States Reply Brief
Total Page:16
File Type:pdf, Size:1020Kb
USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 1 of 28 ORAL ARGUMENT NOT YET SCHEDULED Nos. 13-5247 & 13-5248 ________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ________________________________________ STATE NATIONAL BANK OF BIG SPRING, et al., and STATES OF SOUTH CAROLINA, et al., Appellants, v. JACOB J. LEW, et al., Appellees. ________________________________________ On Appeal from the United States District Court for the District of Columbia No. 1:12-cv-001032-ESH ________________________________________ REPLY BRIEF FOR THE STATE APPELLANTS ________________________________________ Alan Wilson E. Scott Pruitt Attorney General of South Carolina Attorney General of Oklahoma James Emory Smith, Jr. Patrick R. Wyrick Rembert Dennis Building Office of the Attorney General 1000 Assembly Street, Room 519 313 NE 21st Street Columbia, SC 29201 Oklahoma City, OK 73105 [email protected] [email protected] (803) 734-3970 (405) 521.3921 Counsel for the State of South Carolina Counsel for the State of Oklahoma (Additional Counsel Listed Inside) USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 2 of 28 Luther Strange Samuel S. Olens Attorney General of Alabama Attorney General of Georgia Andrew L. Brasher John E. Hennelly Office of the Attorney General Georgia Department of Law 501 Washington Avenue 40 Capitol Square SW Montgomery, AL 36104 Atlanta, GA 30334-1300 (334) 242-7300 (404) 656-3300 Counsel for the State of Alabama Counsel for the State of Georgia Derek Schmidt Bill Schuette Attorney General of Kansas Attorney General of Michigan Jeffrey A. Chanay G. Mennen Williams Building, 7th Fl. Office of the Attorney General 525 W. Ottawa St. 120 SW 10th Ave., 2nd Floor P.O. Box 30212 Topeka, KS 66612 Lansing, MI 48909 (785) 296-2215 [email protected] (517) 373-1110 Counsel for the State of Kansas Counsel for Bill Schuette, Attorney General of the State of Michigan, on Behalf of the People of Michigan Timothy C. Fox Jon Bruning Attorney General of Montana Attorney General of Nebraska Lawrence VanDyke Katherine J. Spohn Office of the Attorney General Office of the Attorney General Department of Justice 2115 State Capitol P.O. Box 201401 Lincoln, NE 68509 Helena, MT 59620-1401 (402) 471-2683 (406) 444-2026 Counsel for the State of Nebraska Counsel for the State of Montana USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 3 of 28 Michael DeWine Greg Abbott Attorney General of Ohio Attorney General of Texas Jennifer L. Pratt John Reed Clay, Jr. Office of the Attorney General Office of the Attorney General 30 E. Broad St., 14th Floor 300 W. 15th Street Columbus, OH 43215 Austin, TX 78701 (614) 728-4948 (512) 936-1342 Counsel for the State of Ohio Counsel for the State of Texas Patrick Morrisey Attorney General of West Virginia Elbert Lin Office of the Attorney General State Capitol Complex Building 1 Room 26-E Charleston, WV 25305 (304) 558-2021 Counsel for the State of West Virginia ii USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 4 of 28 TABLE OF CONTENTS TABLE OF CONTENTS......................................................................................... i TABLE OF AUTHORITIES.................................................................................. ii GLOSSARY.............................................................................................................iv SUMMARY OF ARGUMENT .............................................................................. 1 ARGUMENT........................................................................................................... 2 I. The States’ Statutory Right Had Immediate Value ............................ 2 II. The Government Does Not Alleviate The States’ Injury By Suggesting That It Might Use Its New Discrimination Powers “Only In Certain Limited Circumstances”.......................................... 7 III. Dodd-Frank Prohibits The States From Litigating These Claims Once A Liquidation Begins................................................................ 12 CONCLUSION..................................................................................................... 15 STATEMENT PURSUANT TO D.C. CIRCUIT RULE ECF-3 ...................... 19 CERTIFICATE OF COMPLIANCE................................................................... 20 CERTIFICATE OF SERVICE............................................................................. 21 i USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 5 of 28 TABLE OF AUTHORITIES Page(s) CASES Begier v. IRS, 496 U.S. 53 (1990).............................................................................. 11 * Clinton v. City of New York, 524 U.S. 417 (1998).............................................. 3, 4, 5, 7 Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir. 1995) ..................................................... 15 In re Bonner Mall Partnership, 2 F.3d 899 (9th Cir. 1993)....................................... 9, 10 In re Just For Feet, Inc., 242 B.R. 821 (D. Del. 1999) ................................................ 10 Ind. State Police Pension Trust v. Chrysler LLC, 558 U.S. 1087 (2009) .......................... 14 Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992)..................................................... 7 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)....................................................... 2 Nat’l Ass’n of Home Bldrs. v. U.S. Army Corps of Eng’rs, 440 F.3d 459 (D.C. Cir. 2006)...... 11 Ryan v. Bentsen, 12 F.3d 245 (D.C. Cir. 1993).......................................................... 13 * U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1 (1977)................................ 3, 5, 6, 7, 8 Whitman v. Am. Trucking Ass’ns, 531 U.S. 457 (2001)............................................ 9, 11 * Zivotofsky v. Sec’y of State, 444 F.3d 614 (D.C. Cir. 2006)........................................ 7, 8 U.S. CODE AND PUBLIC LAWS * 11 U.S.C. § 726(b)................................................................................................. 1, 2 * 11 U.S.C. § 1123(a)(4)........................................................................................... 1, 2 * Authorities upon which we chiefly rely are marked with asterisks. ii USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 6 of 28 11 U.S.C. § 1129(a)(7)............................................................................................. 11 12 U.S.C. § 4617(f )................................................................................................. 15 12 U.S.C. § 5381(a)(4)............................................................................................. 12 12 U.S.C. § 5390(a)(4)....................................................................................... 12, 13 12 U.S.C. § 5390(a)(9)(D)........................................................................................ 12 12 U.S.C. § 5390(b)(4)............................................................................................. 10 12 U.S.C. § 5390(d)(2)............................................................................................. 13 12 U.S.C. § 5390(e)..................................................................................... 12, 13, 15 MISCELLANEOUS Fred N. David, Interpreting the Supreme Court’s Treatment of the Chrysler Bankruptcy and Its Impact on Future Business Reorganizations, 27 Emory Bankr. Dev. J. 25 (2010) ................................................................................................................. 14 Benjamin Graham & David L. Dodd, Security Analysis 149 (6th ed. 2009)............ 4 Treasury Dep’t Mot. to Dismiss, Perry Capital LLC v. Lew, No. 13-1025 (D.D.C. filed Jan. 17, 2014) (Docket 31-1), 2014 WL 298737 .................... 14, 15 iii USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 7 of 28 GLOSSARY Act ............................................... Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) Code ............................................ The Bankruptcy Code Dodd-Frank Act .......................... Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) FDIC ........................................... Federal Deposit Insurance Corporation Title II ......................................... Title II of the Dodd-Frank Act, creating the “Orderly Liquidation Authority” iv USCA Case #13-5248 Document #1490422 Filed: 04/28/2014 Page 8 of 28 SUMMARY OF ARGUMENT The Dodd-Frank Act eliminated a substantive statutory right that the Bankruptcy Code long had bestowed upon the States and other bondholders: the right not to suffer discrimination versus similarly situated creditors. 11 U.S.C. §§ 726(b), 1123(a)(4). That right is valuable to the States and other investors not just in bankruptcy proceedings but also here-and-now: a bond with the Code’s anti- discrimination protection offers more value to the States and other investors than does the same bond minus that anti-discrimination protection—and not just in future bankruptcy proceedings, but today. See States Br. 4-5, 21-27. The enactment of Dodd-Frank’s Title II stripped away that protection, by superseding it with a broad new grant of power to federal regulators to discriminate among similarly situated creditors. So as the States’ statutory creditor rights had value now, Dodd-Frank’s elimination of those rights injures the States now. States Br. 21-27. The Government does