United States Trustee v. John Q. Hammons Fall 2006, LLC
The Supreme Court ruled that thousands of bankruptcy debtors who paid unconstitutionally higher fees between 2018 and 2021 are not entitled to refunds — the only required remedy was equal fees going forward, which Congress had already provided.
The decision shows that when Congress itself fixes a constitutional problem only prospectively, courts will generally follow that lead rather than order costly retroactive relief, even when the government collected money it had no right to collect.
How it got here: A bankruptcy court found no constitutional violation; the Tenth Circuit reversed and ordered refunds; the Supreme Court vacated and remanded in light of Siegel; the Tenth Circuit reinstated its refund order unchanged; the Supreme Court granted certiorari again to decide the remedy.
The Case in Depth
What happened
Between 2018 and 2021, large companies filing for bankruptcy in 88 of the 94 federal districts were charged higher quarterly administrative fees than identical companies in six districts in Alabama and North Carolina. A hotel and resort company that filed for bankruptcy in Kansas in 2016 ended up paying over $2.5 million more than it would have owed in those lower-fee districts. Two years ago, the Supreme Court ruled that fee disparity was unconstitutional. This case asked what remedy those overcharged businesses were entitled to.
The question before the Court
After the Supreme Court ruled that bankruptcy fees charged unevenly across federal districts were unconstitutional, do the businesses that overpaid those fees get their money back?
The Court's answer
No — the debtors who paid unconstitutionally higher bankruptcy fees between 2018 and 2021 are not entitled to refunds. The appropriate remedy was requiring equal fees going forward, which Congress had already done by 2021. Because the constitutional violation was the unequal treatment between districts — not the amount of the fees — the remedy needed only to cure that inequality, not to reduce the fees already charged.
The Court decided what Congress would have wanted if it had known the fee statute was unconstitutional. Congress designed the U.S. Trustee Program to be entirely self-funded by user fees and showed consistent commitment to that goal. A court-ordered $326 million refund would destroy that self-funding design and, because most affected companies have since closed, would likely worsen the overall disparity rather than fix it. The debtors also argued due process required a refund, but since they had the opportunity to challenge the fees before paying, no particular remedy was constitutionally required.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Businesses that filed large Chapter 11 bankruptcy cases in most of the country between 2018 and 2021 and paid higher quarterly fees will receive no refunds — potentially $326 million in overpayments stays with the government. The ruling also signals to future litigants that proving a constitutional violation does not automatically entitle them to backward-looking money relief when Congress has already fixed the problem prospectively.
What changes now
The Tenth Circuit's order requiring fee refunds is reversed and the case is sent back for proceedings consistent with the Supreme Court's ruling. The hotel company and similarly situated debtors will not receive refunds. A separate class action on behalf of all affected debtors is reportedly pending in the Court of Federal Claims; the majority's decision does not explicitly foreclose claims by debtors who pressed different legal arguments, and lower courts remain free to consider those.
What this does not decide
The Court explicitly declines to decide whether the due-process tax cases (McKesson, Harper, Reich) apply outside the tax context, and notes that congressional intent is not an unlimited guide — due process "undoubtedly will limit the possible remedies in many cases." The decision also does not resolve what happens to other overcharged debtors who raised different arguments.
Concurrences and dissents
Dissent — Justice Gorsuch
“What's a constitutional wrong worth these days? The Court's answer today seems to be: not much.”The dissent's opening challenge to the majority's refusal to order any backward-looking relief for a proven constitutional violation.
Justice Gorsuch argued that centuries of legal tradition require monetary relief when someone pays money due to unlawful government action, and that the majority's 'what would Congress have hypothetically wanted' approach is a tool for deciding how a statute should operate going forward — not for remedying past harms. Congress had already appropriated funds for exactly this type of refund, and the U.S. Trustee explicitly promised Hammons a refund if it prevailed on its constitutional claim. By denying any backward-looking relief for a proven constitutional violation, the Court signals that Bankruptcy Clause violations are barely worth remedying — a precedent Gorsuch warned could encourage those who wish to engage in only a 'brief denial' of other constitutional rights.
How the Court got there
The legal reasoning, step by step
- The Court first pinpointed the exact nature of the constitutional wrong: under Siegel v. Fitzgerald, the violation was nonuniformity — Congress's fee statute permitted different fees based solely on which district a debtor happened to file in. The fees themselves were not unconstitutionally high; they were unconstitutionally unequal. Because the remedy must match the violation, the goal was to cure the disparity, not necessarily to reduce anyone's fees.
- The Court characterized the disparity as both short-lived (January 2018 to April 2021, roughly three years) and small (only about 2% of large Chapter 11 debtors filed in the lower-fee Bankruptcy Administrator districts). These features shaped how proportionate any remedy needed to be.
- To identify the right remedy, the Court asked what Congress would have chosen if it had known the fee statute was unconstitutional when passed — a test drawn from Sessions v. Morales-Santana. For unequal-treatment cases, this required examining: (a) how strongly Congress was committed to the broader rule (higher fees in U.S. Trustee districts), and (b) how disruptive it would be to extend the exception (lower fees everywhere).
- Congress showed intense commitment to keeping the U.S. Trustee Program entirely self-funded through user fees; nearly two-thirds of the program's funding came from Chapter 11 fees alone. Ordering a $326 million refund would convert a self-funding program into a taxpayer bill — directly opposite to Congress's design — and would likely make the overall disparity worse, since most affected companies had already closed.
- Congress itself resolved the problem in the 2021 Act by requiring only prospective fee equality — it did not retroactively raise fees on the low-fee districts or mandate refunds in the high-fee districts. This direct legislative choice was the clearest evidence of what Congress would have intended.
- On due process, the debtors relied on tax-law precedents that require 'meaningful backward-looking relief' unless a clear pre-payment remedy was exclusively available. But those cases also established that the availability of a predeprivation hearing satisfies due process. Because the debtors had the opportunity to challenge their fees before paying them — a fact they acknowledged — no particular remedy was constitutionally required, leaving the Court free to implement what Congress would have wanted.
Doctrinal impact
Cases affected by this decision
Reaffirms Siegel v. Fitzgerald (596 U.S. 464)
Reaffirmed as the decision establishing the constitutional violation; this case resolves the remedy question Siegel left open.
Reaffirms Sessions v. Morales-Santana (582 U.S. 47)
Reaffirmed as providing the governing test — asking what Congress would have willed — for remedying unconstitutional disparities.
Distinguishes McKesson Corp. v. Division of Alcoholic Beverages and Tobacco (496 U.S. 18)
Distinguished: debtors here had predeprivation hearing opportunities, so this due process precedent requiring backward-looking relief does not apply.