United States v. Miller

JUSTICE GORSUCH, dissenting.¶

The Court has often warned against ''confus[ing] the doctrine of sovereign immunity with the requirement that a plaintiff state a cause of action.'' Pennhurst State School and Hospital v. Halderman , 465 U. S. 89, 112 (1984) (quoting Larson v. Domestic and Foreign Commerce Corp. , 337 U. S. 682, 692–693 (1949)). Yet, to my eyes, the Court’s decision today “suffers a like confusion.” 465 U. S., at 112.¶

Three statutory provisions are relevant here. First is 11 U. S. C. §106(a)(1), which waives the government’s sovereign immunity “with respect to” §544 of the Bankruptcy Code. Second is §544(b)(1), which empowers a bankruptcy trustee to invoke the rights of “a creditor holding an unsecured claim” to set aside any transfer “that is voidable under applicable law.” And third is Utah’s fraudulent-transfer statute, which here supplies the “applicable law” for purposes of §544(b)(1). Utah Code §25–6–203(1) (2025).*¶

As I see it, those three provisions play out this way. Under the Utah statute, a transfer is “voidable” if, after a creditor’s claim arose against the debtor, the debtor (1) “made the transfer” (2) “without receiving a reasonably equivalent value in exchange,” and (3) “was insolvent at the time.” Notably, no one before us disputes that these conditions are¶

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*As the majority notes, recent amendments to Utah’s fraudulenttransfer statute “are immaterial to the question presented.” Ante , at 5, n. 2.¶

satisfied here and a good fraudulent-transfer claim exists. 71 F. 4th 1247, 1251 (CA10 2023). Thus, under “applicable law,” the relevant transfers are “voidable,” and the bankruptcy trustee can use §544(b)(1) to set them aside. That remains true even though the trustee must sue the United States to void the relevant transfers, because §106(a)(1) bars the government from raising a sovereign-immunity defense in the trustee’s action.¶

The Court worries that my line of thinking would “modify the elements of a §544(b) claim.” Ante , at 8. More exactly, the Court observes that, if a creditor sued the government directly under Utah’s fraudulent-transfer statute, the government could interpose a successful sovereign-immunity defense, and the creditor would lose. And, the Court fears, reading §106(a)(1) to allow a bankruptcy trustee to bring the same claim under §544(b)(1) would impermissibly “give the trustee a substantive claim for relief against the Government that does not ‘otherwise exist.'' Ante , at 9 (quoting §106(a)(5); alterations omitted); ante , at 9–10, n. 4 (expressing concern that my reading would alter “a core substantive requirement of the underlying §544(b) claim”).¶

It seems to me, however, that the Court conflates two different things. Whether pursued by a private creditor or a bankruptcy trustee, a good substantive claim for relief exists. No one disputes that a fraudulent transfer took place. The question before us is a distinct one: Can the federal government defeat the claim by raising the affirmative defense of sovereign immunity? With respect to a private creditor pursuing relief in state court, the answer is yes. With respect to a trustee pursuing relief in a federal bankruptcy proceeding, the answer—thanks to §106(a)(1)—is no. Admitting that much does not “modify the elements” of any claim or ''create any substantive claim for relief '' that did not ''otherwise exist.'' Ante, at 8–9 (quoting §106(a)(5); alterations omitted). It merely acknowledges that in one setting, but not another, Congress has chosen to waive an affirmative defense to an otherwise valid claim.¶

For these reasons, I agree with the majority of circuits to have considered the question that bankruptcy trustees may avoid fraudulent transfers to the United States under §544(b). See 71 F. 4th, at 1251–1252; In re DBSI, Inc. , 869 F. 3d 1004 (CA9 2017); In re Yahweh Center, Inc. , 27 F. 4th 960 (CA4 2022). As the Court concludes otherwise, I respectfully dissent.¶