Homage to RBG: The Advocate for Consumers and Debtors

With one notable exception, the late Justice Ruth Bader Ginsburg was consistently a dissenter who would have given more protection for consumers and provided greater relief for debtors in bankruptcy. Her opinions exude compassion and intellect.

Justice Ginsburg, who is being interred this week at Arlington National Cemetery, wrote two particularly notable opinions, one at the beginning and the other at the end of her tenure. She also prominently dissented from Stern v. Marshall, the Supreme Court’s most recent restriction on the constitutional powers of bankruptcy courts.

RBG’s Opinions for the Court

Her last word on bankruptcy was the unanimous opinion in January in Ritzen Group Inc. v. Jackson Masonry LLC, 140 S. Ct. 582, 205 L. Ed. 2d 419 (Sup. Ct. Jan. 14, 2020), a case that gave greater definition to a final, appealable order in bankruptcy cases. Granting certiorari was itself surprising, because the Court had written another important opinion on finality only five years before in Bullard v. Blue Hills Bank, 575 U.S. 496 (2015).

In Ritzen, Justice Ginsburg provided a better theoretical framework and conceptual analysis of the characteristics of finality in bankruptcy cases.

The opinion by Justice Ginsburg with the most profound effect on bankruptcy was her 1997 opinion in Associates Commercial Corp. v. Rash, 520 U.S. 953 (June 16, 1997). There, she extended a helping hand to lenders by reversing the Fifth Circuit and holding that a chapter 13 debtor must pay the replacement cost for the collateral, not the value from foreclosure, to retain personal property.                                   

A year after Rash, Justice Ginsburg was back in the debtor’s camp, narrowing the grounds for denying discharge of a debt. In Kawaauhau v. Geiger, 523 U.S. 57 (March 3, 1998), she wrote the opinion for the unanimous court and said that “merely a deliberate or intentional act that leads to injury” is not enough to bar the discharge of a debt. Rather, there must be a “deliberate or intentional injury.”

In Harris v. Viegelahn, 575 U.S. 510 (2015), the Fifth Circuit had ruled that undistributed wages in the hands of a trustee on dismissal of a chapter 13 case should be distributed to creditors to avoid giving the debtor a windfall.

Again writing for the unanimous Court, Justice Ginsburg reversed the Fifth Circuit and said that the “most sensible reading” of Section 348(f) calls for returning the wages to the debtor. She saw no windfall for the debtor. Instead, she believed the undistributed money was “a fraction of the wages [the debtor] earned and would have kept had he filed under chapter 7 in the first place.”

RBG’s Dissents

Justice Ginsburg wrote or joined the dissenters in eight bankruptcy cases, most notably Stern v. Marshall, 564 U.S. 462 (2011), where she sided with the four-justice dissent authored by Justice Stephen G. Breyer. Stern added complication and expense to many bankruptcy cases by narrowing the scope of core matters. Justices Breyer, Ginsburg, Sonia Sotomayor and Elena Kagan found no violation of the Constitution. Any intrusion on the powers of the district court was “de minimis,” in their view.

Of recent vintage, Justice Ginsburg wrote the dissent in Spokeo v. Robins, 138 S. Ct. 931, 200 L. Ed. 2d 204 (2018), joined by Justice Sotomayor. In Spokeo, the conservatives on the Court appeared to be attempting to establish the proposition that a consumer has no standing to sue for violation of a duty imposed by Congress unless the consumer has sustained monetary damage.

Justice Ginsburg would have found enough concrete injury to sue just because the defendant had published incorrect information about the plaintiff.

In late 1999, Justice Ginsburg wrote the dissent in Rotkiske v. Klemm, 140 S. Ct. 355, 205 L. Ed. 2d 291 (Dec. 10, 2019), where she wrote for herself alone.

The majority in Rotkiske ruled that the statute of limitations on a claim under the Fair Debt Collection Practices Act can begin to run even before the consumer is aware of the violation. Justice Ginsburg believed that a fraud-based discovery rule would have the statute beginning to run only when the consumer became aware of the violation. For the majority, Justice Clarence Thomas called the rule “bad wine of recent vintage.”

Justice Ginsburg wrote the dissent in the 6/3 decision in Schwab v. Reilly, 30 S. Ct. 2652, 177 L. Ed. 2d 234 (June 17, 2010), where she was joined by Chief Justice John G. Roberts, Jr., and Justice Breyer. The three justices took the majority to task for putting “no time limit constraints” on a bankruptcy trustee when it comes to objecting to objections.

RBG Joins Dissenters

In five cases, Justice Ginsburg sided with dissenters who would have favored debtors, consumers, or their attorneys.

• Joining a dissent by Justice Sonia Sotomayor, Justice Ginsburg would have allowed Puerto Rico to fashion a bankruptcy-like law for its instrumentalities since they were ineligible for chapter 9 bankruptcy relief. Puerto Rico v. Franklin California Tax-Free Trust, 136 S. Ct. 1938, 195 L. Ed. 2d 298 (2016).
• In Baker Botts LLP v. Asarco LLC, 576 U.S. 121, 135 S. Ct. 2158, 192 L. Ed. 2d 208, 83 U.S.L.W. 4428 (2015), Justice Ginsburg and two other justices would have allowed counsel for a chapter 11 debtor to file a fee application to recover fees expended in the successful defense of a fee application.
• Also in the camp with two other justices, Justice Ginsburg would have permitted a debtor to mount a claim under the Fair Debt Collection Practices Act against a creditor who files a proof of claim that was time-barred. Midland Funding LLC v. Johnson, 37 S. Ct. 1407, 197 L. Ed. 2d 790, 85 U.S.L.W. 4239 (2017).
• Joining a dissent by Justice John Paul Stevens, Justice Ginsburg would have allowed someone who was injured by asbestos to file a direct-action claim against insurers for the insurers’ own misconduct. Travelers Indemnity Co. v. Bailey, 557 U.S. 137 (2009); and
• In Hall v. U.S., 566 U.S. 506 (2012), Justice Ginsburg was on the short end of a 5/4 decision. For property sold after filing, she would have allowed a family farmer to pay capital gains tax as a general unsecured claim. Like three other justices, she believed that the majority reached a result that was the “very opposite of what Congress intended.”