - 01:44:35.729

you know, I grew up, I was born. 20 miles south of Memphis and I've been there all of my life in my, my um. Experiences are fairly confined, very provincial, yeah, so good. I've been there just a couple of times I came there. 20 years ago

01:44:35.729 - 01:44:57.939

to the pyramid to bat. The pyramid is now a bass shot you can convey that my body language. Does it still have the structure? It's on the outside, but it's still the pyramid. I don't like it. It is the largest mass pro shop in the country,

01:44:58.029 - 01:45:20.649

of course, it's as big as the pyramid. So there is a, I'm sorry, is it time to kick off? OK. All right, sounds good. Do you like bass fishing? Is it gonna work? I think we're going to try to try to kick off the second part

01:45:20.649 - 01:45:38.250

of the panel. So again, thanks to everyone for attending. Um, why don't I, this is ridiculous. If if ever could be said that there are people who didn't need introductions, this is, this is it, but I'm gonna nevertheless take a stab at it. um, so we

01:45:38.250 - 01:45:54.939

are really delighted to have this panel. It's really. A tremendous honor and I have to say as someone who makes my living answering their questions, the idea that I get to spend a little bit of time asking them is a touch daunting, but the panel for

01:45:54.939 - 01:46:16.129

this session is Judge Tom Ambro from the Third Circuit. Judge Ambro has written a number of really important bankruptcy decisions, some of which I'm sure we'll discuss. And um as as was mentioned in the earlier panel is um before uh becoming a judge was really a

01:46:16.129 - 01:46:36.140

distinguished bankruptcy practitioner um so we're we're quite fortunate, um, uh, that we all get to um have Judge Ambro help us figure out what bankruptcy law is um Judge Donald from the or or screw it up, um. Um, only when you rule against us, um, uh,

01:46:36.189 - 01:46:53.509

Judge Donald from the Sixth Circuit is, um, one of a, um, maybe one of two, if I'm not mistaken, Federal Court of Appeals judges who previously served as a bankruptcy attorney, Judge Co Mike Malloy. Oh, right, right, right, OK, right, um, but Judge Donald, who's who

01:46:53.509 - 01:47:12.810

is, you know, as you will see. You know, brilliant, entertaining, and charming is, um, a court of appeal sits on the 6th Circuit and has, um, uh, the, the, the benefit of having served as a bankruptcy judge for how long? 7. 15 years, um, so. Wait

01:47:12.810 - 01:47:31.410

but you had to get to get vested. I missed it so also brings to the Court of Appeals, and bankruptcy jurisprudence the perspective of someone who has an understanding and is steeped in the ways that bankruptcy lawyers think about things and I know this is the

01:47:31.410 - 01:47:47.910

introduction, but I would say that our circuit. It's one that has 3 former bankruptcy judges on the court. Is that right? Yes, Judgey Cole, oh right, right, right. Judge Alice Batchelder and me, right, right, right, they're, they're seniors, so, um, pardon, isn't Judge Batchelder's seniors? No,

01:47:48.080 - 01:48:06.700

3 active. wow, OK, so I live and learn, um. And then to um you know part of what we want to discuss in this panel is the ways in which courts of appeals that as a general proposition or generalist courts who aren't bankruptcy experts um deal

01:48:06.700 - 01:48:26.729

with um bankruptcy problems that come from um you know a universe where there is a lot of underlying expertise and complexity and so finding someone who's not an expert but who's nevertheless willing to join the fray with uh. Intellectual confidence to just jump in wasn't easy

01:48:26.729 - 01:48:46.120

to find, but Sri Srinivasan from the sits on the DC Circuit and who before that was an appellate practitioner, a leading appellate practitioner in private practice, and spent a number of years in the Solicitor General's office arguing an array of cases, some very detailed and some

01:48:46.120 - 01:49:06.790

raising, you know, sort of broader issues, and I thought that would provide an interesting contrast for this discussion. Yeah, and if my math is right, I think Bernice has roughly 7.5 years more on a bankruptcy court than I had. Um, so with that as introduction, why

01:49:06.790 - 01:49:28.509

don't I kick off. So I thought one place to start. During the prior panel, Bob Long described a question that Justice Kagan asked during the argument in the JA case that to me in some ways encapsulated in something of a nutshell what a dynamic that you

01:49:28.509 - 01:49:43.979

see in many, many bankruptcy appeals, and I'm not going to quote it exactly, but the gist of it was look. You could imagine two different bankruptcy codes. One code that said, Here's the priority scheme and you need to follow it, and that's that. Or you could

01:49:43.979 - 01:49:58.089

imagine one that said, Here's the the scheme, you need to follow it unless there's a really good reason why a smart and thoughtful bankruptcy judge should use equitable authority to do something different. And the question before the court was which scheme do we have and I

01:49:58.089 - 01:50:15.680

guess one of one of the topics I'd like to engage is um that dynamic of um a generalist court looking at a code and it's words and saying how do you answer this question. Is a quite different way of thinking about a problem that you typically

01:50:15.680 - 01:50:35.069

see in bankruptcy courts where you come at any particular problem with a pretty thick culture of, you know, we all know what we're doing here we're here to maximize value to facilitate a reorganization. Um, and you read, you confront the problem through the lens of those,

01:50:35.399 - 01:50:53.290

um, preconceptions. So just, just to begin, um, Judge Amber, does, does that ring a bell or, um, are there cases in your experience where you've seen that type of? Yes, I mean. Just a host of things that you were, as you were asking that. Didn't Judge

01:50:53.290 - 01:51:13.779

or Justice Kagan used words like Pareto superior. I, I don't, wasn't Pareto like an Italian economist or something like that, and what he said was if One person is helped. Then another person Must be injured. One could make an I, I didn't get it here. I

01:51:13.779 - 01:51:28.549

thought the, I thought the argument for Chris Landau was if X has helped. Why just isn't helped, right? So the the the theory of it, right, preto optimality is, is, you know, a way to describe a situation in which someone is made better off and nobody

01:51:28.549 - 01:51:43.859

is made worse off. So I, I think the theory I thought Pareto was if X is helped Y has to be hurt. It's impossible not to do one without the other is what I thought anyway. Somebody can tell me what It was a century ago. Sorry,

01:51:44.310 - 01:52:04.680

um, but, so, but so, so more broadly, do you, um, what's your, what's your sense of, of how these issues play out, you know, in appeals from bankruptcy cases? My reaction is most people are trying to. Figure out What is the right thing to do and

01:52:06.930 - 01:52:25.379

Going back in my earlier days before I was a bankruptcy attorney, I did transactions, deals. And I would do a lot of what they call legal opinions, third party legal opinions. And somebody would come to me. And they would say, can we do X? And I

01:52:25.379 - 01:52:42.600

want you to give me a legal opinion that we can do X and you don't find anything. In whether it be the corporate code or whatever it might be that allows you to do that, but you'll end up writing an opinion that nothing prohibits you from

01:52:42.600 - 01:53:08.919

doing X. This is a case where You've got some justices looking for the authorization. To do what was proposed here to in effect skip a class. And others are saying, but nothing prohibits it. Which tells me inferentially that what you're really asking on whom is the

01:53:08.919 - 01:53:28.660

burden? Is the burden on the person who wants the structure dismissal or the. Payment of settlement proceeds that has property stay involved in a different way, or is there something in there and I think Justice Breyer said it what prohibits it it really is on whom

01:53:28.660 - 01:53:47.180

is the burden, and I don't think, I think the court's wrestling with that. I think. We're all wrestling with that. That's that to me the, the big issue. But if you say nothing prohibits it, which in effect is Chris Landau's argument. And you've got Danielle's argument

01:53:47.180 - 01:54:07.649

the other side, but yet, you need some authorization to do this. And you're at the court and you're a generalist, it becomes difficult, it becomes particularly difficult and if you have some. Some bankruptcy expertise, there's ways of looking at it that. Weren't even talked about the

01:54:07.649 - 01:54:27.629

other day. What about, what about settlements in 1919? We trust judges to do those and to have criteria in place, but should that be the way we look at it here? I think Kevin would probably say yeah. He, he's certainly capable of doing it. Brendan is

01:54:27.629 - 01:54:42.299

one of the, I mean, by everybody knows Brendan is one of the, the better bankruptcy judges in America. There wasn't a comparison to Judge. No, no, let me tell you, we are, we are unbelievably lucky in Delaware to have, uh, but I can, I'm, I'm being

01:54:42.629 - 01:55:00.509

a homer here, but I think we have the best bankruptcy bench in the country, bar none, and, uh, so it is. A Almost sit back and you look at this and you say to what extent Forget whether Supreme Court. To what extent do Article III judges

01:55:00.509 - 01:55:18.830

really trust Article 1 judges? And I don't have an answer for that. Well, that to me is at some level, whether it's a question of trust or whether it's a difference in analytic perspective is to me the part of the subject of the discussion. Judge. Do

01:55:18.830 - 01:55:39.370

you notice a difference in how you sort of think about a legal question as as you sit on the court of appeals than the analytic approach that you took as as a bankruptcy judge. at the outset I would say that Now at the appellate court, let

01:55:39.370 - 01:55:57.250

me, let me just say first of all that we don't get that many bankruptcy cases. The bankruptcy bench is incredibly incredible talented. I think the judges are respected. Uh, and, and I do think that we tend to in some measure really rely on that body of

01:55:57.250 - 01:56:10.700

expertise. If you're a journalist and you don't know bankruptcy, first of all, the initial position is to sort of be scared to death that you're going to wade into something that you don't know what the heck you're doing. And so you really rely on the parties

01:56:11.069 - 01:56:26.899

to make certain that they unpack that and give you a road map to the answer without being condescending. You know, I did bankruptcy and sometimes I still don't know what I'm doing. Yeah, OK, but, but you know, even though the journalist judge may not know. They

01:56:26.899 - 01:56:42.609

want you to educate them. Without making it appear that they don't know. OK, so it, it puts you in a different position of walking sort of a fine line, but, but going back to the question, Craig. I think at the appellate court, you, you go back

01:56:42.609 - 01:57:03.700

and you harken back to the fundamental rules of statutory construction. Looking at uh the statute and I was trained under the uh you know, David Kennedy and I agree that. Delaware might have the best bankruptcy bench, but Tennessee's got the best bankruptcy judge, and that's David

01:57:03.700 - 01:57:22.640

Kennedy. He's very good. And what he trained us to do was to always put a microscope to every word in the statute. Now the problem is when you put the microscope to every word and you've gone through that statute, sometimes you're left with a very unsatisfactory

01:57:22.640 - 01:57:38.140

result that does not do justice. Which is one of the things that we, you know, we kind of saw here you're left with an unsatisfactory and even an unsavory result if you simply go, you know, by the statute. So I think you start there, but I

01:57:38.140 - 01:57:57.720

think for me, um, fundamentally it's once I look at all that, what is the right answer? Now I understand that that under statutory construction. And God, I'm here in DC and I realized where I am in the city, but you know, the general does not trump

01:57:57.720 - 01:58:19.419

the specific. Uh, I'm, I'm mindful of that. So, so then the issue becomes how do you get to that position? Of adhering to. The language and the objective of the statute and still doing justice. I think one of the things that that Article Three judges are

01:58:19.589 - 01:58:38.870

suspicious of is a, a, a reliance on the general 105 consideration. Uh, they, they really kind of, you know, sort of push back on that because that, that creates a suspicion that what you're trying to do really is not supported either by the language of the

01:58:38.870 - 01:58:56.540

statute or some prohibition, I mean some lack of a prohibition and, and, and that raises some flags, I think for for courts and they really start to get uncomfortable. So, uh. Analyzing these things, first of all looking at the language and looking at whether or not

01:58:56.810 - 01:59:16.359

the statute says, but nothing here is prohibited, I think gives the court a greater comfort than uh an initial reliance on the, you know, the equitable uh principles that are that are in the code, uh. I think you know as a judge I would start with,

01:59:16.649 - 01:59:33.870

you know, that initial training looking at the statute and then applying the fundamental rules of statutory construction, but asking in the final analysis what's the right thing to do, what is the right outcome, and here, uh, in, in, in the Javit case, you know, the, the

01:59:33.870 - 02:00:01.270

court said look at the three ways, um. Uh, for, uh. The 3 possible results. Confirmation Not a possibility Dismissal and revesting. Not a possibility, uh, converting to chapter seven, not a possibility. So what is the right thing to do? Where do you do the least harm

02:00:01.439 - 02:00:26.890

and get the greatest value in terms of satisfying the objectives of the statute and that's. So Chivas. Your docket probably doesn't involve many bankruptcy matters, much to the dismay of many of us, there isn't much bankruptcy activity in the district, but the right your docket does

02:00:26.890 - 02:00:50.549

involve administrative agency appeals, petitions for review where you've got a very detailed and specific and sort of expertise focused area of the law. And questions about how do you understand the first principles of the scope of the agency's authority. And then have to apply those to

02:00:50.549 - 02:01:09.770

particular actions is sort of in many ways a big part of what you do. So the dynamic of the generalist confronting the area of enormous expertise, often with lawyers and sort of a record that's replete with the expertise is a dynamic that you see. So what

02:01:09.770 - 02:01:21.879

particular challenges do you think those? Yeah, they, they raise significant ones and first of all, it's nice to be here, uh, Craig, we go, we go back a long way and, and Tom and Bernice, nice to be with you all and to, to be in the

02:01:21.879 - 02:01:37.549

midst of, uh, practice area that I just don't confront all that often. So it's, um, it's good to be here and, and Bob, nice digs this is. Yeah, you're all doing well. What could do worse. Yeah, um, I remember interviewing the old Covington and Burling offices.

02:01:37.589 - 02:01:53.370

They, you didn't show me this. He waited till you got through right, um, so it, it is, I, I think it's a it's a similar dynamic and certainly I harken back to the days when I was in private practice and I had a wide range of

02:01:53.370 - 02:02:06.419

cases as Craig suggested the in in the introduction, some of which were the type of cases where the minute you heard the question presented. You didn't even you didn't even have to be a lawyer and you could immediately understand the issue and you knew it about

02:02:06.419 - 02:02:17.000

as well as anybody who was briefing the case. I had one case, for example, where the question was if 3 people are caught in a car with drugs in the car, do you have probable cause to arrest one or do you have probable cause to arrest

02:02:17.000 - 02:02:27.779

all 3 that you basically don't need to know anything about law. I mean, my kids can start thinking about that. Well, what if you're in a bus? What if you're in a school bus? What if you're in an airplane can arrest everybody? It doesn't make sense.

02:02:27.810 - 02:02:39.850

They can only arrest one. Can you arrest two? So the hypotheticals start flowing immediately. That's the type of case where you don't have to have any specialized knowledge at all. It's not a statute, it's a constitutional provision, probable cause, and anybody can really get up and

02:02:39.850 - 02:02:53.069

start thinking about the analytical way to approach the argument and start engaging. And then I've had the other end of the spectrum which I think is a little bit more of what you all are uh dealing with when you at least. Are trying to present arguments

02:02:53.069 - 02:03:07.669

to a generalist like me, which is it's a little bit of an educational function, and I always viewed the role my role as a lawyer in that situation to be a translator because I just assumed that the bench definitely wanted to get the answer right, but

02:03:07.669 - 02:03:16.740

they only thought they could get the answer right if they understood the lay of the land in the way that we understood the lay of the land and the best service you can provide as a lawyer is acting as that neutral translator who can say, OK,

02:03:16.750 - 02:03:31.350

here's a bunch of. Technical words that look like garbled gibberish, but there's actually a method to this madness, and here's what this entire scheme really means and that it's a challenge that we definitely confront with executive agency action because it's a highly specialized and we'll get

02:03:31.350 - 02:03:44.250

1000 pages of a rule making. In in our arcane area that we know nothing about, uh, but a lot of people who know a lot and are highly intelligent and highly committed and highly engaged and have a deep history in the area has spent a great

02:03:44.250 - 02:03:55.379

deal of time trying to assemble a record that shows why this is the right answer and why this actually marries with the statutory text in a way that when you're a journalist and you first look at the statutory text, you may not think it's right. So,

02:03:55.529 - 02:04:09.790

so just to push a little bit, are are are there times when. When you look at this thing with fresh eyes and against sort of the benefit of a blank slate and you say, you know, I know there are a lot of really smart and hard

02:04:09.790 - 02:04:28.459

working people, but they all begin. With a series of premises assumptions or assumptions that aren't at least aren't obviously right from at first glance, no, no, no question, and I think the first thing you always do when you're a judge and you're engaging with the question

02:04:28.459 - 02:04:41.779

of statutory interpretation is you read the statute and. Sometimes it's hard to read highly technical statutory language without having some base knowledge of what the language really speaks to because otherwise it just looks like, you know, the scientific, it looks like the periodic table and you

02:04:41.779 - 02:04:51.640

don't know what it means until somebody starts to explain to you what the backbone is. But once you have a little bit and you look at the statutory text, immediately you can start to think, and I've definitely had this when I was arguing cases and when

02:04:51.640 - 02:05:05.399

I'm hearing cases now where you're taken aback because you look at it and you say, but actually. Everybody is assuming a state of the world that just doesn't seem to me to marry with the statutory text and so you're immediately thrown askew and the job of

02:05:05.399 - 02:05:19.520

the lawyer is to educate the generalist judge on why that assumption may not be right and if we have time I can get into a specific case example that I had um I mean it's not a bankruptcy case. I, I brought, I actually did something the

02:05:19.520 - 02:05:37.609

old fashioned way which is instead of typing notes I actually wrote notes to myself. You can see this is actually handwriting, uh. On a case that I that I know this is right after I balance my checkbook with an abacus and interviewed in the old Covington

02:05:37.609 - 02:05:51.270

office on Pennsylvania. Yes, exactly. I got out my quill pen and I started writing down some notes here, um, in Morse's code and that they. So this is a case I had in the back way back in 2007 and I was in the Solicitor general's office

02:05:51.270 - 02:06:05.529

and it was in an area of law that was education financing, school district financing. So already, you know, it's a highly specialized area. Not only that. But it was education financing in the statute that spoke in terms of statistics and probabilities and so immediately your mind

02:06:05.529 - 02:06:15.450

just starts to spin and I had to spend a lot of time trying to understand this and really I'll set the backbone for you and then I'll tell you what happened at oral argument and then in the opinion it's gonna, I apologize for the long wind

02:06:15.450 - 02:06:27.020

up but like like what you all confront sometimes you can't understand it until you get a little bit of a context. So this is a statute called the Impact Aid statute, and what it does is it essentially says to school districts in areas that are served

02:06:27.020 - 02:06:39.700

by federal facilities. So for example, if you're in an area with a military base, a lot of your financing is is generated your financial needs are generated by the fact of the federal presence. And so what the government says is we don't want to set you

02:06:39.700 - 02:06:50.350

back because we're the ones that are raising your costs, so we're going to do some things to try to make it fair for school districts in terms of financing. And, and really at the end of the day what happens is school a lot of states try

02:06:50.350 - 02:07:02.350

to equalize school district financing right they try to say we're gonna try to get it so that per pupil expenditures in one district are roughly equal to the per pupil expenditures in another district and the states are figuring out how to finance their school districts by

02:07:02.350 - 02:07:16.609

trying to attain what's called equalization and the federal aspect of this kicks into in a way that's not terribly germane because this issue is so deep that you're gonna see why. Here's how you figure out. The federal government wants you to figure out through the Secretary

02:07:16.609 - 02:07:31.000

of Education as a state whether you are trying to attain equalized funding and if you do then that affects the amount of funding that the school district receives. Here's what the statute says. In the 2nd fiscal year preceding the fiscal year for which the determination is

02:07:31.000 - 02:07:48.509

to be made. The amount of few per people expenditures made by the school district with the highest such per pupil expenditure did not exceed the amount of such per pupil expenditure made for the school district with the lowest such per pupil expenditure by more than 5%.

02:07:48.520 - 02:08:00.669

So obviously you're right with me. You, you know exactly what this says. I'm, I'm, I'm, I'm being sarcastic. Uh, and so what, what it's basically telling you is you gotta look at the poor people expenditures of each district in the state and you gotta try to

02:08:00.669 - 02:08:12.419

figure out whether it's equalized and the way you do it is you compare the highest to the lowest, figure out what the spread is. If it's really narrow, it's pretty equalized. If it's really wide, it's not equalized. So it's you're, you're getting into statistics about degree

02:08:12.419 - 02:08:30.649

of measure so you think you're done, but wait a minute, here's what the statute says after that. In making that determination. The Secretary of Education shall disregard school districts with per pupil expenditures above the 9 95th percentile or below the 5th percentile of such expenditures. So

02:08:30.649 - 02:08:41.250

now you're talking about percentile and 95th percentile and 5th percentile, and you rate the school districts and you gotta forget about the ones at the top and you gotta forget about the ones at the bottom. And I, I gotta tell you, when I first got this

02:08:41.250 - 02:08:53.870

case, I started reading this is the only statutory language that I have. I'm reading the statutory language at first I'm falling asleep. And, and second, I'm just trying to understand what's going on and to really understand it you have to know school district financing, you have

02:08:53.870 - 02:09:07.709

to know statistics, you have to understand why you need need to lead off out leave off outliers to make any statistical sense. You have to understand why school districts even care about this. It requires such knowledge in such an area with a lot of history that

02:09:07.709 - 02:09:22.100

unless you have that you can't possibly do the case justice. Now I'll, I'll cut to the cut to the chase in this in this way. Almost anybody who read the statutory language thought that the way that the Secretary of Education was doing it was wrong. And

02:09:22.100 - 02:09:36.140

what the Secretary of Education was doing is outlining all school districts along the spectrum. It says disregard the bottom 5%, disregard the top 5%, and then figure out what the spread is. The whole question was about what who you're disregarding. What the Secretary of Education was

02:09:36.140 - 02:09:48.529

doing is not disregarding school districts. So if you have 100 school districts, it wasn't disregarding the bottom 5 and the top 5. What the secretary was doing was something which makes a lot more sense, but it's a lot more difficult to me with the statutory text,

02:09:48.899 - 02:10:01.319

which is disregarding the bottom 5. Well if you take into account a number of students disregarding the top 5, if you take into account the number of students because you could have some really large school districts that are contributing a whole lot to the fiscal state

02:10:01.529 - 02:10:11.169

and you wouldn't, and some really small ones that that don't contribute at all, you wouldn't want to treat them all the same because some districts matter a lot more because of the number of students. So we get up in court, we're giving the argument. I'm trying

02:10:11.169 - 02:10:22.830

to defend the secretary's understanding immediately the justices are OK, that's very interesting what you're saying, and I was trying to explain why this makes good sense. I, I don't even get a chance really to even say, may it please the court before I have my, my

02:10:22.830 - 02:10:37.270

argument underway. And, and Justice, I think it was the Chief Justice or Justice Scalia, immediately chimed. Justice Scalia says, uh, Mr. Srinivasan, you wouldn't want us to ignore the statutory text, would you? first no, Your Honor. Yes, I said, no, no, Your Honor, I don't think

02:10:37.270 - 02:10:46.919

you need to ignore the statutory text. And then he said, Well, you wouldn't want us to stretch the test statutory text, would you? And I said, well, I think it depends on what you mean by the word stretch because I don't think you really need to

02:10:46.919 - 02:11:00.479

stretch the text, so we're launched and it's exactly the dynamic that you're talking about here. Can a general's judge appreciate why, even though the words that are looking at him or her don't seem to marry with what they wants them to say, it actually makes a

02:11:00.479 - 02:11:14.040

great deal of sense if you understand the industry. So the argument just became a push and pull basically this makes sense, yeah, but look at the text. Justice Stevens says to me at one point, Suppose I'm with you on the the reading that this is the

02:11:14.040 - 02:11:26.430

most sensible reading and nobody could have intended anything different, but suppose I'm against you and just don't think that the text really can accommodate your reading. What do you think I should do? Well, I mean some of like I mean Bob has probably been in a

02:11:26.430 - 02:11:41.450

similar situation when you're a generalist up there you can't just say. You know, we give effect to what's sensible and don't worry about the words and because then that's a lot of justices who are gonna have none of it so I started giving an answer and

02:11:41.450 - 02:11:51.399

I said, well, you know, I think it's a sliding scale and the more clear you think the text is the less you can give effect to what you think makes sense but I don't think we're in a situation in which we're so far off the deep

02:11:51.399 - 02:12:01.439

end on the text that you can't give effect to your common sense intuition and. Uh, the Chief Justice said, well, yeah, I would have thought you would have said that because your office, I the Solicitor general's office, is always in here telling us to give effect

02:12:01.439 - 02:12:13.100

to the text, and I said, yeah, that's why you start with the text, but I think we're OK on that. And Justice Scalia says, what's the matter? Don't you folks have any Church of the Holy Trinity people over there anymore and for those those. Don't know.

02:12:13.310 - 02:12:23.870

Church of the Holy Trinity is an old case, old Supreme Court case that basically stands for the proposition that even if the language says one thing, if the only sensible construction is the other thing, you can do the other. And Justice Scalia was basically saying you

02:12:23.870 - 02:12:36.430

can't do that. So fast forward later Justice Justice Breyer has exchanged with the very very end of the lower argument where he's trying to analogize this is something that all the bankruptcy protection practitioners probably here can can identify with and then I don't know if this

02:12:36.430 - 02:12:49.040

came up in your argument, Danielle, but. Often what generalist judges are doing is trying to draw analogies. So Justice Breyer says, Well, let's treat school districts like a set of cards, and let's just say each school district has a card and a number on it tell

02:12:49.040 - 02:13:00.120

you how much they're being, uh, they're expending per student, and, OK, I'm with you. I'm with you. So if I just count off the 1st 5 cards and I just count off the 1st 5 bottom 5 cards, why aren't I doing and at and at that

02:13:00.120 - 02:13:12.029

point I'm frankly just my head spinning and I'm sure it's a, it's, it's a good question. It just shows my inadequacies as an advocate. And at some point you're famous for that. Yeah, well, um, well, it was laid bare here and, and we had a couple

02:13:12.029 - 02:13:24.509

of exchanges and I finally said, you know, Justice Breyer, I don't, I don't think I'm quite understanding, and he said something like, I'm not sure I understand what I'm asking you, so just forget about it. So to get to the end of our argument, the case,

02:13:24.520 - 02:13:38.470

the, the case goes to submission. I don't think any of us really had a good idea of what was gonna happen. The opinion comes out, Justice Breyer of all people writes the opinion. It's 54 and it turns out in our favor. He writes an opinion that

02:13:38.470 - 02:13:57.799

literally says at the beginning, um, something like, for purposes of exposition, we depart from the normal order of discussion. Um, and we first, where we usually consider statutory language initially instead because of the technical nature of the language in question, we first examined the provisions background

02:13:57.799 - 02:14:10.040

and basic purposes. So he starts with background and basic purposes under Chevron and then he goes to text. And he says what we say makes a lot of sense when you look at history, when you look at the only way school districts can think about it,

02:14:10.080 - 02:14:22.709

when you look at stat statisticians will tell you why you need to limited outliers, this is the way to do it. Kennedy and Alito concur and say we agree we think the order of doing this basically is kind of odd and we would have started with

02:14:22.709 - 02:14:41.939

the text but notwithstanding that, that's author's discretion and we'll go with it. Justice Scalia, perhaps unsubscribing unsurprisingly rights of dissent, and he, I think to put it, put it mildly goes ballistic. It's just not what we do as courts. We start with the words. The only

02:14:41.939 - 02:14:51.660

way we can understand what Congress wanted to do is we give effect to the words, and if you look at the words, it can't possibly be squared squared with the Secretary of Education did. So I, I don't know that I did a particularly good job in

02:14:51.660 - 02:15:04.379

that case and all can. I mean, I couldn't even understand some of the questions that just shows you, um, but I think at the at the end of the day I felt good about the result because I really felt like the language at least accommodated what

02:15:04.379 - 02:15:16.740

we wanted to do. I also felt very strongly. That if you thought about the way the world, the only way the world could sensibly be constructed, this has to be the right answer. And at the end of the day I come back to the most basic

02:15:16.740 - 02:15:28.339

proposition that I, I think we should all think about in this area, which is we talk about text versus purpose, which is the way you've been kind of discussing it so far. What are we asking about when we're thinking about text? You're really thinking about what

02:15:28.339 - 02:15:40.589

Congress could have intended and that's the way, that's the place to be. What did Congress mean to do? And if you think about what Congress meant to do in a highly specialized area like school district financing or bankruptcy or whatever, presumably they're getting a lot of

02:15:40.589 - 02:15:52.069

advice on the language they're using from practitioners in the area from people who are steeped in the industry so it at the end of the day we come back to that because the words that they put into the statutory code are born of a lot of

02:15:52.069 - 02:16:04.310

information from people who are experts like you all, um, and like school district. Um, officials in the case that I was arguing and you have to view the words with that in mind too, and I thought in my case if you did that this was the

02:16:04.310 - 02:16:15.890

right conclusion to come to. Fortunately 5 people thought so too, and 4 people didn't, uh, but that's what we needed to get to win and I think that's the way to think about these cases it's the way I think about them now that I'm on the

02:16:15.890 - 02:16:28.924

bench. Looking at agencies, what was Congress trying to get at? We can only understand what Congress was trying to get at if we try to think about the informational dynamic that was going on in Congress's mind, which just gets us back to thinking about how specialists

02:16:28.924 - 02:16:43.308

are viewing the area. So, other than, other than uh other than Scalia, who were the other three against you? The other three were uh Alita was for you. Scalia was against us. Alito was for you. Alito was for you, the other three against you. It was

02:16:43.308 - 02:17:03.559

Thomas Suter and, uh, Chief Justice Roberts. Fascinating. Can I pick up on that because I, I think it, it's, it's a good way to come into Jebbik. Whether you be a specialist or a generalist. I think all of us here who have done bankruptcy. It was

02:17:03.559 - 02:17:23.240

understood if somebody asked you out in the hall before you went into court. So what's the priority waterfall? And you go, uh, it's secured administrative priority unsecured equity. And that's just the way we understand it. And So this concept of absolute priority, which has been around

02:17:23.240 - 02:17:43.669

since 1939 or so, actually you could trace it back even further, so that's the concept. Then somebody comes in and says to you. But in fact, Absolute priority is only in 1129 when you have a cramdown plan and that's only in 726. It ain't nowhere else.

02:17:44.450 - 02:18:09.250

So that person. I Now, what happens when you go to a journalist? The generalist, if that person's primarily motivated by text, you got a problem. That's really Chris Landau's point is the text doesn't support what some people have thought to be. The common knowledge. The flip

02:18:09.250 - 02:18:24.530

to that is the other side says, wait a minute, if this is the way it's understood, and this is the way we actually think even in '78, Congress understood it and I'll come back, remind me to come back to that in a moment. Then You're inviting.

02:18:26.440 - 02:18:42.879

Counsel in the next case and in the next case and in the next case to skip a class, to skip a person in the class, and the consequences of that. So if you're a pragmatist or consequentialist, you're saying, oh boy, this ain't good, this is going

02:18:42.879 - 02:18:58.689

to be a really slippery slope, and in fact it's not going to be fair. So you've got the textualist on one side versus the person looking at the consequences and the fairness on the other, and there's a real tension and you're seeing that tension play out

02:18:58.689 - 02:19:18.440

in connection with this particular oral argument on December 7th. The interesting thing about the drafting of the code. When our court came out. With the decision. And there was a petition for a hearing in the bank. And so what do you do? And I, I've said

02:19:18.440 - 02:19:36.110

this, I, I called Rich Levin, who worked on the code with Ken Klee. I said, what were you guys thinking? Just as background. And he goes I don't know. And I go, Rich, you guys wrote it. He says, let me give you a little story. When

02:19:36.110 - 02:19:53.900

we were drafting Ken and I, we were young and we thought we were really smart and we were gonna answer every single question, every single problem with some drafting. And he said George Treer, who was a well known bankruptcy lawyer from LA comes in and he

02:19:53.900 - 02:20:13.120

says, boys. You know, I was like that once. But the older I get, The more I think that maybe you should allow for some play in the joints which is actually identical to what Chris used the other day. And Rich goes. The older I get, the

02:20:13.120 - 02:20:34.700

more I think that maybe George was right. And so who knows, but To a journalist, if you're, you're hitting a textualist. Like Justice Scalia, God rest his soul. That's one way to make the argument, but if you are looking at somebody like Justice O'Connor who really

02:20:34.700 - 02:20:51.000

looked at the consequences of what she was doing. Danielle's argument makes a whole lot of sense to her, so different strokes, different folks, different ways of looking at it, and I would say to people, don't think of of things necessarily as being, you know, one end

02:20:51.000 - 02:21:07.099

of the political spectrum in the other. It's, it's a different way of approaching an issue that has. Not necessarily a whole lot to do with politics. So, can I suggest another way of thinking about this, which is, um, I get the, um, text versus purpose, right?

02:21:07.160 - 02:21:23.099

And that's a dynamic, you see. There's another way of thinking about some of these issues which is, uh, like rules versus standards. I just interject. I'm not sure on this one it's necessarily, we don't necessarily know what the purpose of Congress was. It's conceivable that no

02:21:23.099 - 02:21:43.330

one thought of this. Correct, right, exactly, um. You know, looking at this from the rules versus standards way of life, there are people who say we're going to have clean doctrinal lines with sort of crisp corners and clarity about the rules, and then others who think,

02:21:43.580 - 02:22:02.080

you know, when rules are articulated, there are guideposts and that there ought to be playing in the joints in broad discretion. You might view. A case like Jevvik through a lens similar to say Owens Cornick where a bankruptcy court, which is about substantive consolidation, you might

02:22:02.080 - 02:22:21.190

say, look, whenever you've got a situation where it's really complicated to figure out which assets belong to whom and which liabilities go where, if it's really hard to do. It might just make more sense to lump it together and call it all one thing, or you

02:22:21.190 - 02:22:39.419

might say, look, I understand it's hard, but if someone relied specifically on the credit of X when they made the loan, you don't get to say it's just easier and more efficient and will facilitate the reorganization. You're stuck with the hard rule, and it seems to

02:22:39.419 - 02:22:57.580

me. Right. And if you look at the dynamic of the way Owens Corning played out through the process, the bankruptcy courts, which tend, you know, in my experience, to more broadly believe that Congress meant to give them broader discretion to do substantial justice and achieve the

02:22:57.580 - 02:23:14.549

purposes of the code by the best of their lights, thought when it read the code that it had that authority, and the Court of Appeals said actually no there are rules, and I understand it's inconvenient. And I understand that you know it may be hard to

02:23:14.549 - 02:23:36.860

do, but where someone relied, you have to respect their reliance interest. Do you see that dynamic as related to the problem in a case like I don't know. I think in Owen's corning to some extent you had. A Significant difference between A 2nd Circuit opinion Written

02:23:36.860 - 02:23:51.110

by Ralph Winner. Oh, I think Augie was Stivo, yeah, and it laid out a, a couple of ways of looking at it. It was one of the first cases that that dealt with substantive consolidation where you ignore boundaries and you bring everything together for purposes of

02:23:51.110 - 02:24:07.209

the bankruptcy. And Then you had, I think it was a number of other cases later including a DC Circuit case which got into all these various factors, right, 18 variables and no coefficient. there was there was one, yeah, one bankruptcy court had 7. The DC Circuit

02:24:07.209 - 02:24:24.070

had a, you know, or the DC Circuit was sort of like it was touchy feely and. You weren't on the court. That court doesn't know what it's doing. And so, and so. In in reality what happened in in uh Owen's corning was I wanted to go

02:24:24.070 - 02:24:42.379

back and give a rationale for why Ralph was right and I don't like factors. Uh, anybody who knows me knows that. And so I found this is where an amicus brief actually just to digress for a second was helpful. They had done something called factors, and

02:24:42.379 - 02:24:58.549

I wasn't necessarily agreeing with it, but it hit me. why not talk about principles and could I come up with some principles that might be guides for, uh, bankruptcy judges in looking at this. And so that's where I started playing around, OK, what are the principles

02:24:58.549 - 02:25:20.129

I can come up with? But in the end it was really an an attempt. To give a give reasons why I thought Judge Winner had it correct at the outset. So You, you play it out, one of the problems with Owen's Corning was that you started

02:25:20.129 - 02:25:44.299

having people call these deemed. So you would deem it for purposes of the plan. And And whoa, so the person who made the lending relying on X as credit was all of a sudden being disadvantaged. And so that was in part. If you want to talk

02:25:44.299 - 02:26:03.450

about a motivating concept. In part is there was some unfairness there. And that's not the way also from the butner you look back at how states would have looked at this, and that's where I really dove back into how states deal with when you ignore boundaries

02:26:04.040 - 02:26:25.330

and It seemed that the unfairness predominated police for me in that particular case. So Judge Donald, um. You know, as someone who is a bankruptcy judge, one of the great things about the bankruptcy practice is um it's a small community, um, it's a bunch of people

02:26:25.330 - 02:26:47.540

who work together a lot. There are these um you know, terrific actually bench bar interactions where lawyers and judges sort of will talk about the way we think about problems, um. To what extent do you think? Well, and so what happens is when you have a

02:26:47.540 - 02:27:08.429

thick and robust culture, sometimes what happens is it causes a sort of prism on how you see the world through the perspective, the thicker the culture, the more robust the culture, the thicker the prism, and the more it affects the way you view. Issues and to

02:27:08.429 - 02:27:26.139

what extent, um, you know, in, in your experience, do you think that um. Being now a generalist judge, you have to sort of strip back that prison or does that dynamic affect the way these issues come to you? I think it does. I, I wanna, I

02:27:26.139 - 02:27:48.080

wanna step back and, and just talk about my own experience briefly because I think that question. Basically invites me to talk about that experience coming into. Uh, the bankruptcy system coming from a non-bankruptcy background on the front end. Observation was that This was a group of

02:27:48.530 - 02:28:11.580

highly specialized individuals who spoke a common language. And it was kind of like being in a foreign country and not speaking the language because they all spoke the strange language and it, it really It took some time to learn the language and, and because people are

02:28:11.580 - 02:28:28.950

very comfortable with that language and with each other, there's sometimes a tendency to forget that there are other people out there who don't speak it. And because things move very quickly, there is a natural urgency uh in bankruptcy. Things need to move, things need to happen,

02:28:29.299 - 02:28:47.719

and, and this group of specialized people can develop almost an impatience for folks who don't, who are not a part of that, who don't come from that area, but I think that these cases and talk about the journalist court, there is uh uh a need, an

02:28:47.719 - 02:29:17.290

importance for people to understand. That um in presenting these cases. need to approach it. In a way, in the brief writing that basically. Educates around the issue. The ad advocacy has to be uh education and persuasion because I, I think Sri said earlier. It's really difficult

02:29:17.290 - 02:29:37.849

for you to be an effective advocate if you don't establish uh and ensure a baseline of knowledge from which people can uh can rely uh and also consider a range of uh of possible options if there are those uh I've seen all too many, uh, instances

02:29:37.849 - 02:29:55.500

of people coming into uh the the court and they come in with their role of this is my position. This is what you need to understand and it's kinda like you're not willing to, to be open and discuss other possibilities. That doesn't work and when you're

02:29:55.500 - 02:30:15.459

talking about bankruptcy as I said before, you've got to Educate on a number of of uh of of of layers uh to bring the the court around where the court. Hopefully is sophisticated enough to even consider these other options like the example you used about Justice

02:30:15.459 - 02:30:33.700

Breyer, what about this, what about that? That really gives the court the best opportunity to, to get it right when they can think broadly about these other issues, but in many instances, uh, you've got to get the court up to the baseline and that needs to

02:30:33.700 - 02:30:51.110

be done. Uh, in the briefing because you're not gonna have enough time in the ruffle tumble of oral argument to get the court up to speed, uh, and. You know, we tell people all the time that you've got to sometimes uh admit, uh, explain the weaknesses

02:30:51.400 - 02:31:05.679

even though you don't want to, but you gotta explain why they're not damning, why they don't, uh, you know, uh, automatically by default give the victory to the other side. But you can't just ignore it. The court needs to be educated on all of those things

02:31:05.679 - 02:31:22.910

and bankruptcy is, it's difficult in many instances, but you have to keep in mind and we have to keep in mind that overarching umbrella of the purpose of, of the bankruptcy code. So you know, whether you look at it as a purposeivism theory or something else,

02:31:23.320 - 02:31:40.900

um, that's the backdrop I think that we have to examine all of these, of these issues and I do think that. Even though I said stop and put the the um. The microscope or whatever to every word it has to make a coherent uh hole in

02:31:40.900 - 02:31:57.790

the end and the court is gonna be looking at what is the language but also where the language uh gives some seems to give some permission or doesn't include a prohibition. That's an important, um, an important thing too, and if your view is for the court

02:31:57.790 - 02:32:10.419

to use that lack of a prohibition as a vehicle to get to the area you need to get to, then you got to explain how the court is, you know, is gonna be able to get there, uh. That that's the way I, I, I look at

02:32:10.419 - 02:32:26.349

it and I have sat with uh. I never sat, interestingly enough on a panel with one of my other on a bankruptcy case where one of my other colleagues had a bankruptcy background. Maybe we have some kind of unspoken rule that it's only one form of

02:32:26.349 - 02:32:41.429

bankruptcy judge her panel on a bankruptcy case, uh, but it is interesting talking about that. For those of you who want to know whether or not when there is a former bankruptcy judge on a panel with, uh, dealing with the bankruptcy issue, whether the other colleagues

02:32:41.429 - 02:32:57.589

defer. Um, you know, judges are fiercely independent, and they don't defer. I don't care what your background is. People come at it, you know, we're all equals. We're at the table trying to figure this out, and my view is just as significant, uh, and as persuasive

02:32:57.940 - 02:33:09.290

as any other view here, and I feel that's the way it should be. I wonder if Judge Jabber has a view on that. Uh, I had a case a few years ago with two of my dear friends, Mike Fisher and Brooke Smith. The Supreme Court fixed

02:33:09.290 - 02:33:32.160

that one, and yes, and they, they, uh, it was a case called Philadelphia Newspapers which I guess eventually went to the Supreme Court under, uh, Radlaxs. They were looking at the text. And they were looking at the text. 12 or 3. That's it. And and, and

02:33:32.160 - 02:33:48.200

Brooks, God bless him, when Mike Fisher wrote the majority opinion saying I won't join in part X because it talks about legislative history. I mean that's, that's my buddy Brooks, and I kept saying, guys, this is actually an easy case and. I almost put that in

02:33:48.200 - 02:34:03.519

the opinion. It was an easy case, and so I decided, OK, I'll go through and do the analysis. Yes, it looks like text is such and such, but you have to have text within context. And then what is the structure of the bankruptcy code and then

02:34:03.519 - 02:34:17.089

what are the consequences that you go their way and by the way, this doesn't really this in the end isn't fair and I. You know, I thought, well, OK, I'm just outvoted because the 5th Circuit had gone 30 the other way. So I had 5 judges

02:34:17.089 - 02:34:34.320

against me, and then it doesn't make them right. Well, eventually the 7th 7th Circuit picked up on it and, and, uh, and. The Ninth Circuit, I guess, and so it gets straightened out, but it's a great example, right, because Judge the, the, the 3rd Circuit majority

02:34:34.690 - 02:34:46.849

says plain language, what are you talking about? It says this, this or that. It means any of the three. And they also had a very good judge in the 5th Circuit, a friend of mine, Edith Jones. I mean, Edith is, is, you know, bankruptcy steeped, so

02:34:46.849 - 02:35:04.950

they, they say this is an easy case, plain language. Judge Ambrose says actually it's not so easy. It's actually complicated. You need to understand the structure and the history and the purpose and the role of secured credit and the other analogous protections of the scheme, and

02:35:04.950 - 02:35:18.665

you really need to get 1111B in order to understand how it is that credit bidding operates because there are analogous provisions throughout the code and you kind of need to pull. Needle all the way through the fabric in order to understand how this all comes together

02:35:18.955 - 02:35:34.394

and writes 40 pages of in my humble view, overwhelmingly persuasive structural argument about how the pieces of the code fit together and how you can't understand a single piece in isolation without understanding the rest of the architecture and if you pull this out because of this

02:35:34.394 - 02:35:50.280

language, there's a whole house of cards that then falls down, devastating. Then goes to the Supreme Court and says no. It's actually just plain language. You don't need the rest of that. Oh, but the plain language means the opposite of what the Third Circuit majority said

02:35:50.280 - 02:36:08.919

it meant, um, but, um, right, but but perfect example though, right, of the role of text and, uh, and structure. Yeah, it, it is, and interestingly enough, the decision that the Supreme Court was written by Justice Scalia. Who looked at text differently than my two colleagues

02:36:08.919 - 02:36:30.179

and judges on the the 5th Circuit, so. They're not easy issues and they're not especially not easy issues. First of all, they're not easy issues for people who do bankruptcy. So they're geometrically harder for somebody for whom bankruptcy is to quote Bernice, a foreign language, and

02:36:30.179 - 02:36:55.469

I guess as advocates and maybe other people on panels try to make it as simple and bite size as you possibly can for your colleagues or those before whom you appear because otherwise if you start talking. In Bankruptcy speak. You're going to lose them. So this

02:36:55.469 - 02:37:19.139

dynamic of let's let's say the court that is the native speaker in what is otherwise a foreign language to the generalists, and then reviewed by the court that is the generalist court isn't really unique to bankruptcy if one might think about the um. The way the

02:37:19.139 - 02:37:36.139

Supreme Court deals with patent cases that come from the Federal Circuit, which has an expertise in intellectual property issues the same way do you see any analogies or parallels there? Oh yeah, yeah, no question. I mean, I think that it all seems very, very analogous to

02:37:36.139 - 02:37:49.620

me, and I guess the thing is that from the perspective of the specialist either court or specialist body practitioners, the object is to avoid being perceived as an echo chamber. Because I think once you get perceived as an echo chamber, then it starts to look like

02:37:49.950 - 02:38:03.759

you're speaking your own language to your own people and you've lost sight of the broader perspective and if the generalist court has that perception of the specialists, not as a specialist body of experts, but as a specialist body who's just an echo chamber, then it turns

02:38:03.759 - 02:38:21.280

out to be problematic, um, and I'd be curious to know, for example, the case that you were you all were just discussing where plain language goes one way and then um. There's a more modulated analysis that takes into account purpose and context and then lo and

02:38:21.280 - 02:38:34.230

behold plain language goes the other way. You know, for the people who decide that the plain language goes the other way, would they have reached that conclusion had it not been for the intermediate step of understanding the context, because I think the thing is you can

02:38:34.230 - 02:38:50.304

only, you can, you can only give effect to language in some situations when you do understand the context and then it might look really plain. That's why Judge Amper actually gets credit notwithstanding the Supreme Court's. Saying oh you don't need to do any of that work

02:38:50.304 - 02:39:03.705

it's actually really easy. I actually my humble view is that they might not have come, they may not have thought that the language was so plain and so simple, but for the assistance they got by someone explaining to them, here's the structure, here's how it works,

02:39:03.825 - 02:39:22.339

here's how it operates. I mean, you know, at some level it becomes an existential question about what what is language and you know what is what is playing and text and context, um. Um So let me maybe ask a provocative question that your, your observation raised

02:39:22.339 - 02:39:41.150

which is um the risk is that the generalist court. thinks that the specialist court is an echo chamber and that they essentially aren't getting it. They're speaking their own language. It's a different language from the way we speak and as long as they're going to insist,

02:39:41.719 - 02:39:58.040

you know, doing it their way, we're just going to keep fixing it until they get it, right? You might describe it when we're being pejorative, the Supreme Court's patent jurisprudence with the Federal Circuit vaguely that way to be provocative to. Judge Donald and Judge Amber, to

02:39:58.040 - 02:40:27.030

what extent do you think a decision like Stern v. Marshall in those cases is the Supreme Court saying something like that to the bankruptcy establishment? Brill. I'm going after you. You know, um, I, I thought, um. When I first came in the court, we were in

02:40:27.030 - 02:40:55.879

the Marathon era and I I heard so many lectures and so many conversations about uh that issue and those issues. I, I thought that. Uh, we had Basically addressed. And we have come to Um I'm understanding our level of respect that that we wouldn't sort of

02:40:55.879 - 02:41:13.099

have to rep that again and and then you know time is marched on and looking at at at Stern v. Marshall I, I, I guess I'm not ready to say that uh it is. An echo chamber, but I think that the journalist courts are going to

02:41:13.099 - 02:41:39.580

always fiercely. Protect Their right and ability and will continue to have uh I suppose a. Healthy or unhealthy depending on where you are suspicion of the um the the specialist courts uh and I think they wanna avoid basically ever appearing that uh of abdicating their role

02:41:39.580 - 02:41:59.980

as a as an independent reviewer of those actions emanating from there uh. I think that there is because of that, there's always gonna be a likelihood that, you know, that we, the journalist courts are going to, you know, to mess it up. A protecting our You're

02:41:59.980 - 02:42:17.820

protecting our role as an independent reviewer. But I, I'm not prepared to say that um they view the specialist courts, particularly the bankruptcy court, uh, as an, as an echo chamber. I think there is a respect for that body of expertise, but the journalists will continue

02:42:17.820 - 02:42:40.679

to maintain their, their role and question and sort of look under everything that makes certain that that in their view it does comport with. Uh, you know, the roles of statutory construction and, and other things. I think that with regard to the intellectual property area, particularly

02:42:40.679 - 02:43:00.980

patents. As you know, the Federal Circuit has Had patent jurisdictions since 1983 or thereabouts. And I think there has been a perception, I don't know if it's true or not, that the court was getting so down in the weeds with regard to particular issues, so arcane.

02:43:01.799 - 02:43:23.030

That It didn't make sense to a generalist. You see the same thing translated to bankruptcy. Think about the henhouse case from 2000. Everybody understood 506C or supposedly they thought they understood the way it would be, and if something was a trustee, it could also be some,

02:43:23.110 - 02:43:39.660

you know, another party that could bring the same types of matters and you got to the Supreme Court and I went to the argument with Eric Brunstad and. The, uh, fellow Bob, uh, Brown Brownley or from Saint Louis, and it was a great oral argument later

02:43:39.660 - 02:43:59.669

on that year Justice O'Connor said that was the best oral argument of the year and but it was clear that they, even though these two guys were talking simplistically, it wasn't really understanding. They weren't getting the context and it ended up being a textual decision not

02:44:00.139 - 02:44:20.669

not nothing, right, only that the trustee means word trustee means trustee. That's right. And so. What do you do about it? So in our circuit, fast forward 3 years. The a panel in a case called cybergenics. Has somewhat the same type of issue. They go 3

02:44:20.669 - 02:44:38.610

to 0. We're just gonna go with the language because that's in effect what Henhouse is doing. And I'm saying to folks, whoa, this ain't good. I mean, and we were fortunate enough to get the court to go and bank, which never happens if you're somebody's 3

02:44:38.610 - 02:44:55.200

to 0 unless the panel itself says we should go in bank, which they didn't. And it was like 8 to 5 or 8 to 6, uh, the other way and I, I remember one of my colleagues saying to me, OK, you won. And But it's going

02:44:55.200 - 02:45:10.120

to get reversed and for some reason the Supreme Court didn't take it. Maybe what they saw, maybe er petition was filed, or maybe what they saw was maybe there is context here that we didn't deal with or appreciate a few years ago. If committees couldn't pursue

02:45:10.120 - 02:45:32.809

a state causes of action, we wouldn't have the problem. Good point. And so it, it is a um I'll give you one aside because I think I can say it now. The opinion in cybergenics. I had a 9 page outline. And Eddie Becker, God rest his

02:45:32.809 - 02:45:46.370

soul, who was one of a great judge, said, I just live for big cases. I just love big cases, and he signed it to himself, so he calls me the next day and he says, you know that nine page outline you had, you mind, uh, sending

02:45:46.370 - 02:45:59.980

it up my way? I said, Well, why don't you just write your opinion and I'll look at it maybe I figure I'll do a concurrence or something. The opinion comes out and it's identical. To the 9 pages and I've always said to my two clerks who

02:45:59.980 - 02:46:21.349

worked on it. Then why don't you give that and they will never own up to it. Eddie, I'm sorry I had to tell him. Great minds. Great minds think alike. That's the explanation, um. Um, actually he had also this he then to rub it in, he

02:46:21.349 - 02:46:43.540

calls me, doesn't send me a note. He calls me and he says, guess what? I just got this professor somewhere, this bankruptcy expert saying what a great opinion I wrote. Damn Wow Wow, um. So it's like, you know, this week every year that he would come

02:46:43.540 - 02:47:01.530

to the court to play piano at the court's annual Christmas party. It's hard, hard not, yeah, it's hard not to, I guess your year he did the same, um, um. Um, any song that was pre-1954, he could, without having any kind of notes in front of

02:47:01.530 - 02:47:19.679

him would play it. And so just to digress, there was a, I quoted Hank Williams. The original Hank Williams. Who is country of course and. Eddie calls me, he says, who in the hell is Hank Williams? I said, whoa, whoa, you knew everything before '54. Hank

02:47:19.679 - 02:47:33.709

Williams died like on January 1st, 1953. I mean, you know, if you grew up in rural America where I grew up, you know who Hank Williams is? He says, take it out of the damn opinion. What I put in the opinion was I was actually a,

02:47:33.719 - 02:47:44.750

uh, I was the scent I he wrote a song one time. What in the confound cat hair do you want me to do? And I was thinking the bank, the district judge had gone back and gone back to him twice and then he's sitting there going,

02:47:44.830 - 02:48:03.469

What do you want me to do, guys gals anyway, sorry, so, so. Relating it right, so to the extent you think that there is this. Culture clash between and I'm going to simplify it right between the sort of echo chamber of the specialist and the broader

02:48:03.469 - 02:48:22.950

view of the generalists right appeals are sort of teaching moments right where the two worlds collide and therefore something comes out of it and you, you learn something, um, if that's right, um. Then I guess I'd be interested in folks' reactions to whether the tool of

02:48:22.950 - 02:48:45.799

certified interlocutory appeals in bankruptcy cases is something that is um underused might be used more often um interested in reaction to that and similarly if I can be further. Provocative to the approaching but not crossing the line of disrespectful, um, whether the doctrine of equitable mootness

02:48:45.799 - 02:49:01.000

interferes in an unhelpful way with that type of communication. So I'll throw that open to you. Can I just give a little background on the this is another Eddie Becker story. You're talking about like 158D so yeah, OK, so get a call from Ed Becker and

02:49:02.230 - 02:49:19.500

Who in the hell is Mike Siegel? And I said Mike Segal is a friend of mine at Simpson Thatcher and at the ABA level they have determined that having appeals often go from bankruptcy judges to district judges without going to the court of appeals is is

02:49:19.500 - 02:49:33.559

a waste of time, energy, and money. And he says, we're inundated. We're inundated with immigration stuff and with sentencing, and we don't have, we can't do, we can't have this. He said, I said, let me tell, let me call Mike and put you two together. He

02:49:33.559 - 02:49:54.990

says, I really wanna talk with this guy. And so. I, I, I put them together and within, I'm sure within about 5 minutes of usually, you know, I'm right you're, they liked each other. And cut the deal that became 158. That's great. And so it is

02:49:54.990 - 02:50:16.080

a good idea. Should it be used more often? I think it is a good idea. I think it probably should be used more often. And Kev, what do you think? Good. has to certify an issue. Both times I said no. Other colleagues have certified more frequently

02:50:16.080 - 02:50:30.929

than I have, and the circuit also doesn't hear them all. Oh yeah, that's correct. I mean, you got some people who think, you know, let's let it ripen, so to speak, and develop. I think the process works. I think, I think, I think on our court,

02:50:31.139 - 02:50:49.059

um, it's not used all that uh frequently and I, I think the attitude of the court is the we want to let it ripen. I mean the our court has just a ton of, of, um, you know, sentencing and resentencing cases now and so it's, it's

02:50:49.339 - 02:51:04.990

hugely busy and, and I think our court doesn't look. Doesn't look favorably, uh, probably would not want to see more. So I'm not saying that it's not a good idea to do it, but I think that our court probably would be less inclined, uh, to hear

02:51:04.990 - 02:51:30.179

them because we want it to, to, to go and develop. so. During the Supreme Court argument in Bullard, the case that ended up holding that orders denying confirmation are not final appealable orders, there's a back and forth, and the discussion is, well, look. bankruptcy is a

02:51:30.179 - 02:51:46.629

complex, the Supreme Court has called it an unruly area of the law, and that there's benefit to obtaining greater clarity and that there was an acknowledgement that if they found that orders denying confirmation were not appealable, it would be harder to develop the law. And so

02:51:46.629 - 02:52:02.360

there's a back and forth where Justice Breyer asks the litigant Doug Hallwoodrimeier represented the bank. It says you know if we he was saying that the order was not appealable. He says if we rule your way, would it make sense to include in our opinion a

02:52:02.360 - 02:52:25.629

suggestion to the bankruptcy courts that they more regularly use this tool as a way to bring clarity to this area of the law whereupon Justice Scalia in his inimicable way says. We have a hard enough time getting them to follow our holdings. How do you think

02:52:25.629 - 02:52:44.379

they'll respond to our suggestion? I think he was thinking specifically about Judge Carry when he said that, um, you know, one thing I think we have to say in defense of the Supreme Court, they, they. In the bankruptcy area they normally try to be as narrow

02:52:44.379 - 02:53:02.469

as possible. Sometimes even when they're trying to be narrow like Stern v. Marshall, which you asked about, people perceive that they went the ramifications, the consequences, the effects are much more significant than. Than was intended and you know when it went back to the court, I

02:53:02.469 - 02:53:17.169

think to some extent, you know, I think the court was also worried about other things like how do you deal with magistrates and so there's a host of things they have to consider and they're really trying desperately. Not to mess things up, to allow the system

02:53:17.169 - 02:53:43.299

to flow and sometimes maybe because of a lack of us giving them the context that we should. things, things happen, the, uh, What was the case where the zoning and the New London or something like that. And, and one somebody said to one of the justices,

02:53:43.860 - 02:53:57.379

how could you possibly, I can't think of the case, but it, it had all kinds of ramifications regarding condemnation, eminent domain, etc. Does everybody remember the case, uh, anyway, the concept was you really messed it up, and one of the justices, uh, somebody said the justice,

02:53:57.459 - 02:54:12.940

you really messed it up, and he goes, Why didn't somebody tell us we were gonna mess it up? Um, So I, I, I confess I, I, my, my own experiences, I always feel as if I'm in the wrong court. um, I'm, uh, you know, I do

02:54:13.190 - 02:54:25.485

bankruptcy work all the time when I am in a bankruptcy court, I'm often, you know, say, oh gee, you've done this and this and this. Supreme Court, what's it like in the Supreme Court? I get to the bankrupt I get to the Supreme Court and what

02:54:25.485 - 02:54:47.610

they really wanna know is how does it actually work in bankruptcy, um, um, so when you have areas cases that involve um. Specialized complex areas. To what extent is it and this is not just about bankruptcy right it can be about a complex agency and a

02:54:47.610 - 02:55:05.450

case in which there's a thick history. To what extent is it helpful to have someone who is really well versed in that language as the advocate as opposed to having someone who's the generalist who looks at it more like you would. Yeah, I mean, I, I,

02:55:05.730 - 02:55:22.080

when I was in practice, um. I was a generalist, obviously, and I was trying to. Convince clients that they should want to hire a generalist. And so I was paid to tell people that what you wanna do is you wanna hire somebody like me, um, or

02:55:22.690 - 02:55:38.620

some in your case that might have been a good idea. Well, you know, the idea was to be a translator and because. The short answer is it can be either if the person understands the translator role. So if you're a specialist and you can put yourself

02:55:38.620 - 02:55:51.019

in the mindset of a generalist, I mean that's fantastic because then you're able not only to have the deep reservoir of knowledge that's necessary to be able to inform the generalist court about some principles that you might understand that they might not have the same familiarity

02:55:51.019 - 02:56:00.080

with, but you can translate it in a way that they can understand it. If you're a generalist and you do your job, you're surrounding yourself with specialists so that you can arm yourself with all the information you need and then you can inform the generalist court

02:56:00.080 - 02:56:13.070

in the way that you speak with them normally. So it could be either. I mean, I think if you're where I came from was I was a journalist and I thought that my job was to immerse myself in, you know, get the treatise first, talk to

02:56:13.070 - 02:56:25.740

practitioners. Do everything I could to to arm myself with all the information I needed so that I could play that translator role and if you, if I get somebody like that in front of me and I'm sure Tom and Bernice would say the same thing, that's

02:56:25.740 - 02:56:37.030

a gold mine because that person is speaking the language that you, the way that you speak the language, but they can draw on other stuff that you may not understand and express it in a way that you can't understand so that that's where you wanna be

02:56:37.030 - 02:56:49.990

and. I, it can come, it doesn't necessarily matter which place you start from, but if you get in that sweet spot in the middle, you're, you're in the right spot. I mean, on, on, you know, the question of. Whether what I used to say made sense

02:56:49.990 - 02:57:03.530

when I was getting paid to say it. I'm gonna two things about that. One is. One institution that has no incentive other than to present its arguments in the best way possible to the to the courts that are gonna rule either in their favor or against

02:57:03.530 - 02:57:18.620

them is the United States government. And the United States government forever has structured its presentation such that it's generalists speaking to a generalist court. So there's one office, the Solicitor General Solicitor General's office that generally speaks to the Supreme Court. The appellate divisions in the Justice

02:57:18.620 - 02:57:31.000

Department generally speak to courts of appeals, even though these cases might be highly, highly specialized. So that institution has decided for better or for worse, and they think for better. That the way to do it is to get generalists who have the benefit of all the

02:57:31.000 - 02:57:41.400

specialists who are in the government itself and can play that translator role and one of the arguments I used to make when I was in private practice was if, if that's what the United States does, then it stands to reason that that's a good way to

02:57:41.400 - 02:57:54.400

do things and what I will try to do is to be like the government and that I'm gonna arm myself with the great knowledge that you and the, the council that you've used for years had and that's the that's the role you wanna be. Can I

02:57:54.400 - 02:58:12.419

just add a tag on to that. It was years ago. We had one of the first cases that dealt with the Private Securities Litigation Reform Act. And there were 400 pages of briefing, and they went this way and that way and in came a 27 page

02:58:12.419 - 02:58:32.580

amicus brief from the SEC and the person who had signed it was somebody whom I knew, and he was very trusted Mike Eisenberg. And that 27 pages was by an entity without a dog in the fight. Dick Posner says, Mika Currie, they're never a friend of

02:58:32.580 - 02:58:47.429

the court. They're usually a friend of a side. Here they were a friend, they just wanted to get it right. And that 27 pages was the road map for how the case came out. And it was written, in effect, yes, it was written by a specialist.

02:58:48.179 - 02:59:03.480

In a particular area but written in the style of a journalist and when you get that, it is an immense help. To you as a judge. That's terrific. So we are approaching the end of time. I thought I should just throw it open briefly if there

02:59:03.480 - 02:59:24.959

are questions in the audience that anyone wants to ask that. You mentioned that Stern had unintended consequences broader than it was gonna be another. David thinks yes. Uh, most of, most of us are hoping no. I guess I would imagine, I imagine you hope no as

02:59:24.959 - 02:59:41.599

well. We all hope no, but I don't think, you know, I, I come back to they don't want to do something that really screws it up and it is a very difficult issue. It's a difficult issue for bankruptcy folks. It's a difficult issue, as I said,

02:59:41.879 - 03:00:09.879

exponentially for those who are not bankruptcy folks. So Judge. Bankruptcy judge was an experienced bankruptcy practitioner. District court judge also had bankruptcy and goes to a panel with a bankruptcy expert. No agreement about what the plain meaning of the statute is. Is that really a use,

03:00:09.900 - 03:00:26.799

you find that method of statutory construction. Uh, Obviously I didn't necessarily, but the, I used to say to Tom, was Tom or Slevich, who, who it was Steve Steve Slevich, I used to say, I got your back, dude. That and 50 Cent is a small Midwestern

03:00:26.799 - 03:00:41.650

town won't get you a cup of coffee because we've lost so it worked out so it worked out OK. Um, so with that I'd like to thank all of you and thank the panel, um, for, um, I hope this has been helpful to folks and, um,

03:00:41.769 - 03:00:54.679

and, and again thanks to Denise for doing all of as as ever all of the hard work. So thanks very much. All right thank you. What, what I got it.