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Supreme Court hears arguments in Puerto Rico bankruptcy case

[JURIST] The US Supreme Court [official website] heard oral arguments [cay call, PDF] Tuesday in two cases. In Puerto Rico v. Franklin California Tax Free Trust, consolidated with Acosta-Febo v. Franklin California Tax-Free Trust [SCOTUSblog materials], the court is considering whether federal bankruptcy law preempts a Puerto Rico law intended to allow the commonwealth's public utilities to restructure their debts. The issue before the court is whether Chapter 9 of the Federal Bankruptcy Code [Cornell LII materials] preempts a Puerto Rico statute creating a mechanism for the commonwealth's utilities to restructure their debts. Puerto Rico argued [transcript, PDF] that Congress, in creating Chapter 9, defined the term "state" to include Puerto Rico, except for the purposes of determining who may be a debtor under Chapter 9. This simply means that Puerto Rico is outside the scope of Chapter 9 and therefore in light of Chapter 9's 1984 amendment, Puerto Rico is categorically precluded from passing through the "gateway into chapter 9." Therefore, as Congress has excluded Puerto Rico from Chapter 9, they are not subject to Chapter 9's preemption provision. Respondents in turn argued that Congress created clear textural provisions stating that Puerto Rico is viewed as a state except for one singular purpose in Chapter 9 of defining who may be a debtor. Respondents further argued that to deem Chapter 9 otherwise would be to give Puerto Rico the power to write their own municipal laws on such matters, which no state has possessed since 1946.

The court also heard arguments in a case dealing with whether a court's dismissal of an inmate's Federal Tort Claims Act (FTCA) [Cornell LII Materials] bars a parallel Bivens claim. In Simmons v. Himmelreich [SCOTUSblog materials], the court is considering the issue of whether a final judgement in an action brought under Section 1346(b), which dismissed the claim on the ground that relief is precluded by one of the Federal Torts Claim Act's exceptions to liability [Cornell LII materials], bars a subsequent action by the claimant against the federal employees whose acts gave rise to the FTCA claim. Petitioners argued [transcript, PDF] that when an FTCA action is dismissed under Section 2680, the resulting judgment triggers a bar on a Blevins claim for two reasons. First, the bar applies to any FTCA judgment and a 2680 dismissal counts as such a judgment. Second, a 2680 dismissal implicates the bars core purpose, which is to protect the government from the burdens and disruptions associated with multiple lawsuits over the same subject matter. Petitioner further argued that the purpose of the FTCA is to allow the claimant to make the decision of whether to sue the government or the responsible employee directly, but to allow the government to avoid litigation over the same facts twice. Respondent argued that language within the FTCA is inherently ambiguous but Section 2680 has a clear "shall not apply" directive that clearly states that other provisions of the Act (FTCA) shall not apply, which includes the judgment bar. Therefore, a judgment under 2680 does not apply to other sections of the FTCA and cannot bar a Bivens claim.

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