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No. 15- IN THE Supreme Court of the United States MELBA ACOSTA-FEBO, AS GOVERnmENT DEVELOPMENT BANK FOR PUERTO RICO AgENT, And JOHN DOE, IN HIS OffICIAL CAPACITY AS EmPLOYEE OR AgENT OF THE GOVERnmENT DEVELOPMENT BANK FOR PUERTO RICO, Petitioners, v. FRANKLIN CALIFORNIA TAX-FREE TRUST, BLUEMOUNTAIN CAPITAL MANAGEMENT, LLC, et al., Respondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES CouRT OF AppEALS FOR THE FIRST CIRcuIT PETITION FOR A WRIT OF CERTIORARI JOHN E. ROBERTS MARTIN J. BIENENSTOCK ANDREA G. MILLER Counsel of Record PROSKAUER ROSE LLP MARK D. HARRIS One International Place SIGAL MANDELKER Boston, Massachusetts 02115 PHILip M. ABELSON (617) 526-9600 EHUD BARAK PROSKAUER ROSE LLP Eleven Times Square New York, New York 10036 (212) 969-3000 [email protected] Attorneys for Petitioners 260579 A (800) 274-3321 • (800) 359-6859 i QUESTION PRESENTED Whether chapter 9 of the federal Bankruptcy Code, which does not apply to Puerto Rico, nonetheless preempts a Puerto Rico statute creating a mechanism for the Commonwealth’s public utilities to restructure their debts. ii PARTIES TO THE PROCEEDINGS BELOW In addition to Petitioners Melba Acosta-Febo and John Doe, the Commonwealth of Puerto Rico, Alejandro García Padilla, as Governor of the Commonwealth of Puerto Rico, and César Miranda Rodríguez, as Secretary of Justice of the Commonwealth of Puerto Rico, were appellants in the First Circuit. Respondents Franklin California Tax-Free Trust, BlueMountain Capital Management, LLC, Franklin New York Tax-Free Trust, Franklin Tax-Free Trust, Franklin Municipal Securities Trust, Franklin California Tax-Free Income Fund, Franklin New York Tax-Free Income Fund, Franklin Federal Tax-Free Income Fund, Oppenheimer Rochester Fund, Oppenheimer Municipal Fund, Oppenheimer Multi-State Municipal Trust, Oppenheimer Rochester Ohio Municipal Fund, Oppenheimer Rochester Arizona Municipal Fund, Oppenheimer Rochester Virginia Municipal Fund, Oppenheimer Rochester Maryland Municipal Fund, Oppenheimer Rochester Limited Term California Municipal Fund, Oppenheimer Rochester California Municipal Fund, Rochester Portfolio Series, Oppenheimer Rochester Amt-Free Municipal Fund, Oppenheimer Rochester Amt-Free New York Municipal Fund, Oppenheimer Rochester Michigan Municipal Fund, Oppenheimer Rochester Massachusetts Municipal Fund, Oppenheimer Rochester North Carolina Municipal Fund, and Oppenheimer Rochester Minnesota Municipal Fund were appellees in the First Circuit. The Puerto Rico Electric Power Authority was a defendant in the district court but was not a party to the appeal in the First Circuit. iii CORPORATE DISCLOSURE STATEMENT Petitioners Melba Acosta-Febo and John Doe submit this Petition in their capacities as agents of the Government Development Bank for Puerto Rico, which is a public corporation wholly owned and operated by the Commonwealth of Puerto Rico. iv TABLE OF CONTENTS Page QUESTION PRESENTED . i PARTIES TO THE PROCEEDINGS BELOW. ii CORPORATE DISCLOSURE STATEMENT . iii TABLE OF CONTENTS. iv TABLE OF APPENDICES . vi TABLE OF CITED AUTHORITIES . vii PETITION FOR A WRIT OF CERTIORARI. .1 OPINIONS BELOW. .1 STATEMENT OF JURISDICTION . .1 STATUTORY PROVISIONS INVOLVED . .1 STATEMENT OF THE CASE . .2 A. Factual Background . .4 B. Proceedings Below . .9 REASONS FOR GRANTING THE WRIT . .11 v Table of Contents Page I. THE FIRST CIRCUIT VIOLATED THE FUNDAMENTAL PRINCIPLE THAT A STATE OR THE COMMONWEALTH SHOULD NOT BE STRIPPED OF ITS POLICE POWERS UNLESS CONGRESS HAS INDICATED A “CLEAR AND MANIFEST” INTENT TO DO SO. .11 A. The Recovery Act is Entitled to a Presumption Against Preemption . .12 B. Section 903(1) of the Bankruptcy Code Does Not Evince a Clear and Manifest Intent of Congress to Preempt the Recovery Act. .16 II. THIS CASE IMPLICATES ISSUES OF EXCEPTIONAL NATIONAL IMPORTANCE. .27 CONCLUSION . .31 vi TABLE OF APPENDICES Page APPENDIX A — OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT, DATED JULY 6, 2015 . .1a APPENDIX B — JUDGMENT OF THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT, FILED JULY 6, 2015 . .74a APPENDIX C — OPINION AND ORDER OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO, FILED FEBRUARY 6, 2015 . .76a APPENDIX D — RELEVANT STATUTORY PROVISIONS . .151a vii TABLE OF CITED AUTHORITIES Page C A S E S Abie State Bank v. Weaver, 282 U.S. 765 (1931) . .15 Allied-Bruce Terminex Cos. v. Dobson, 513 U.S. 265 (1995). .26 Altria v. Good, 555 U.S. 70 (2008). .13 Ashton v. Cameron Cnty. Water Improvement Dist. No. 1, 298 U.S. 513 (1936) . .19 Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005) . .13, 26 BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) . .3, 12 City of Pontiac Retired Emps. Ass’n v. Schimmel, 751 F.3d 427 (6th Cir. 2014) . .30 CTS Corp. v. Waldburger, 134 S. Ct. 2175 (2014) . .13 Doty v. Love, 295 U.S. 64 (1935). .15 viii Cited Authorities Page Faitoute Iron & Steel Co. v. City of Asbury Park, 316 U.S. 502 (1942) . .3, 14, 15 Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000). .17 Gibbes v. Zimmerman, 290 U.S. 326 (1933). .15 Gregory v. Ashcroft, 501 U.S. 452 (1991) . .3, 12 Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707 (1985). .13 Int’l Shoe Co. v. Pinkus, 278 U.S. 261 (1929) . 24, 26 King v. Burwell, 135 S. Ct. 2480 (2015). .19 Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) . .13, 15 Midlantic Nat’l Bank v. N.J. Dep’t of Envt’l Prot., 474 U.S. 494 (1986) . .3 ix Cited Authorities Page Neblett v. Carpenter, 305 U.S. 297 (1938). .3, 15, 25 Nken v. Holder, 556 U.S. 418 (2009). .18 Noble State Bank v. Haskell, 219 U.S. 104 (1911) . .15 P.R. Dep’t of Consumer Affairs v. Isla Petroleum Corp., 485 U.S. 495 (1988). .13, 16 Pennsylvania v. Williams, 294 U.S. 176 (1935) . .15 Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) . .3 Stenberg v. Carhart, 530 U.S. 914 (2000). .20 Sturges v. Crowninshield, 17 U.S. (4 Wheat.) 122 (1819). .3, 14, 25, 26 United Sav. Ass’n v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365 (1988). .17 Univ. of Tex. Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013) . .18 x Cited Authorities Page Wyeth v. Levine, 555 U.S. 555 (2009). .15 STATUTES 11 U.S.C. § 101 . .15, 20 11 U.S.C. § 101(10)(A) . .20 11 U.S.C. § 101(13) . .20 11 U.S.C. § 101(40) . .18 11 U.S.C. § 101(52) . passim 11 U.S.C. § 109(c) . .7 11 U.S.C. § 109(c)(1) . .18, 21 11 U.S.C. § 109(c)(2). 8, 17, 18 11 U.S.C. § 901 et seq. .2, 7 11 U.S.C. § 903 . .19 11 U.S.C. § 903(1). passim 28 U.S.C. § 41 . .30 28 U.S.C. § 1254(1). .1 xi Cited Authorities Page Cal. Fin. Code § 648 . .14 Ky. Rev. Stat. § 304.33-010 to 304.33-600 . .14 Laws of Maryland 1805 ch. 110 . .14 Laws of the State of N.Y. 1788 ch. 92 . .14 N.Y. Banking Law § 610 . .14 Okla. Stat. tit. 6, §§ 1201-1207 . .14 P.R. Laws Ann. tit. 3, § 8791 et seq.. .5 P.R. Laws. Ann. tit. 7, §§ 201-215 . .14 P.R. Laws. Ann. tit. 7, §§ 551 et seq. .4 2014 P.R. Laws Act No. 66 . .5 2015 P.R. Laws Act No. 1 . .7 2015 P.R. Laws Act No. 2 . .7 2015 P.R. Laws Act No. 72 . .7 40 Pa. Stat. Ann. §§ 221.1 to 221.63. .14 Pub. L. No. 73-251, 48 Stat. 798. .23 xii Cited Authorities Page Pub. L. No. 74-507, 49 Stat.1198 . .23 Pub. L. No. 75-302, 51 Stat. 653 . .23 Pub. L. No. 76-669, 54 Stat. 667 . .23 Pub. L. No. 77-622, 58 Stat. 377 . .23 Pub. L. No. 79-481, ch. 532, 60 Stat. 409 . .23 Pub. L. No. 98-353, 98 Stat. 333, 368-69 . .8 Wis. Stat. Ann. §§ 645.01-645.90 . .14 OTHER AUTHORITIES H.R. Rep. 4307, 79th Cong., 1st Sess. (Oct. 5, 1945) . 22, 23 H.R. Rep. 2246, 79th Cong., 2d Sess. (June 11, 1946). .23 Mary Williams Walsh, Puerto Rico Fails to Pay $58 Million Bond Debt, N.Y. Times, Aug. 4, 2015 . .5, 6 Michael Corkery & Mary Williams Walsh, In Puerto Rico, Debt is Called “Not Payable,” N.Y. Times, June 29, 2015 . .5 xiii Cited Authorities Page Michelle Wilde Anderson, The New Minimal Cities, 123 Yale L.J. 1118 (2014) . .7 Nick Brown & Megan Davies, Puerto Rico’s creditors should prepare to sacrifice – governor, Reuters (Aug. 7, 2015) . .7 Peter J. Coleman, Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607-1900 (1974) . .14 Statement of Melba Acosta-Febo on behalf of GDB before the Subcomm. of Regulatory Reform, Commercial & Antitrust Law of the H. Comm. on the Judiciary (Feb. 26, 2015) . .6, 28 Stephen J. Lubben, Puerto Rico and the Bankruptcy Clause, 88 Am. Bankr. L.J. 553 (2014) . .25 Todd J. Zywicki, The Past, Present & Future of Bankruptcy Law in Am., America, 101 Mich. L. Rev. 2016 (2003) . .15 1 Collier Pamplet Edition 2015 (Alan N. Renick & Henry J. Sommer eds., 2015) . .18 1 PET ITION FOR A WRIT OF CERTIORARI Petitioners Melba Acosta-Febo and John Doe, in their capacities as agents of the Government Development Bank for Puerto.