The question
Whether the sovereign-immunity waiver in 11 U.S.C. Section 106(a) reaches the state-law cause of action a bankruptcy trustee invokes as the "applicable law" underlying a Section 544(b) avoidance claim against the United States.
United States v. Miller
What the Court decided
The Court held that Section 106(a)'s sovereign-immunity waiver applies only to the Section 544(b) claim itself and not to the state-law claim nested within it. A trustee suing under Section 544(b) must still identify an actual creditor who could have avoided the transfer under applicable law outside bankruptcy, and sovereign immunity bars the underlying state cause of action against the United States. The waiver is jurisdictional and does not create substantive rights or expand the trustee's avoidance powers.
How the justices split
8-1The Court's opinion
Jackson, joined by Roberts, Thomas, Alito, Sotomayor, Kagan, Kavanaugh, Barrett
Section 106(a) abrogates sovereign immunity with respect to Section 544 but does not waive immunity for the state-law cause of action a trustee invokes as applicable law. A waiver of sovereign immunity is jurisdictional and functions as a prerequisite for jurisdiction, not a source of new substantive rights. Section 106(a)(5) states that nothing in the section creates any substantive claim for relief or cause of action not otherwise existing, so reading Section 106(a) to modify the elements of a Section 544(b) claim would conflict with that text. A trustee must therefore still identify an actual creditor who could have avoided the transfer outside bankruptcy, and immunity bars the underlying Utah cause of action against the United States.
Dissenting
Gorsuch, writing alone
Gorsuch filed a dissenting opinion. The syllabus reports the dissent without stating its reasoning.
How we know · 5 sourced claims
Jackson delivered the opinion of the Court, joined by Roberts, Thomas, Alito, Sotomayor, Kagan, Kavanaugh, and Barrett.
Source: syllabus, lineup
Gorsuch filed a dissenting opinion.
Source: syllabus, lineup
Section 106(a)'s sovereign-immunity waiver applies only to a Section 544(b) claim itself and not to state-law claims nested within that federal claim.
Source: syllabus, Held
To prevail under Section 544(b), a trustee must identify an actual creditor who could have voided the transaction under applicable law outside of bankruptcy proceedings.
Source: syllabus, Held
Section 106(a)(5) provides that nothing in the section shall create any substantive claim for relief or cause of action not otherwise existing under some other source of law.
Source: syllabus, Held