What to Expect From Justice-To-Be Gorsuch on Bankruptcy
When I heard that the President had nominated 10th Circuit Judge Neil Gorsuch for the Supreme Court, I wondered what his bankruptcy-related opinions might tell us about him. Bill Rochelle beat me to it, with his characteristically insightful analysis of a few salient Gorsuch opinions. But I found three more that I thought worth highlighting, as well. A simple takeaway from all of these cases is that Gorsuch is not at all what one might call “debtor-friendly.” In fact, I don’t think one of the dozen-or-so opinions I found ruled in favor of the debtor(s). But a more nuanced takeaway is that Gorsuch is a careful and serious jurist who will apply the letter of the law in tight and cleverly written opinions. At least he should be fairly predictable, a virtue that the person who nominated Judge Gorsuch does not share.
In the first case, In re Renewable Energy Devmt. Corp., from July 2015, Judge Gorsuch faithfully applies Stern, Wellness, and Arkison in an opinion that reveals both his care and sophistication in slogging through the bankruptcy jurisdictional labyrinth. The opinion reads very much like one authored by Scalia, opening with the entertaining line, “This case has but little to do with bankruptcy,” and offering animated, almost theatrical back-and-forth discussions of the appellant’s alternative “factually intertwined” test and other challenges.
In the second case, TW Telecom v. Carolina Internet, from 2011, Judge Gorsuch showed that he is not slavishly bound to precedent when that reliance is shown to be misplaced. In this opinion, Judge Gorsuch addressed the longstanding 10th Circuit precedent interpreting section 362(a) as NOT applying to the debtor-defendant who pursues an appeal from a prepetition judgment against it. Candidly acknowledging that nine other Courts of Appeals had ruled otherwise, and Collier had called out the 10th Circuit for this aberrant ruling (distinguishing post-petition litigation actions by a debtor-plaintiff, which are not stayed, from those by a debtor-defendant attacking a judgment against it, which are stayed), Judge Gorsuch curtly abandoned the 10th Circuit’s prior interpretation and ... got with the program.
Finally, in a third, unpublished opinion from 2008, In re Ardese, Judge Gorsuch affirmed the somewhat controversial position that failing to list a cause of action for labor law violations and employment discrimination on the debtor’s schedules estopped her from pursuing that claim against her employer post-petition. In addition to relying on recent, indistinguishable 10th Circuit precedent, Judge Gorsuch took a fairly hard line against Ms. Ardese's claim of lack of sophistication, as well as her attempt to reopen her bankruptcy case and have the claim administered by the trustee.
We should not expect a soft touch from Justice Gorsuch for pro-debtor arguments relying on rehabilitative policy. Expect Gorsuch to continue in most respects the line-toeing tendencies of his predecessor in bankruptcy matters. Not Scalia, but not far off.