Two years ago, the Supreme Court ruled that the 2018 increase in payments to the U.S. Trustee system was unconstitutional because it was not immediately applicable in the two states with Bankruptcy Administrators rather than U.S. Trustees. Siegel v. Fitzgerald, 142 S. Ct. 1770 (Sup. Ct. June 6, 2022).

Although there was no split of circuits, the Supreme Court held today in a 6/3 decision that chapter 11 debtors who paid unconstitutionally higher fees in 48 states are not entitled to refunds.

Justice Ketanji Brown Jackson wrote the opinion of the Court. Justice Neil M. Gorsuch penned a dissent joined by Justices Clarence Thomas and Amy Coney Barrett. The dissent was six pages longer than the 16-page opinion for the majority.

For the majority, Justice Jackson said that “the constitutional violation we identified in Siegel created a monetary disparity in bankruptcy fees that was short lived and small.” Believing that congressional intent informed the Court on the proper remedy, she said that “Congress would have wanted prospective parity, not a refund or retrospective raising of fees,” because the U.S. Trustee system was intended to cost taxpayers nothing.

Since Congress amended the statute in 2020 to ensure that fees would always be uniform in the future, the majority reversed the Fourth Circuit’s requirement of a refund, holding that “the appropriate remedy is prospective parity.”

For the dissenters, Justices Gorsuch said that “[t]raditional remedial principles” and “outstanding precedents” require refunds. He said that prospective relief “does nothing to remedy fees unlawfully exacted in the past.”

Justice Gorsuch ended his dissent by hoping “that the Court corrects its mistake before it metastasizes too far beyond the bankruptcy context.”

We will provide a more thorough analysis on Monday.