Merit Management Group, LP v FTI Consulting, Inc.

Merit sought review of the 7th Circuit decision that the safe harbor provision in 11 USC 546(e) does not apply in an avoidance action where the financial institutions involved are mere conduits for funds. Resolving a circuit split on the issue, the Court unanimously affirmed. It held that 546(e) is an exception to the avoidance power and must be read in the context of the avoidance power provisions of the bankruptcy code as a whole and excluding conduit transfers is proper under the plain language of 546(e), the section heading, the parallel language in 546(e) and the avoidance provisions and the structure of the code with avoidance power linking with a safe harbor. It held that the parenthetical (or for the benefit of) added to 546(e) did not change the outcome as it mirrors the language of the avoidance provisions, provides full safe harbor protection to all covered entities even if not an intermediary and any purpose argument fails as 546(e) does not provide safe harbor for transfers through a covered entity.

Texas v New Mexico and Colorado

The United States and Colorado filed exceptions to the special master report recommending dismissal of eh United States complaint in this matter. The Court sustained the United States objection, denied all other objections and remanded holding United states participation is appropriate here as the compact at issue here is intertwined with water delivery contracts involving Texas and a treaty with Mexico, New Mexico concedes the United States is indispensable, breach of eh compact here could impede the United States from fulfilling its treaty duties with Mexico and it seeks the same relief as Texas.

Patchak v Zinke

Patchak sought review of the DC Circuit decision that Congress had the power to mandate dismissal of his claim under a law passed during the pendency of his claim. The Court, 6(4 justice plurality and two justices concurring in judgment),-3 affirmed. The plurality argued that Public Law 113-179 was a valid jurisdiction stripping statute that did not mandate any factual findings or dictate the consequences of those findings in this case but merely mandated dismissal of his case and any other challenge to a casino in Michigan, that this is an approved exercise of power under Article III and this case was still pending when 179 was passed and it is constitutional even though it is directed at his case and any similar claim and no other cases. It argued the dissent’s standard is unlikely to state the constitutional rule but 179 survives the dissent’s proposed rule as it targets all cases relating to the casino not just this case. Breyer added a concurrence arguing 179 both reaffirms the taking of the casino land into trust and directs any suit be dismissed to avoid eh costs of litigation. Ginsberg, joined by Sotomayor, concurred in judgment arguing 179 withdrew consent to be sued and this resolves the case. Sotomayor added a concurrence in judgment arguing that if 179 actually stripped jurisdiction then it unconstitutional, but it is best read to merely follow a suggestion of the Court in an earlier appeal and reinstated sovereign immunity. Roberts, joined by Kennedy and Gorsuch, dissented arguing 179 actually dictates the result in this case, that is a usurpation of judicial power by Congress as it is aimed at one case and leaves nothing for the judiciary to do that is not justified by any Court precedent and the outcome here will allow Congress to do indirectly through jurisdiction striping (which he argued did to actually occur here) what it cannot do directly by dictating findings and consequences of findings.

U.S. Bank N.A., Trustee v Village at Lakeridge, LLC

Bank sought review of the 9th Circuit decision adopting clear error review of bankruptcy court non-statutory insider findings. The Court, with two concurring opinions filed, unanimously affirmed. It held that the decision about whether someone is an insider is a mixed question of law and fact, the finding under 9th Circuit law is factual as it draws a factual inference from the basic facts and there is little if any legal work deciding if a transaction was arm’s length and thus no reason for appellate courts to make the final call on de novo review. Kennedy added a  concurrence arguing the decision does not ratify the 9th Circuit legal standard and noting other circuits can continue elaborate the nonstatutory insider doctrine. Sotomayor, joined by Kennedy, Thomas and Gorsuch added a concurrence arguing the 9th Circuit standard may not be correct as it allows arm’s length transactions to defeat insiders status even though statutory insider status does not hinge on arm’s length transactions and because the standard may be wrong the standard of review may need to be revisited once the correct legal standard is adopted by the Court in a future case.