Subject: [NEXTEL-1] Breyer, J., dissenting- Oppps I bumped My Head!

From: Marcel <[email-masked]>
Date: Mon, 27 Jan 2003 12:27:18 -0500

Breyer, J., dissenting

                   SUPREME COURT OF THE UNITED STATES

                                     Nos. 01—653 and 01—657

                   ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
                       APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

                                         [January 27, 2003]

    Justice Breyer, dissenting.

    The statute before us says that the Government may not revoke a license it has granted
to a person who has entered
bankruptcy “solely because [the bankruptcy debtor] … has not paid a debt that is
dischargeable in [bankruptcy].” 11
U.S.C. § 525(a) (emphasis added). The question is whether the italicized words apply when
a government creditor, having
taken a security interest in a license sold on an installment plan, revokes the license
not because the debtor has gone bankrupt,
but simply because the debtor has failed to pay an installment as promised. The majority
answers this question in the affirmative.
It says that the italicized words mean

“nothing more or less than that the failure to pay a dischargeable debt must alone be the
proximate cause of the
cancellation–the act or event that triggers the agency’s decision to cancel, whatever the
agency’s ultimate motive . . . may be.”
Ante, at 8 (emphasis added).

Hence, if the debt is a dischargeable debt (as virtually all debts are), then once a
debtor enters bankruptcy, the Government
cannot revoke the license–irrespective of the Government’s motive. That, the majority
writes, is what the statute says. Just read
it. End of the matter.

    It is dangerous, however, in any actual case of interpretive difficulty to rely
exclusively upon the literal meaning of a statute’s
words divorced from consideration of the statute’s purpose. That is so for a linguistic
reason. General terms as used on
particular occasions often carry with them implied restrictions as to scope. “Tell all
customers that …” does not refer to every
customer of every business in the world. That is also so for a legal reason. Law as
expressed in statutes seeks to regulate
human activities in particular ways. Law is tied to life. And a failure to understand how
a statutory rule is so tied can undermine
the very human activity that the law seeks to benefit. “No vehicles in the park” does not
refer to baby strollers or even to tanks
used as part of a war memorial. See Fuller, Positivism and Fidelity to Law–A Reply to
Professor Hart, 71 Harv. L. Rev. 630,
663 (1958).

                                                I

    In my view this statute’s language is similarly restricted. A restriction implicitly
limits its scope to instances in which a
government’s license revocation is related to the fact that the debt was dischargeable in
bankruptcy. Where the fact of
bankruptcy is totally irrelevant, where the government’s action has no relation either
through purpose or effect to bankruptcy or
to dischargeability, where consequently the revocation cannot threaten the
bankruptcy-related concerns that underlie the
statute, then the revocation falls outside the statute’s scope.

    In my view Congress intended this kind of exception to its general language in order
to avoid consequences which, if not
“absurd,” are at least at odds with the statute’s basic objectives. Cf. United States v.
Kirby, 7 Wall. 482, 486 (1869) (“All
laws should receive a sensible construction. General terms should be so limited in their
application as not to lead to injustice,
oppression, or an absurd consequence”).

    The Court’s literal interpretation of the statute threatens to create a serious
anomaly. It seems to say that a government
cannot ever enforce a lien on property that it has sold on the installment plan as long as
(1) the property is a license, (2) the
buyer has gone bankrupt, and (3) the government wants the license back solely because the
buyer did not pay for it. After all,
in such circumstances, it is virtually always the case that the buyer will not have paid a
debt that is in fact “dischargeable,” and
that “event” alone will have “trigger[ed]” the government’s “decision” to revoke the
license. See supra, at 1—2.

    Yet every private commercial seller, every car salesman, every residential home
developer, every appliance company can
threaten repossession of its product if a buyer does not pay–at least if the seller has
taken a security interest in the product.
E.g., Farrey v. Sanderfoot, 500 U.S. 291, 297 (1991). Why should the government (state or
federal), and the government
alone, find it impossible to repossess a product, namely, a license, when the buyer fails
to make installment payments?

    The facts of this case illustrate the problem. NextWave bought broadcasting licenses
from the Federal Communications
Commission (FCC) for just under $5 billion. It promised to pay the money under an
installment plan. It agreed that its
possession of the licenses was “conditioned upon full and timely payment,” that failure to
pay would result in the licenses’
“automatic cancellation,” that the Government would maintain a “fi[r]st lien on and
continuing security interest” in the licenses,
and that it would “not dispute” the Government’s “rights as a secured party.” App. to Pet.
for Cert. 388a, 392a—393a,
402a—404a. NextWave never made its installment payments. It entered bankruptcy. And the
FCC declared the licenses void
for nonpayment. In a word, the FCC sought to repossess the licenses so that it could
auction the related spectrum space to
other users. As I have said, the law ordinarily permits a private creditor who has taken
an appropriate security interest to
repossess property for nonpayment–even after bankruptcy. See, e.g., Farrey, supra, at 297.
Would Congress want to say
that the Government cannot ever do the same?

                                               II

    To read the statute in light of its purpose makes clear that Congress did not want
always to prohibit the Government from
enforcing a sales contract through repossession. Nor did it intend an interpretation so
broad that it would threaten unnecessarily
to deprive the American public of the full value of public assets that it owns. Cf. 47
U.S. C. §§309(j)(1)—(4) (authorization of
spectrum auctions with restrictions “to protect the public interest”). Congress instead
intended the statute’s language to
implement a less far-reaching, but more understandable, objective. It sought to forbid
discrimination against those who are, or
were, in bankruptcy and, more generally, to prohibit governmental action that would
undercut the “fresh start” that is
bankruptcy’s promise, see Grogan v. Garner, 498 U.S. 279, 286 (1991). Where that kind of
government activity is at issue,
the statute forbids revocation. But where that kind of activity is not at issue, there is
no reason to apply the statute’s prohibition.

    The statute’s title, its language, and its history all support this description of its
purpose. The title says, “Protection against
discriminatory treatment.” 11 U.S.C. § 525(a). The statute’s text, read as a whole, see
Appendix, infra, strongly suggests that
bankruptcy-related discrimination is the evil at which the statute aims. A phrase is
sometimes best known by the statutory
company it keeps. See, e.g., Gutierrez v. Ada, 528 U.S. 250, 255 (2000). And here the
relevant phrase is immersed within
language that describes a host of acts, including discharges from employment and refusals
to hire, and forbids them only where
done solely for bankruptcy-related reasons, i.e., a person’s being a bankruptcy debtor,
having been a bankruptcy debtor, or
having become insolvent before or during a bankruptcy case. See Appendix, infra.

    The statute’s history demonstrates an antidiscriminatory objective. House and Senate
Reports describe the relevant section,
§525(a) as “the anti-discrimination provision.” S. Rep. No. 95—989, p. 81 (1978)
(hereinafter S. Rep.); H. R. Rep. No.
95—595, p. 367 (1977) (hereinafter H. R. Rep.). The House Report says that its “purpose .
. . is to prevent an automatic
reaction against an individual for availing himself of the protection of the bankruptcy
laws.” Id., at 165. In describing related
provisions, the House Report refers to an intent to prevent the Government from punishing
“bankruptcy per se” by denying “a
license, grant, or entitlement” on the premise “that bankruptcy itself is sufficiently
repre[h]ensible behavior to warrant … a
sanction.” Id., at 286. It adds that the overriding goal was “to eliminate any special
treatment of bankruptcy” in laws of the
United States. Id., at 285.

    In addition the House and Senate Reports describe §525(a) as an effort to codify this
Court’s holding in Perez v. Campbell,
402 U.S. 637 (1971). S. Rep., at 81; H. R. Rep., at 165, 366. The Court there held that
the federal Bankruptcy Act
pre-empted a state statute that suspended the driver’s license of any person who had not
paid a motor accident judgment
(explicitly including a judgment discharged by bankruptcy). 402 U.S., at 652. The Court
rested its holding on the theory that
the state statute’s failure to exempt discharged debts “frustrate[d] the full
effectiveness” of the Bankruptcy Act’s promise of a
“fresh start.” Ibid.

    Further, the House Report, along with House floor statements, assured the enacting
Congress that the statute would allow
“governmental units to pursue appropriate regulatory policies.” E.g., H. R. Rep., at 165.
It was not meant “to interfere with
legitimate regulatory objectives,” 123 Cong. Rec. 35673 (1977) (remarks of Rep. Butler);
see also H. R. Rep., at 286. It might
seem fair to count as one such objective the receipt by the public of payment for a
partially regulated public asset that the
public, through the Government, has sold. Cf. 47 U.S. C. §309(j)(3)(C).

    Finally, nothing in the statute’s history suggests any congressional effort to prevent
Government repossession where
bankruptcy-related concerns, such as “fresh start” concerns, have no relevance. The
statute does contain exemptions, but those
exemptions, for agriculture-related licenses, are not to the contrary. 11 U.S.C. § 525(a).
As I read the statute, the exemptions
simply excuse, say, meatpacking licensing agencies from a rule that would otherwise forbid
taking negative account of, say, a
prior bankruptcy (say, by providing that a license “shall terminate upon [the] licensee .
. . being discharged as a bankrupt,” 7
U.S.C. § 499d(a); see ante, at 1—2, and n. 1 (Stevens, J., concurring)). To read them as
permitting consideration of former
bankruptcies where food supply is at issue makes them understandable. To read them as
support for the majority’s view–as
authorizing the Government to revoke meatpacking, but only meatpacking, licenses upon
nonpayment–makes little sense to me.

    The statute’s purposes, then, are to stop bankruptcy-related discrimination and to
prevent government licensors from
interfering with the “fresh start” that bankruptcy promises, but not to prevent government
debt-collection efforts where these
concerns are not present. Unlike the majority, I believe it possible to interpret the
statute’s language in a manner consistent with
these purposes.

                                               III

    The provision’s congressional authors expected courts to look for interpretations that
would conform the statute’s language
to its purposes. They conceded that the provision’s “ultimate contours” were “not yet
clear.” H. R. Rep., at 165. But they said
that the courts would determine “the extent of the discrimination that is contrary to
bankruptcy policy.” Ibid. And they thought
the courts would do so “in pursuit of sound bankruptcy policy.” S. Rep., at 81; H. R.
Rep., at 367.

    One obvious way to carry out this interpretive mandate is to interpret the relevant
phrase, “solely because” of nonpayment of
“a debt that is dischargeable,” as requiring something more than a purely factual
connection, i.e., something more than a causal
connection between a government’s revocation of a license and nonpayment of a debt that
is, merely in fact, dischargeable.
The statute’s words are open to the interpretation that they require a certain
relationship between (1) the dischargeability of
the debt and (2) the decision to revoke the license. That necessary relationship would
exist if the debt’s dischargeability played
a role in the government’s decisionmaking through motivation–if, for example, the fact
that the debt was dischargeable (or the
fact of bankruptcy, etc.) mattered to the FCC. The necessary relationship would also exist
if the government’s revocation
interfered in some significant way with bankruptcy’s effort to provide a “fresh start.”
But otherwise, where the fact of
dischargeability is irrelevant, where it has nothing to do with the government’s decision
either by way of purpose or effect, the
government’s license revocation would fall outside the scope of the provision.

    This interpretation is consistent with the statute’s language. It simply takes account
not only of the statutory language’s factual
content–i.e., its reference to a debt that is in fact dischargeable–but also its intended
significance. A debt’s dischargeability
cannot simply be a coincidence but must bear a meaningful relation to the prohibited
government action. Cf. Staples v. United
States, 511 U.S. 600, 619—620 (1994) (statute forbidding possession of a machinegun
requires not simply that the gun, in
fact, discharge automatically, but also that the defendant know that the gun meets the
statute’s description).

    This interpretation is consistent with several lower court efforts to interpret the
statute. See, e.g., Toth v. Michigan State
Housing Development Authority, 136 F.3d 477, 480 (CA6), cert. denied, 524 U.S. 954 (1998);
In re Exquisito, 823 F.2d
151, 153 (CA5 1987); In re Smith, 259 B. R. 901, 906 (Bkrtcy. App. Panel CA8 2001). But
see In re Stoltz, No.
01—5048, – F.3d –, 2002 WL 31845886 (CA2, Dec. 20, 2002). It would avoid handicapping
government debt collection
efforts in ways that Congress did not intend. It would further the statute’s basic
purpose–preventing discrimination and
preserving bankruptcy’s “fresh start.” And it would avoid interfering with legitimate
public debt collection efforts. An individual
could not generally promise to pay for a public asset, go into bankruptcy, avoid the
payment obligation, and keep the
asset–even in the absence of the evils at which this statute is aimed.

    This statutory approach is far from novel. Well over a century ago, the Court
interpreted a statute that forbade knowing and
willful obstruction of the mail as containing an implicit exception permitting a local
sheriff to arrest a mail carrier. United States
v. Kirby, 7 Wall., at 485—487. Justice Field, writing for the Court, pointed out that
centuries earlier the British courts had
interpreted a statute making it a felony to break out of prison not to extend to a
breakout when the prison is on fire. Id., at 487.
And, similarly, the courts of Bologna had interpreted a statute punishing severely “ ‘
whoever drew blood in the streets’ ” not to
extend to a surgeon faced with an emergency. Ibid. “[C]ommon sense,” wrote Justice Field,
“accepts” these rulings. Ibid. So
too does common sense suggest that we should interpret the present statute not to extend
to revocation efforts that are no more
closely related to the statute’s objectives than are baby strollers to the “vehicles”
forbidden entry into the park. See supra, at 2.

                                               IV

    The majority responds to my concerns in several ways. First, it characterizes the
dissent in a slightly exaggerated manner,
stating, for example, that I have “determine[d]” the statute’s “purpose” in “splendid
isolation from [its] language,” that
bankruptcy’s “fresh start” objective “plays no real role in [my] analysis,” and that that
“criterion” is, in any event, “circular.”
Ante, at 11, and 12, n. 4. I would refer the reader to Parts II and III above (which
contain considerable discussion of statutory
language and statutory history) and, in particular, to the discussion of Perez, a decision
that relied upon the “fresh start”
objective in a way that the statute seeks to codify and that my own suggested
interpretation of the statute incorporates. In my
view, the language of the statute taken as a whole–including its “insolvency” language,
ante, at 11—12–strongly suggests that
Congress intended bankruptcy to have something to do with the forbidden government action.
See Appendix, infra.

    Second, the majority argues that my interpretation makes the statute’s “dischargeable
debt” provision “superfluous,” given
language forbidding revocation because a person “ ‘is . . . a [bankruptcy] debtor.’ ”
Ante, at 13—14 (emphasis deleted). I do
not see how that is so. A refusal to issue, say, a new dry cleaner’s license “solely
because” a bankruptcy debtor once failed to
pay for other dry cleaner’s licenses (now discharged debts) is not necessarily the same as
a refusal to issue a new license
“solely because” the debtor “has been … a bankrupt,” 11 U.S.C. § 525(a). And the statute’s
separate provisions simply cover
this differentiated bankruptcy-related waterfront.

    Third, the majority returns to the statutory language prohibiting a government from
revoking a license “solely because [the
bankrupt debtor] . . . has not paid a debt that is dischargeable,” 11 U.S.C. § 525(a).
Ante, at 12—13. To my ear, this language
suggests a possible connection between dischargeability and revocation. I have tried to
test my linguistic sense through analogy,
imagining, for example, a regulatory rule telling apartment owners that they cannot refuse
to rent “solely because a family has
children who are adopted” (which, notwithstanding the majority’s complex discussion of
“destructive children,” ante, at 13,
seems linguistically comparable). This language suggests the need for a connection between
(1) the fact of adoption and (2) the
refusal (thereby exempting an owner who accepts no children at all). Is it not, like the
statute’s language, at least open to such
an interpretation? That is the linguistic point. It opens the door to a consideration of
context and purpose–which, in any event,
are relevant to determine whether the statute contains an implicit exemption, see supra,
at 8—9.

    Finally, the majority points out that, in the wake of a complicated procedural
history, this case is now not about “enforcement
of [a security] interest in” the Bankruptcy Court. Ante, at 14, and n. 5. But the
majority’s interpretation certainly seems to
cover that circumstance, and more. Under the majority’s understanding, a government
creditor who seeks to enforce a security
interest in a broadcasting license (after the bankruptcy stay has been lifted or after
bankruptcy proceedings terminate) would be
seeking to repossess, and thereby to revoke, that license “solely because” of the debtor’s
failure to pay a “dischargeable” debt.
After all, under such circumstances, “failure to pay” the debt that is in fact
dischargeable would “alone be the proximate cause”
of the government’s action. Ante, at 8. It is “the act or event that triggers the agency’s
decision to cancel, whatever the
agency’s ultimate motive.” Ibid.

    If I am right about this, the majority’s interpretation means that private creditors,
say, car dealers, can enforce security
interests in the goods that they sell, namely cars, but governments cannot enforce
security interests in items that they sell, namely
licenses. (Whether a private party can “take and enforce a security interest in an FCC
license,” ante, at 14, is beside this
particular point.)

    The matter is important. In this very case, the Government sought to retake its
licenses through enforcement of its security
interest. See, e.g., In re NextWave Personal Communications, Inc., 241 B. R. 311, 321
(SDNY) (affirming denial of the
Government’s motion for relief from the automatic stay under 11 U.S.C. § 362(d)(1)),
rev’d, 200 F.3d 43, 45—46, 62, and
n. 1 (CA2 1999) (reversing that affirmance). The Court of Appeals for the District of
Columbia Circuit indicated that the
FCC’s revocation of the licenses, see ante, at 14, is properly characterized as
foreclosure on collateral–i.e., as an attempt to
enforce liens. See 254 F.3d 130, 151 (CADC 2001); cf. In re Kingsport Ventures, L. P., 251
B. R. 841, 844 (ED Tenn.
2000) (private party’s power to use “revocation” to enforce interest in a license). But
because the Court of Appeals rested its
decision on §525(a) grounds, it did not determine whether bankruptcy’s automatic stay
blocked such foreclosure. 254 F.3d, at
148—149, 156. See generally 11 U.S.C. § 362(a)(4)—(5) (staying enforcement of liens).
Consequently, if the majority believes
that §525(a) permits the Government to enforce security interests in its license
collateral, it should remand this case, permitting
the Court of Appeals to decide whether other bankruptcy provisions (such as §362) block
the Government’s efforts to do so.

    I emphasize the point because the majority is right in thinking that lien-enforcement
difficulties create much of the anomaly I
fear–in effect divorcing the majority’s reading from the statute’s basic purpose. Is it
not reasonable to ask for reassurance on
this point, to ask what future interpretive corollary might rescue government
lien-enforcement efforts from the difficulties the
majority’s statutory interpretation seems to create? Unless there is an answer to this
question, the majority’s opinion holds out
no more than a slim possibility of ad hoc adjustment based upon future need. And such an
adjustment, if it comes at all, may
amount to mere judicial fiat–used to rescue an interpretation that rests too heavily upon
linguistic deduction and too little upon
human purpose.

                                               V

    Because the Government, asserting its security interest, may be able to show that
revocation here bears no relationship to the
debt’s “dischargeability” and would not otherwise improperly interfere with the Code’s
“fresh start” objective, I would vacate
the Court of Appeals’ judgment and remand for further proceedings. I respectfully dissent.

                              APPENDIX TO OPINION OF BREYER, J.

    The full text of 11 U.S.C. § 525(a) states:

“Protection against discriminatory treatment

“(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers
and Stockyards Act, 1921, and
section 1 of the Act entitled ‘An Act making appropriations for the Department of
Agriculture for the fiscal year ending June
30, 1944, and for other purposes,’ approved July 12, 1943, a governmental unit may not
deny, revoke, suspend, or refuse to
renew a license, permit, charter, franchise, or other similar grant to, condition such a
grant to, discriminate with respect to such
a grant against, deny employment to, terminate the employment of, or discriminate with
respect to employment against, a
person that is or has been a debtor under this title or a bankrupt or a debtor under the
Bankruptcy Act, or another person with
whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor
is or has been a debtor under this
title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the
commencement of the case under this
title, or during the case but before the debtor is granted or denied a discharge, or has
not paid a debt that is dischargeable in the
case under this title or that was discharged under the Bankruptcy Act.”

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