US Supreme Court: 05-1429

8/14/2019 US Supreme Court: 05-1429

http://slidepdf.com/reader/full/us-supreme-court-05-1429 1/70

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Official - Subject to Final Review

IN THE SUPREME COURT OF THE UNITED STATES

- - - - - - - - - - - - - - - - - x

TRAVELERS CASUALTY AND :

SURETY COMPANY OF :

AMERICA, :

Petitioner :

v. : No. 05-1429

PACIFIC GAS AND ELECTRIC :

COMPANY. :

- - - - - - - - - - - - - - - - - x

Washington, D.C.

Tuesday, January 16, 2007

The above-entitled matter came on for oral

argument before the Supreme Court of the United States

at 11:01 a.m.

APPEARANCES:

G. ERIC BRUNSTAD, JR., Hartford, Conn.; on behalf of

Petitioner.

E. JOSHUA ROSENKRANZ, New York, N.Y.; on

behalf of Respondent.

1Alderson Reporting Company



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


ORAL ARGUMENT OF PAGE

G. ERIC BRUNSTAD, JR.

On behalf of the Petitioner 3ORAL ARGUMENT OFE. JOSHUA ROSENKRANZ

On behalf of the Respondent 25REBUTTAL ARGUMENT OFG. ERIC BRUNSTAD, JR.

On behalf of Petitioner 51






1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


authorizes that right, in this case, contractual rights,

or alternatively rights available under State statute.

That, we submit, is an impermissible

creation of a Federal common law rule. There is no

basis for it under this Court's preemption precedents.

There's no conflict between Federal policy and State

policy which would justify the creation of the rule, and

accordingly, it is unwarranted.

JUSTICE KENNEDY: Can you tell me -- this is

just basic bankruptcy. I should know, but I looked it

up and couldn't find it. A standard promissory note

which provides for attorneys' fees, the holder of the

note is the creditor, the maker of the note is the

bankrupt -- the maker of the note goes bankrupt. The

holder of the note gets his attorney and says: File a

claim in bankruptcy. And the attorney sends him a bill.

Is the attorneys' fees, the attorney fee for filing the

bankruptcy claim, recoverable as part of the claim?

MR. BRUNSTAD: It depends, Justice Kennedy.

It depends on what their contractual right provides.

Here we have a contractual --

JUSTICE KENNEDY: It's the standard, it's

the standard attorneys' fee provision, all attorneys'

fees in connection with collection of this note and

enforcement of the terms of this note.




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


MR. BRUNSTAD: Then, yes, Justice Kennedy, I

would say it probably would be covered. It probably

would be covered and the analysis --

JUSTICE KENNEDY: Is there something where I

can look that up in Collier? Are there millions of

cases? I mean, this seems to me fairly rudimentary.

MR. BRUNSTAD: Yes, Justice Kennedy. In our

reply brief, we do cite to Collier, where we talk about

exactly that scenario and it is described. And it

basically works like this. A claim under the Bankruptcy

Code is defined under Section 1015. The claim includes

any right to payment whether it's contingent or fixed,

matured, unmatured, et cetera. Any right to payment,

literally any right to payment, when the debtor files

for bankruptcy, that becomes a claim. If the right --

JUSTICE KENNEDY: No, no. But in my case,

it's a post-petition action.

MR. BRUNSTAD: Yes, Justice Kennedy. The

key concept -- and this is explained clearly in Collier

-- is where does the right come from? If it arises out

of a pre-petition contract, then the right is

pre-petition in nature, even though the fees are

incurred post-petition. Think of a guarantee. Think of

if PG&E had guaranteed its parent's debt for the $100

million, let's say.




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


JUSTICE STEVENS: Could you just back up

just for a second? Supposing at the time of the

bankruptcy that the services have not been performed.

It's post-petition conduct by the lawyer.

MR. BRUNSTAD: Right.

CHIEF JUSTICE ROBERTS: Now, in that case,

are you saying that routinely the lawyer recovers fees

in the bankruptcy case even if the debtor, the debtor

was insolvent? And we're assuming insolvency in the

hypothetical, although it may not fit this case.

MR. BRUNSTAD: Exactly, yes, Justice

Stevens, if in fact, though, the creditor bothers to

assert the claim for fees in the bankruptcy case. In

most cases, creditors don't, because it's not worth the

effort of asserting the claim for fees subsequently. In

cases such as this, where you have a solvent debtor who

can pay all claims in full, there's no reason why they

should be able to get out of their contractual

obligations in bankruptcy.

JUSTICE STEVENS: Well, why wouldn't it be

worth -- I know here. But why wouldn't it be worth the

effort, instead of getting $90 on the note, to get 95?

MR. BRUNSTAD: Well, because there's a

transaction cost in actually filing the additional claim

setting forth the amount that you've incurred. In most




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


cases, Justice Stevens, creditors don't even hire

attorneys to pursue or file a claim in bankruptcy. In

most Chapter 7 cases, for example, they are no-asset

cases.

JUSTICE STEVENS: Are you telling me just

based on your experience that in Justice Kennedy's

hypothetical, normally, no fees are recovered?

MR. BRUNSTAD: Normally, there's no

distribution on unsecured claims in most bankruptcy

cases. So why bother?

JUSTICE STEVENS: But assuming in those

cases where there's some distribution, is it correct, as

I'm assuming your answer to Justice Kennedy's question,

that the normal practice is you don't bother because

there is not enough involved?

MR. BRUNSTAD: Typically, Justice Stevens,

that is correct. But in cases such as this, where the

attorneys' fees are substantial, the debtor is solvent,

and there are substantial --

JUSTICE KENNEDY: Just in the hypothetical,

I would think that in many cases, there's going to be

some payout for the promissory note, and the holder of

the note tells his attorneys: Make sure I get that

claim in bankruptcy. The attorney files a claim. And

every attorney that files a claim for a promissory note




1

2

3

4

5

6

7

8

9 --

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


which is entitled to a fee from the bankruptcy court for

filing in the bankruptcy court.

MR. BRUNSTAD: For the work done in

performing, filing the proof of claim, that's correct.

And even though, Justice Kennedy, the attorney's conduct

was after the debtor filed for bankruptcy, the right to

payment arises out of the pre-petition contract. Again,

think of the guarantee hypothetical. There you had the

JUSTICE STEVENS: The pre-petition contract,

but not out of pre-petition conduct.

MR. BRUNSTAD: That's correct, Justice

Stevens. But just think about the pre-petition tort

claim, where there has been exposure to asbestos

products pre-petition, but the injury arises

post-petition. It's still a pre-petition claim.

JUSTICE SOUTER: Okay, but you're one step

ahead of that here, because here there hasn't been any,

in effect, any exposure. Here there isn't any certain

default on the note. So far as we know, here, there may

never be any default on the workers comp obligation. So

that your contingency is a much more remote contingency.

Why should that, why should this case fall into the same

category as the promissory note?

MR. BRUNSTAD: Justice Souter, it's




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


different in this sense. This is an indemnity, all-loss

indemnity provision. The surety is not supposed to

incur any loss, any cost whatsoever, for supplying these

surety bonds to PG&E.

JUSTICE SOUTER: And so far as we know, it

won't.

MR. BRUNSTAD: But it has, because when PG&E

filed for bankruptcy --

JUSTICE SOUTER: Well, it has, but that

depends on a totally circular argument. The minute it

filed for bankruptcy, although there had been no default

on the comp obligation, your client started incurring

attorneys' fees, and it was not incurring attorneys'

fees based on any default by the, by the debtor.

MR. BRUNSTAD: Justice Souter, you can

visualize bankruptcy itself as being a default. When

the debtor files for bankruptcy, you must come to the

bankruptcy court to present your rights --

JUSTICE SOUTER: You can call bankruptcy a

default, but that's not what I mean, and you know that's

not what I mean. I'm talking about a default on the

workers comp obligation.

MR. BRUNSTAD: Yes, sir.

JUSTICE SOUTER: There has been no default

on the workers comp obligation, and because they intend




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


to keep on running this business, there is reason to

suppose that there will not be.

MR. BRUNSTAD: Well, by analogy, Justice

Souter, in the LTV case, the same posture at the

beginning of the case. We don't know what's going to

happen in the future. You must file your claim at the

beginning of the case. In LTV --

JUSTICE SOUTER: Yes, and maybe you don't

have a claim at the beginning of the case. I mean,

that's what we're getting at. We can understand the

claim when the note -- when you've got a promissory note

and you're out of money. The claim is inevitable. In

this case, there is no inevitable claim.

MR. BRUNSTAD: But that's precisely the

point of why claim is defined so broadly to include

contingent claims.

JUSTICE SOUTER: But if it is defined as

broadly as this, we're in a situation exactly like this.

There has been no default on the obligation, and prior

to getting to this Court, $167,000 has been racked up in

legal fees that accomplishes absolutely nothing.

MR. BRUNSTAD: Absolutely false, Justice

Souter. In bankruptcy, if you do not present your

rights, if the rights of the workers themselves are not

properly treated, they are lost. Under Section 1141,

10

Alderson Reporting Company



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


they are extinguished.

JUSTICE SOUTER: All right, in this case,

$167,000 has been spent to come to the conclusion, as I

understand it. That if the time comes to assert a right

of indemnification, you can assert a right of

indemnification and we can oppose it. If we are going

to construe the bankruptcy law to provide a law like

this, then maybe there is something wrong in the, in the

construction of the bankruptcy law.

MR. BRUNSTAD: No, Justice Souter, because

if you look at what Section 1141 of the Bankruptcy Code

does, it provides that a plan of reorganization binds

all parties. If you're not provided for adequately in

the plan under Section 1141(d), your rights are

extinguished forever. You must come to the bankruptcy

court; you must be sure that the rights are properly

characterized. Excuse me.

JUSTICE GINSBURG: But that's not what this

bankruptcy court thought about the claim. This

bankruptcy court said some rather critical things.

MR. BRUNSTAD: Yes, Justice Ginsburg, but I

think we need to distinguish two different things.

There was the work that was performed in preserving the

rights of the injured employees, to make sure they were

properly classified, that their rights were rendered

11




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


unimpaired. If that hadn't been in the plan, then their

rights would have been extinguished under Section 1141.

Then there was the claim that the surety

provides for having had to have done all of that work.

JUSTICE GINSBURG: And I don't -- there was

never a time that the plan said we are not going to pay

our workers' compensation.

MR. BRUNSTAD: The problem, Justice

Ginsburg, is that the plan said nothing at all. And

when the plan says nothing at all, the default rule in

bankruptcy is that rights are extinguished; they are

discharged under Section 1141(d). It must be in the

plan in order to be invalid after the confirmation of

the plan. We had to assure those rights were properly

treated in the plan, because if they weren't, they would

have been discharged under the general -- general

discharge provision.

That is why one must come to the bankruptcy

court, one must file a proof of claim, one must enforce

your rights in bankruptcy; if you don't, you lose them.

That's why the surety here stepped forward, said it has

subrogation rights; the workers have rights. And the

bankruptcy court agreed with Travelers. It directed the

debtor to put that language in the plan. Travelers --

JUSTICE GINSBURG: I thought there was a

12




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


section of the code that preserved subrogation rights.

MR. BRUNSTAD: That's Section 509, Justice

Ginsburg.

JUSTICE GINSBURG: Yes.

MR. BRUNSTAD: But that's not what I was

speaking of just momentarily. The rights of the injured

employees, the workers, when they filed for -- when PG&E

filed for bankruptcy, the injured workers had claims.

They were going to receive periodic benefit payments off

into the future. If PG&E had not properly provided for

those claims in the bankruptcy case in their plan, those

claims would have been extinguished. As a result,

though, Travelers would not have been off the hook on

its surety bond, Travelers would have had to have

stepped forward and make the payments if PG&E did not.

But if Travelers hadn't come to the

bankruptcy court and said, these are our rights, these

need to be preserved, its recourse against PG&E would

have extinguished as well. If one does not come to the

bankruptcy court and assert one's rights, one loses

them. And of course, creditors when they do have to

assert their rights, incur attorneys' fees for doing so.

And here we had a pre-petition contract that said,

whatever loss we incur, including attorneys' fees, we

have a right to recover, a right to payment. That

13




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


becomes the claim.

JUSTICE SOUTER: Let's assume, let's assume

that one of the recipients of comp payments had come

forward and said: I object to the plan, I have a claim

for comp payments and I object to the plan because it

doesn't provide for them. And the -- the court said,

you're, you're right. The plan is going to include

provision for comp payments and it had been so amended,

and it was then -- the plan was then amended.

Would you, under those circumstances, have

had any -- would Travelers, under those circumstances,

have had any reason to assert a claim?

MR. BRUNSTAD: We would not have done that

work. No, Justice Souter, because the injured worker

him or herself would have done it.

JUSTICE SOUTER: No, I know it. But would

you have had any other claim that you would have

asserted, had that been done?

MR. BRUNSTAD: Well, with respect to the,

the treatment of the workers under the plan, no. With

respect to --

JUSTICE SOUTER: With respect to any

interest of Travelers?

MR. BRUNSTAD: Yes, Justice Souter.

JUSTICE SOUTER: If that had been done,

14




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


would Travelers have asserted a claim?

MR. BRUNSTAD: Yes, Justice Souter.

JUSTICE SOUTER: What?

MR. BRUNSTAD: We would have said, in our

proof of claim, as we did: If we must make payment in

the future, we are entitled to two things. One, we are

entitled to reimbursement from PG&E for any amount that

we must spend in the future whenever that might occur.

Two, if we have to pay any of the employees, we are

subrogated. We stand in the shoes of the employees and

may assert those rights.

The subrogation right would have been fully

protected, though, Justice Souter, because of the

treatment of the workers in the plan rendering them

unimpaired. We would have left simply -- with simply

saying we have these reimbursement rights which we would

have in case we have to make payment.

Now, in the LTV case, which we cite in our

papers, at the beginning of the LTV case, the surety who

has had $40 million in surety bonds was in a position,

very much the same as in this case, when PG&E filed.

PG&E got an order authorizing it to continue to pay but

not requiring it to pay. That can only be done in the

plan of reorganization. LTV started paying the workers'

comp benefits, but then defaulted and stopped, long

15




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


after the bankruptcy case had commenced, but far short

of when it concluded. The surety had to step up to the

plate and make the payments.

If the surety had not filed a proof of claim

at the beginning of the case, the surety would have lost

its recourse against the debtor, LTV, even though it

subsequently, far later, had to make payment.

JUSTICE GINSBURG: Correct me if I'm

wrong --

MR. BRUNSTAD: That's how bankruptcy works.

JUSTICE GINSBURG: In -- in this case, I

thought that if a contingency claim for indemnification

is not allowed, but if it becomes fixed at some time,

then the claim can be made and is not lost.

MR. BRUNSTAD: No, Justice Ginsburg. There

is a bar date set in the beginning of Chapter 11 cases.

You must file your claim by the bar date or you'll be

forever barred, even if your liability becomes fixed

later.

JUSTICE GINSBURG: I'm talking about

502(e)(1).

MR. BRUNSTAD: Yes, Justice Ginsburg, if

your reimbursement claim is contingent, it will be

disallowed, subject to reconsideration under Section

502(j). And that's what the parties stipulated to in

16




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


this case in our stipulation. We filed our proof of

claim, then PG&E objected to our proof of claim, but

Justice Ginsburg, PG&E did a lot more than just object

to our contingent reimbursement rights. They

mischaracterized our subrogation rights as claims; they

sought to disallow our subrogation claims; and they

sought to subordinate our claims. Plus in addition,

they sought to disallow the claims of the injured

workers.

So we had to respond to the litigation that

was commenced. We had to defend our rights, and we were

successful. The workers' claims were ultimately left

unimpaired in the bankruptcy as they should have been.

PG&E was fully responsible for paying the workers'

claims.

JUSTICE GINSBURG: In any case, this has

nothing to do with the, Fobian, so-called Fobian issue,

whether the Ninth Circuit drew the bright line.

MR. BRUNSTAD: Correct, Justice Ginsburg.

The Fobian rule, we submit, is an impermissible creation

of Federal common law. It's not justified by any

concept of preemption; there is no conflict with

bankruptcy policy --

JUSTICE KENNEDY: Are they --

JUSTICE BREYER: Question --

17




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


JUSTICE KENNEDY: Let me just ask you about

the Fobian, and I know Justice Breyer has a question.

Let's assume that you're correct in that the

fees are allowable. Can the bankruptcy court make the

determination of the reasonableness of the fees?

MR. BRUNSTAD: It depends, Justice Kennedy.

If State law, if it's an unsecured claim under Section

501(b)(1) --

JUSTICE KENNEDY: In this case.

MR. BRUNSTAD: In this case, that would be a

determination under State law. Every State, Your Honor,

has a reasonableness requirement.

JUSTICE KENNEDY: So -- so if the bankruptcy

judge isn't sure of what the amount is, he looks to

State law to determine the amount?

MR. BRUNSTAD: Yes, Justice Kennedy. Under

Section 501(b)(1) --

JUSTICE KENNEDY: But the bankruptcy court

does determine reasonableness.

MS. MAHONEY: If State law provides for it,

and all States do. The bankruptcy court adopts the

State reasonableness standard for unsecured claims under

Section 502(b)(1). Yes, Justice Breyer?

JUSTICE BREYER: I'm sort of back where

Justice Kennedy started on this. Forget -- I'd like to

18




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


forget your case, because your case seems to me to be a

case where parties argue reasonably about whether the

contract itself covers this kind of fee. And maybe it

doesn't, if it's very unreasonable, et cetera.

But let's take a very straightforward case.

It's an obvious contract to collect a debt, or maybe a

mortgage, and in the debt or the mortgage agreement, it

says, attorneys' fees will be paid for collection. It

clearly covers bankruptcy, too, by its language.

And now there must be many instances or

some, anyway, where the security is inadequate.

MR. BRUNSTAD: The security --

JUSTICE BREYER: And there must be other

instances in which there wasn't any security. And if I

read Collier as you pointed to, that seems to say, in

such cases, very simple, the creditor has the status of

an unsecured creditor in respect to those attorneys'

fees.

BRUNSTAD: And in --

JUSTICE BREYER: Overage in the secured

case, and the whole claim in the unsecured case. So get

in the queue and you can collect your pro-rata share.

MR. BRUNSTAD: Absolutely, Justice Breyer.

JUSTICE BREYER: My question is, I have 19

professors on the other side coming to tell me that

19




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


that's never happened. They can't even find an

instance. So it isn't as if, it isn't as if you haven't

found an instance, it is that they are prepared to say

it never happened. And then there may be one exception

or two or something like that.

And I can't, that -- I'm now totally

puzzled. Because if it's so clear as you say, and I

follow your logic, and I followed Collier, why? After

all, there are bankrupt people who do have some assets.

Explain it.

MR. BRUNSTAD: Justice Breyer it happens all

the time. In our brief, we cite to many, many cases in

which attorneys' fees are allowed as unsecured claims.

It's actually been happening for over 100 years, it

happened in the Bankruptcy Act of 1998.

JUSTICE KENNEDY: No, no. But -- but we are

talking about attorneys' fees for services performed in

the bankruptcy proceeding?

MR. BRUNSTAD: Correct, Your Honor.

JUSTICE KENNEDY: The cost of filing the

claim, the cost of talking to the bankruptcy judge, et

cetera.

MR. BRUNSTAD: Correct, Your Honor. And in

a key case we cited, the Second Circuit's decision,

United Manufacturers and Merchants, where they didn't

20




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


even hire an attorney until after the bankruptcy case

was filed, the attorney performed services, filing a

proof of claim, protecting the equitable rights, and the

Second Circuit clearly held that those attorneys' fees

were properly part of the unsecured claim, but it

couldn't be any clearer. And the Second Circuit --

JUSTICE STEVENS: But what I don't -- there

is a body of law on the other side of that issue, too,

isn't there?

MR. BRUNSTAD: There is, Justice Stevens,

but those are lower court decisions.

JUSTICE STEVENS: Yes. Absolutely. The

Second Circuit is a lower court.

MR. BRUNSTAD: Well, compared to this Court,

certainly, Justice Stevens.

JUSTICE STEVENS: That's exactly right.

There are no cases from this Court speaking to this

precise issue, are there? On which there is a

disagreement among the lower courts?

MR. BRUNSTAD: Justice Stevens, I think it's

important to say that the alternative rule that PG&E

asked for is one that every court of appeals to have

addressed has rejected. What they are saying is, oh,

you can't get your attorneys' fees based on a

construction of the Bankruptcy Code. No court of

21




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


appeals has accepted it. There are some lower

bankruptcy court decisions that have accepted it, but

that is routinely overturned on appeal.

The issue of whether you get your attorneys'

fees as part of an unsecured claim, Cohen versus De La

Cruz, in that case this Court had to construe whether

the term debt, which means under the Bankruptcy Code the

same thing as a claim, is defined as liability on a

claim, there the Court, this Court concluded that that

debt included attorneys' fees, the treble damages, the

whole nine yards.

JUSTICE BREYER: You would have thought that

the one group of people who ought to know this

thoroughly, or at least have a view are the bankruptcy

bar.

MR. BRUNSTAD: Well --

JUSTICE BREYER: And, and yet there are no

briefs from them; there are not -- there is no article

that I could find in Bankruptcy Journal.

CHIEF JUSTICE ROBERTS: Well, there may be

no briefs from them because it isn't the question on

which we granted cert, is it?

MR. BRUNSTAD: Chief Justice Roberts, that's

correct. And our view is that the Court should deal

only with the Fobian rule. And the alternative argument

22




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


which Respondent presented was never argued below, was

not decided below, was not presented in the opposition

to certiorari. It's been rejected by every single court

of appeals --

JUSTICE GINSBURG: But it would be proper to

remand for the Ninth Circuit to consider those other

arguments?

MR. BRUNSTAD: Yes, Justice Ginsburg. And

that's exactly what this Court should do. It should

remand their statutory interpretation argument to the

Court of Appeals to consider, for the lower courts to

consider. This Court deserves more than just a 20-page

reply brief in response to 80 pages of briefing by the

other side on an issue that was never raised below, not

presented in the opposition to certiorari.

Remand would be the proper thing to do with

respect to their claim. I do believe that is true,

Justice Ginsburg.

JUSTICE GINSBURG: On both their statutory

interpretation and the contract?

MR. BRUNSTAD: The contract, reasonableness,

all of those issues. The circuit split, which we

presented to the Court, and which I understand

certiorari was -- well, I'm guessing -- certiorari was

granted on, it deals with the Fobian rule. As this

23




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


common law rule, this sort of construct, that if you're

litigating Federal law issues, well, as a matter of

general Federal common law, you can't get the attorneys'

fees unless it's authorized by Federal law.

And our brief was entirely devoted to that.

You can't justify that rule in our view under preemption

principles; there's no conflict; there is no Congress

preempting the field in any way; you can't justify this

under Atherton as a, as a -- something that's necessary

because of a conflict with Federal policy.

And also the Fobian rule is inappropriately

categorical, in violation of what we submit are these

Court's principles in the Nolan case, in the CF and I

case. In those cases, the Court said: It's not for the

courts to create these claims processing rules in

bankruptcy. But that exactly is what the Ninth Circuit

did here.

If there are no further questions I'd like

to reserve the balance of my time for rebuttal.

JUSTICE STEVENS: One quick question, if I

may. Would one of the issues open on remand be the

construction of the contract? Is there an issue at

State law as to whether Travelers pays for these

particular services?

MR. BRUNSTAD: Yes, Justice Stevens. That

24




1

2

3

4

5

6

7

8

9

10

11

12

13 --

14

15

16

17

18

19

20

21

22

23

24

25


would be appropriate on remand. I reserve the balance

of my time.

CHIEF JUSTICE ROBERTS: Thank you, Counsel.

MR. BRUNSTAD: Thank you.

CHIEF JUSTICE ROBERTS: Mr. Rosenkranz.

ORAL ARGUMENT OF E. JOSHUA ROSENKRANZ

ON BEHALF OF THE RESPONDENT

MR. ROSENKRANZ: Mr. Chief Justice, and may

it please the Court:

Let me begin at the threshold, on whether

this Court should consider the statutory construction

argument that we've presented. The issue of statutory

JUSTICE GINSBURG: And can we be, take one

step before that and tell us if you are conceding that

the Fobian rule has no basis in the statute and is

wrong?

MR. ROSENKRANZ: Your Honor, the Fobian rule

reaches the correct conclusion in this case, but Your

Honor is correct. The problem with the Fobian rule is

that it doesn't go far enough in presenting, in

preventing creditors from requiring other creditors to

pay for their attorneys' fees.

JUSTICE KENNEDY: Well, if you say it

doesn't go far enough then I infer from that you say

25




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


that it's valid as far as it goes?

MR. ROSENKRANZ: It is valid as far as it

covers this case but not on the rationale of the Ninth

Circuit. In other words, the Ninth Circuit did begin in

the wrong place, which was not to read the statute,

Section 502, which is why that is a rational predicate

to the issue that Travelers is presenting here.

CHIEF JUSTICE ROBERTS: I'm not sure I

agree, Counsel, that the Fobian rule is both narrower

and broader than the question you try to present. For

example it applies to the claims of a secured creditor

for attorneys fees on a secured claim as well.

MR. ROSENKRANZ: No, Your Honor --

CHIEF JUSTICE ROBERTS: Why -- it doesn't?

MR. ROSENKRANZ: No, Mr. Chief Justice. No

court has ever held that the Fobian rule applies to

oversecured creditors. Everyone acknowledges that

Section 506(b) applies to oversecured creditors so.

CHIEF JUSTICE ROBERTS: So if you're an

oversecured creditor with a claim for attorneys' fees

arising under solely issues of matters of Federal

bankruptcy law, the Fobian rule doesn't prevent that?

MR. ROSENKRANZ: No, Your Honor. Everyone

is absolutely clear that Fobian to the extent that it

applies --

26




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


CHIEF JUSTICE ROBERTS: Well, not everyone.

I'm not clear on it.

MR. ROSENKRANZ: I'm sorry, Your Honor. All

the bankruptcy practitioners and courts are clear that

to the extent that Fobian applies, it applies only to

unsecured creditors. But again this is a rational

predicate to this Court's analysis of Fobian. How do we

know?

CHIEF JUSTICE ROBERTS: If it is a rational

predicate, we might have expected to hear about it in

the opposition to certiorari.

MR. ROSENKRANZ: Yes, Your Honor. I

apologize for focusing only on the issue that Travelers

was focusing on, which was whether this was, whether the

Fobian rule was itself cert-worthy question. But it is

a rational predicate because, as you can see from

Travelers' brief, Travelers says no fewer than a dozen

times, including in two point headings: Read the code;

read the code. It will tell you that unsecured

creditors have an allowable claim for post-petition

attorneys' fees, and only if you begin by reading the

code can you figure out whether the Fobian common law

overlay is correct or not. So when we say, Your Honors,

yes, let's read the code, that's not an ambush and that

is not smuggling in.

27




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


CHIEF JUSTICE ROBERTS: No, it's an ambush

and it is smuggling in the sense we don't have a court

of appeals decision one way or the other on that

question, do we?

MR. ROSENKRANZ: Your Honor, we do have

court of appeals decisions on this precise question, not

in this case because the court of appeals had Fobian and

the rule that underlay Fobian for 20 years. But there

are three courts of appeals --

JUSTICE KENNEDY: Justice Ginsburg has a

question I'm very interested in. Do you defend the

Fobian rule?

MR. ROSENKRANZ: We do not, Your Honor. The

Fobian rule is wrong at least, especially as to the

distinction that it draws between State law and Federal

litigation. There's only one answer to the question --

JUSTICE STEVENS: Well, why then isn't the

proper disposition of this case to send it back to the

Ninth Circuit to consider all these other arguments?

MR. ROSENKRANZ: Well, Your Honor, because

this issue has been fully ventilated among the lower

courts.

JUSTICE GINSBURG: Yes, but we are not a

court of first view and you know that very well. We are

a court of review. So no matter how well it's been

28




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


aired, we wait to see what the lower courts have said on

a question. We don't take it in the first instance.

MR. ROSENKRANZ: Yes, I understand that,

Your Honor. It would have been futile to argue this

before the Ninth Circuit. The Ninth Circuit would have

said that --

JUSTICE GINSBURG: I understand that because

they have the Fobian rule.

MR. ROSENKRANZ: Yes. Now, but, Your Honor,

let me just add two additional reasons why this Court

should consider it now. The first is this has been

fully ventilated in the lower courts. There is not a

single argument in the briefs on either side on which

there is not a lower court opinion going one way or

another on every argument.

Secondly, there is an enormous amount of

affirmative harm that can come from this Court simply

saying, let us conclude that the Ninth Circuit was wrong

in disallowing these claims on the logic that the Ninth

Circuit followed, but we will reserve for a later day an

open question of law on what Section 502(b) and 506(b)

means. And the harm comes from the fact that

overwhelmingly the lower courts in the last 10 years

have concluded that 502(b) and 506(b) mean that

unsecured creditors do not have these claims.

29




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


If this Court declares that it is now an

open question --

JUSTICE STEVENS: Let me ask you a question

about that. Your argument depends -- you analogize --

you would agree, I take it, that if this was an

oversecured, secured creditor they'd be entitled to

fees?

MR. ROSENKRANZ: Your Honor, we would

dispute the contractual interpretation, but yes, Your

Honor.

JUSTICE STEVENS: But assuming, assuming the

contract provides that.

MR. ROSENKRANZ: Yes, Your Honor.

CHIEF JUSTICE ROBERTS: And if that's true

-- and the reason for that I suppose is that doesn't

impair the rights of the general creditors at all.

MR. ROSENKRANZ: That's one logic of the --

JUSTICE STEVENS: If that's so, why isn't

their argument that, well, your client is solvent, the

complete answer to your position?

MR. SHORR: Well, Your Honor, because

Congress didn't say that. Congress gave only one answer

to the question whether unsecured creditors get their

attorneys' fees allowed, that is post-petition

attorneys' fees allowed. It's either yes or no. There

30






1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24 --

25


attorneys' fees. The fees will be pre- petitioned in

nature, constituting a contingent pre-petition

obligation that became fixed post-petition when the fees

were incurred. All right. Now, what is your response

to that?

MR. ROSENKRANZ: Your Honor, my response is

I urge you, Justice Breyer, to look back at Colliers,

because that is absolutely accurate and it doesn't apply

to this case.

JUSTICE BREYER: Because?

MR. ROSENKRANZ: Because, Your Honor, that

is a statement about whether it is a pre-petition claim,

not about whether the claim is allowable or not, which

is what we are arguing about.

JUSTICE BREYER: Then you explain that to

me?

MR. ROSENKRANZ: Yes, Your Honor. Step one

is, is it a claim. No one disputes that this is a

claim. It is a right to payment. Step two, is this an

allowable claim? The answer under the code is

absolutely not, because the code says there is only one

class of creditors that gets their attorneys' fees

claims allowed and that is oversecured creditors and so

JUSTICE BREYER: Well, that's because 506

32




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


had to do that in order to tell the bankruptcy courts

how to deal with secured claims.

MR. ROSENKRANZ: No, Your Honor.

JUSTICE KENNEDY: That doesn't -- and then

you have the negative inference or the exclusio unius

argument, whatever, which I think is misplaced in this

context.

MR. ROSENKRANZ: Your Honor, Congress put

506(b) in the code for one purpose and one purpose only,

and that was to allow claims that are not elsewhere

allowed, because if it doesn't do that 506(b) serves no

purpose at all. 506(b) says nothing at all about

whether the claim is secured.

JUSTICE GINSBURG: Why doesn't it serve the

purpose of saying that the fees will be covered by the

security? They'll not be just be claims for fees that

would stand together with the unsecured creditors, but

that the oversecured -- the security will cover the

interest, will cover the attorneys' fees, and that's the

function of 506 whatever --

MR. ROSENKRANZ: Your Honor, the answer is

506(b) does not say anything about whether the allowed

claim is secured or not. It is completely silent about

that. Now, if we accept, as we explain in our brief in

much more detail, if we accept Travelers' argument that

33




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24 --

25


it was an allowed claim in the first instance and it is

therefore furthermore an allowed security claim, 506(a)

tells you what to do with that. 506(a) tells us that an

allowed claim to a secured creditor is a secured claim.

It still leaves Section 506(b) with nothing left to do.

Now, let me just back up and underscore:

Any creditor would love to get the other creditors to

pay its attorneys' fees. Tort claimants would love it,

trade creditors would love it, local tax collectors

would love it. But Congress said only one category of

claimants get to claim their post-petition attorneys'

fees.

JUSTICE BREYER: Of course, that is exactly

what's puzzling me. But why haven't they gone out and

got? So why -- what you're pointing to so far is that

Congress has said a particular class of people get the

attorneys' fees out of the security insofar as the

security will support it. It doesn't say a word about

what happens to the attorneys' fees after the security

is exhausted, nor about anybody else's attorneys' fees,

where so provided by contract. Colliers says they can

get it.

MR. ROSENKRANZ: Your Honor, Congress said

JUSTICE BREYER: Same puzzlement.

34




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


MR. ROSENKRANZ: Your Honor, Congress has

said no such thing. What Congress says is that an

allowed claim is allowed as of the date of the filing of

the petition. That is when you value the claim and you

value the claim as of the date of the filing of the

petition. At that point, it is worth zero because no

post-petition attorneys' fees have been incurred. And

the fact of the matter is it may well have never

occurred to the drafters of the code when --

JUSTICE BREYER: Suppose I sell you a house

and I make a promise that I'll fix any leaks in the

bathroom. And lo and behold, before there's a leak

the -- I'm bankrupt. And while I'm bankrupt it floods,

the bathroom. No claim?

MR. ROSENKRANZ: Your Honor, that is a

claim. It is a --

JUSTICE BREYER: It is a contingent claim.

And you're saying this is the same.

MR. ROSENKRANZ: I'm saying -- they are

saying this is a contingent claim. If -- and it is a

very strange sort of a contingency. It is Travelers

saying, we have a claim, it is a contingent claim; the

contingency is whether tomorrow morning we're going to

pick up the phone and called Weil Gotshal to monitor the

bankruptcy proceeding.

35




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


But let's assume it is a contingent claim.

It is still a disallowed claim and Congress provided

numerous statutory indications that it was. I already

mentioned 506(b) but there are more. Congress said that

attorneys' fees are available only, quote, "to the

extent that a claim is oversecured." Now that would be

a very --

CHIEF JUSTICE ROBERTS: No. It's quite

unlike the situation, for example in Timbers, where had

you in 502 a disallowance of post-petition interest.

There is not in 502 a disallowance of attorneys' fees.

MR. ROSENKRANZ: Well, Your Honor, I was

just going to get there. Timbers underscores this

proposition. Timbers focused on the structure of 506

and it began with and it underscored, the only words

that it underscored were, "to the extent that." But let

me turn to that.

JUSTICE KENNEDY: Well, Timbers cited, as

the Chief Justice indicates, the interest section in

506. That's all it's about. I don't -- I think Timbers

is misleading on this point.

MR. ROSENKRANZ: Your Honor, Timbers has the

structural argument that focuses on what the purpose of

506(b) is. But there are more indications. It would be

odd for Congress, for example, to draft this provision

36




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


506(b) that purports to put post-petition attorneys'

fees on the same footing at post-petition interest if it

intended to put them on different footings. It's an

observation this Court made in Ron Pair. Moreover,

Congress was not oblivious to the existence of

attorneys' fees post-petition. There are 15 occasions

in the code where Congress spoke to attorneys' fees and

if Congress had intended attorneys' fees to be available

to this enormous class of unsecured creditors, one would

think that it would not have hidden that in the

definition of "claim" --

JUSTICE BREYER: Well, are those 15 places

-- do they involve attorneys' fees as administrative

expenses? Do any of them involve attorneys' fees simply

as an unsecured claim for attorneys' fees?

MR. ROSENKRANZ: Your Honor, as to

creditors, four of them apply to attorneys' fees as

administrative expenses. It's a very important point

because the code says and it adopts this age old rule

that if you are going to take money away from some

unsecured creditors and give it to attorneys it better

be because you're expanding the pot for all of the other

creditors.

JUSTICE BREYER: What's the answer to my

question? Is the answer that 11 of them say you can

37




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


collect attorneys' fees, but only as an unsecured claim

against creditors.

MR. ROSENKRANZ: Your Honor, for the, for

creditors there are only six that apply. Four of them

are the administrative.

JUSTICE BREYER: All right, so six.

MR. ROSENKRANZ: Yes.

JUSTICE BREYER: So six are administrative,

and then the remaining two say that the creditor can

collect it as an unsecured debt?


JUSTICE BREYER: Which are those two?

MR. ROSENKRANZ: Well, one of them does.

JUSTICE BREYER: Which is that?

MR. ROSENKRANZ: That is the provision that

Travelers cites -- and I apologize it's not in any of

the appendices -- 502(b)(4). And 502(b)(4) underscores

our point. 502(b)(4) says, and I'm quoting directly

from the code: "A claim is allowed to the" -- "is

disallowed to the extent that," and then "(4) if such

claim is for services of an insider or attorney and such

claim exceeds the reasonable value of such services."

That is focused on pre-petition activities of the

lawyers on behalf of the debtor.

JUSTICE BREYER: That seems to cut the other

38




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


way because it says it's disallowed insofar as it's

unreasonable of course, and therefore it would be

allowed insofar as it's reasonable.

MR. ROSENKRANZ: Well, yes. Pre-petition

claims for services provided by an attorney before for

the petition.

JUSTICE KENNEDY: No, attorney for the

debtor.

MR. ROSENKRANZ: An attorney for the debtor

and, Your Honor, the code is clear it's noteworthy.

JUSTICE BREYER: Yes, but I mean you don't

have exactly what I was driving to. I was quite

interested that you said there are 11 other provisions

that we could look at for support, and I wouldn't think

it was support if those consider -- concern

administrative expenses, which nobody's asking for here,

they just want an unsecured claim, or if they concern

some other --

MR. ROSENKRANZ: Fair enough Your Honor.

JUSTICE BREYER: -- irrelevant thing.

MR. ROSENKRANZ: Fair enough, Your Honor.

My point is that Congress knew about attorneys' fees and

if it wanted this huge class of unsecured creditors to

collect their attorneys' fees for post-petition

activities, it wouldn't have hidden that in a general

39




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


definition of claim or in the general statement of

allowability.

CHIEF JUSTICE ROBERTS: Counsel, your

brother in his reply brief said that no court of appeals

has endorsed your theory, and I -- earlier you told me

one had. Which one in particular?

MR. ROSENKRANZ: Your Honor, the First

Circuit -- there are three courts of appeals that have

addressed the question, all in dictum but in very

extensive dictum. So the First Circuit comes out our

way in Adams versus Zimmerman. The Second Circuit comes

out also in dictum on Travelers' side in United

Merchants. And then the Sixth Circuit splits the baby

in half, or reads the code all the way up to our

position as we do, and then takes a detour in another

direction.

CHIEF JUSTICE ROBERTS: So you really want

us to reach out and decide a question that's not

presented when there has been no holding of the court of

appeals one way or the other on the issue?

MR. ROSENKRANZ: Your Honor, we didn't come

here asking this Court to address this question.

Travelers put it front and center. They conceded --

CHIEF JUSTICE ROBERTS: If you thought the

Fobian rule was wrong, you could have said that.

40




1

2

3

4

5

6

7

8

9

10

11 --

12

13

14

15

16

17

18

19

20

21

22

23

24

25


MR. ROSENKRANZ: Well, Your Honor, it would

have made no sense for us to argue that Fobian was wrong

when we were trying to defend the judgment below. But I

concede, Your Honor, this Court has discretion to decide

whether it's going to address what we believe is an

absolute factual predicate, and what Travelers seems --

I'm sorry, legal predicate -- and what Travelers seems

to believe is a legal predicate, which is why we're

saying to the Court this case, this issue has been

ventilating for 20 years, and a lot of mischief can be

JUSTICE BREYER: How -- can we decide? But

I'm wondering about, maybe you don't want to answer

this, but I mean, if we were to say Fobian is wrong,

everybody will agree with us. But we should have to say

why it's wrong. And if we say the reason that it's

wrong is because you can't collect attorneys' fees at

all, you'll be delighted. And if we say the reason it's

wrong is because you can collect attorneys' fees

regardless, they'll be delighted. And our only other

alternative is to not say why it's wrong or -- I mean,

that's the problem.

MR. ROSENKRANZ: That's exactly --

CHIEF JUSTICE ROBERTS: That's an added

complication. There's another case on which the Ninth

41




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


Circuit's based its decision in your case, DeRoche.

Your proposed solution here doesn't address the issue in

DeRoche because there it's the debtor that's seeking

attorneys' fees.

MR. ROSENKRANZ: Absolutely, Your Honor.

CHIEF JUSTICE ROBERTS: So we still have to

decide the Fobian issue. And your failure to defend it

here means that we're going to have to decide in on that

inadequate record. If you have mentioned that in an

opposition to certiorari, perhaps we would have granted

cert in the DeRoche case and had an argument about the

rule that we have to decide.

MR. ROSENKRANZ: Your Honor, I appreciate

that, and I apologize for not having raised it in the

cert petition, cert opposition, we were simply focused

on why it is that this little sliver of the Fobian rule

was not worth this Court's attention. But I understand

that this Court needs to look forward and try and figure

out what exactly the issues are that are presented. I

only add that the statutory question that is presented

in DeRoche and in this case are as Your Honor has

pointed out, mirror images of each other.

So whatever this Court decides as to the

statutory construction question on 502(b), this Court

can say it's not resolving Fobian because this is a

42




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


predicate question. And this Court can say there may

well be circumstances in which a creditor can say, you

know what, for State law litigation we have this common

law right, and we reserve for a later day the question

of whether there is an exception to the statutory rule

that we are articulating.

Now I want to underscore that Congress had

very important reasons that are built into the code for

coming out this way and disallowing unsecured creditors

attorneys' fees. Bear in mind that these sorts of fee

shifting provisions are absolutely ubiquitous. They are

in every credit card contract. They are in every bank

loan. They are in virtually any written contract, and

when a contract doesn't provide for it, quite often

State law statutes do. Allowing all of these unsecured

creditors to pay their lawyers out of the hides of all

of the other unsecured creditors --

JUSTICE STEVENS: Yes, but that's not the

facts of this case. Isn't that correct?

MR. ROSENKRANZ: Well, Your Honor --

JUSTICE STEVENS: This will not have any

adverse, if I understand the facts, any adverse impact

whatsoever on any unsecured creditor.

MR. ROSENKRANZ: Your Honor, on the facts of

this case if the rule had been otherwise, we don't know

43




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


whether PG&E would have been solvent at all. But we are

arguing about a rule that is not one rule for Travelers

and one rule for everyone else. We are arguing about a

rule for the vast majority of cases.

JUSTICE STEVENS: No, but just looking at

this case itself, if there is plenty of money there to

pay a State law obligation, why shouldn't just ordinary

rules of contract law apply?

MR. ROSENKRANZ: Well, Your Honor, the

answer is, Congress dealt with this issue and decided

that no one gets to get in line and get their attorneys'

fees, regardless of whether they're solvent or not.

It's a --

JUSTICE GINSBURG: You're raising a

provision that says just that, it's the absence of a

provision for attorneys' fees that you're relying on.

MR. ROSENKRANZ: Well, no, Your Honor.

We've been talking about why the only natural way to

read the code is to disallow attorneys' fees, and I'm

explaining that if attorneys' fees are generally

disallowed to everyone, there's no exception to that

rule in the code that says ah, yes, but if there's an

insolvent -- if there's a solvent debtor, the rule is

otherwise.

JUSTICE GINSBURG: Where is the provision

44




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


that generally disallows attorneys' fees?

MR. ROSENKRANZ: I'm sorry. What I'm saying

is 502(b) when you read "as of the time of the filing of

the petition," it says -- that means, that must mean

that it doesn't apply to post-petition attorneys' fees,

especially when you look at 502(b) through the lens, as

this Court did in Timbers, of the rest of the code.

506(b), all of these other attorneys' fees --

JUSTICE KENNEDY: Well, on that point you

disagree with the Collier citation at page 9 of the

reply brief then?

MR. ROSENKRANZ: Yes, Your Honor, I disagree

with Colliers, but I don't think Colliers comes out one

way or another on this particular question. That was

the same question that was asked earlier about whether

it's a claim, whether it's a pre-petition claim.

JUSTICE KENNEDY: Well, it says if the

creditor incurs the attorneys' fees post petition in

connection with protecting a pre-petition claim --


JUSTICE KENNEDY: -- the fees will be

pre-petition.

MR. ROSENKRANZ: That was the same --

JUSTICE KENNEDY: So you disagree with that?

MR. ROSENKRANZ: I don't disagree with that,

45




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


Your Honor. I was referring to another provision of

Colliers, not the one that's cited in the reply brief.

That is a correct statement but it has no application

here because we are not arguing about whether it's a

pre-petition obligation. Of course it's a pre-petition

obligation. Just like pre-petition interest -- excuse

me -- post-petition interest is a pre-petition

obligation we are arguing that the code cancels that

obligation because there are very important reasons,

such as equality among all unsecured creditors, the --

JUSTICE BREYER: You're saying this

particular set of pre-petition obligations. Collier, I

think in context must be saying, you get paid the money.

I mean, he goes on in the next sentence and says by the

way, despite my last sentence, you don't get the money?

MR. ROSENKRANZ: No, Your Honor. What

Colliers is talking about is a completely different

question. He doesn't answer that question one way or

another in Colliers.

JUSTICE BREYER: Oh, in other words what he

implies, if I ready the whole page I'll see, although he

just said what we quoted, the whole page means, by the

way, I'm not telling you if you get the money or not?

MR. ROSENKRANZ: This was a completely

different discussion on a --

46




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


JUSTICE BREYER: Sorry, I'll --

MR. ROSENKRANZ: -- completely different

section referring to setoffs.

JUSTICE BREYER: I think your 506(b)

argument, I see your point, I see your point, is there

-- I mean, and you'd have to say well, 506(b) simply

repeats 506(a), as sometimes provisions do, and then it

becomes somewhat superfluous, somewhat not. I got that

point. I also have your point about, well, there are

other references. Now, is there any other point in the

code?

MR. ROSENKRANZ: Yes, Your Honor. There is

one other point and that is, 502(c) tells the court what

it is supposed to do with contingent claims. It is

supposed to either liquidate them or estimate them.

These are -- this is a very strange sort of contingency,

as I mentioned earlier.

JUSTICE SCALIA: That's not in the

materials, 502(c)?

MR. ROSENKRANZ: 502(c) is, Your Honor.

It's on the very back of the cert petition appendix on

page, I believe 28. And so it says either estimate or

liquidate, but always as of the date of the filing of

the petition. Now as of the date of the filing of the

petition it would be impossible to estimate without a

47




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


crystal ball.

JUSTICE BREYER: How do they do it with my

leaky bathroom?

MR. ROSENKRANZ: Your Honor, what you do is

-- that is a classic contingency. What you do is to

estimate the likelihood that the bathroom will in fact

leak and the cost of those expenses, and you put

something into the, into the bankruptcy estate for that

purpose. That would be something that Congress would

never have wanted to do with thousands and thousands of

unsecured creditors.

JUSTICE KENNEDY: I -- I am concerned about

your point that there are all kinds of attorneys' fees

contracts out there and if everybody can get fees for

filing the claim post-petition act, we have a huge

amount of claims to pay.

Travelers would tell us, though, that a

surety is different, that they somehow stand in the

shoes of PG&E or something.

MR. ROSENKRANZ: Your Honor, I don't

understand why a surety is different from any other

contract. All contractual creditors will want their

fees. The reason that they haven't been applying for

them is that the overwhelming majority of bankruptcy

courts will tell you no, you can't have them, because

48




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


the overwhelming majority of cases have been saying

exactly what I'm saying to you. 502(b) does not allow

them, and we can tell that by looking at 506(b).

And there are other reasons that Congress

would not have wanted to do that. It would have

burdened the administration of the state -- of the

estate. The court would be spending more time

administering claims about fees and what does this

contract mean, and fees upon fees upon fees, than it

would be spending administering the basic bankruptcy

estate.

JUSTICE SOUTER: Well, of course the

argument here is that this is something different from

the general abuse that you're describing, because the

plan didn't make any provision here for, for paying the

workers comp obligation at all. What is your response

to that?

MR. ROSENKRANZ: Your Honor, my response is

that is absolutely wrong. The first draft of the plan

which you can see on page 28 of the appendix says

explicitly, and I quote, "all workers compensation

programs are treated as executory contract." Treated as

executory contracts and deemed assumed by the debtor,

and that means that the workers got the most favorable

treatment that they could have gotten. These are not

49




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


just unsecured claims.

CHIEF JUSTICE ROBERTS: Your friend says

it's more favorable to say the claims are unimpaired.

MR. ROSENKRANZ: Your Honor, that's what

they argued. The bankruptcy court explicitly held

otherwise and the Ninth Circuit agreed with the

bankruptcy court. The bankruptcy court said, none of

your interventions were reasonably necessary to reach --

excuse me -- to advance your interests. Therefore, you

are absolutely wrong when you argue to us that you are

on the State law side of the Fobian rule.

Now if you ask me, Your Honor, where in the

bankruptcy court decision does it say that, I would

refer the Court to page 24a of the -- of the cert

petition appendix, where you see asterisks for a missing

paragraph right in the middle of the opinion. That, and

just to orient the Court, we're looking at the first

paragraph that says first of all. Then there's a --

there is an asterisk eliminating a paragraph. Look at

page 140a, 141 of the joint appendix where the missing

paragraph that Travelers eliminated is filled in, and

there the court summarizes a 15-page colloquy with

Travelers about why it is completely wrong in claiming

that its steps were reasonably necessary.

And on page 141, just to orient the Court

50




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


again, you see that it begins, second paragraph, first

of all. That's the same paragraph. The next paragraph

refers to Mr. Brunstad's arguments. It says, "I just

simply don't by it. I don't think you can sort of say,

you know, we thought there was a thief hiding under the

bed so we had to clear out under the bed. I don't think

there was a risk there." And that was the gist of 15

pages proceeding the joint appendix, where the court

methodically demolishes each of the argument Travelers

presents here.

Thank you, Your Honor.

CHIEF JUSTICE ROBERTS: Thank you, counsel.

Mr. Brunstad, you have eight minutes remaining.

REBUTTAL ARGUMENT OF G. ERIC BRUNSTAD, JR.

ON BEHALF OF THE PETITIONER

MR. BRUNSTAD: Justice Breyer, in our brief

on pages 25 and 26, we cite to a number of cases where

the courts allowed attorneys' fees as an unsecured

claim, both for pre-petition work done and also

post-petition work done where the contractual right was

pre-petitioned. We also cite a bunch of cases around

page 44 -- 43 and 44 of our brief, including an article

in the middle of page 44, quote: "In cases decided

under the Bankruptcy Act, the higher courts consistently

held that attorneys' fees were allowable even as

51




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


unsecured claims in bankruptcy." Close quote. I've

been a bankruptcy lawyer for over 20 years. I've been

teaching bankruptcy law for 17 years. It is absolutely

not true that courts routinely disallow claims for

attorneys' fees as part of unsecured claims. It's the

opposite is true it's routine that they are allowed in

practical reality however they are not presented because

creditors don't bother to present them because

distributions are generally so low in bankruptcy.

On the point about the plan completely

protected the rights of the injured workers, nothing

could be farther from the truth. The provision that

counsel cites in the plan refers to exec, as executory

contracts, workers' compensation benefit programs.

Those are the contractual relationships between PG&E and

its administrators, not the claims of the workers

themselves. Tellingly, PG&E never argued in the

bankruptcy court that the claims of the workers were

fine under the plan. In fact, they said, we will do

what Travelers wants after the bankruptcy court directed

-- and it's in the transcript -- that that was the

appropriate thing to do.

In fact, what Travelers insisted is

required by Section 1123 of the Bankruptcy Code, claims

such as the workers' must be classified, their treatment

52




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


must be specified. If they are not they are eliminated.

The reference to executory contracts

clearly doesn't apply. As we explain in our reply

brief, the workers' claims were not executory contracts

under applicable law. That section does not apply.

Of course, I think, Chief Justice

Roberts, there is a lot more that we would like to say

about their alternative arguments than we were able to

put in our 20-page reply brief. The issue that they

raised has not been fully ventilated in the lower

courts. In fact, there are many more things we would

say about it on remand.

I also think it's important to point out,

Justice Stevens, they are a solvent debtor, and under

the concept of absolute priority shareholders are not

allowed to recover anything unless creditors are paid in

full. What they are trying to do is they're trying to

get rid of their contractual obligations in bankruptcy

for the benefit of their shareholders. There's no

implication between creditors, creditors' recoveries in

this case one versus the other.

In the Dow Corning case which we cite in

our reply brief the Sixth Circuit expressly held where

you have a solvent debtor you have to pay all of the

attorneys' fees. That is an additional argument we

53




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


would develop on remand.

But all of their arguments about Section

506 and their interpretation of 502 simply don't matter,

because as a solvent debtor they're not entitled to take

advantage of that theory even if it were valid. And we

contend that it isn't valid. The court of appeals have

resoundingly rejected it. The Second Circuit rejected

it in United Merchants and Manufacturers. The Sixth

Circuit rejected it in Dow Corning. The Eleventh

Circuit it en banc in the Wellsville case. All of them

considered the 506 argument that they're making and

rejected it, and properly so.

Counsel cites to Section 502(b)(4).

That's an important section because that demonstrates

that Congress understood that attorneys' fees would be

allowable as an unsecured claim under Section 502. And

in Section 502(b)(4) it provided the only exception, the

only one where attorneys' fees would not be allowable as

an unsecured claim. It provided expressly attorneys'

fees would not be allowable for the attorney for the

debtor to the extent the claim for the fees exceeded the

reasonable value of the services performed. Why is that

provision there? Because Congress saw there was a

problem. There was a problem of debtors sending money

to their attorneys. Congress understood that to be a

54




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


problem and it remedied it.

Congress did not think there was a

problem with respect to this historic practice of going

on over 100 years of attorneys' fees being allowed as

unsecured claims, and so in Section 502 it allows them.

Respondents' argument about Section 506(b) renders

Section 502(b)(4) superfluous. If attorneys' fees were

never allowable as part of an unsecured claim except for

how 506(b) allows it, then there would not be a need for

Section 502(b)(4). In addition, Respondent overstates

the office of Section 506. 506, as this Court explained

in Ron Pair, provides, essentially tells us what secured

creditors get out of their collateral and in what order

-- the pre-petition amount and then, if there's any

value left, the value of the collateral. After you pay

the pre-petition amount of the claim, you can add

attorneys' fees and you can add, post-petition you can

add interest. Their interpretation of Section 506(b)

would render Section 502(b)(2) superfluous. Under their

theory, only oversecured creditors get post-petition

interest, get interest.

JUSTICE KENNEDY: If you prevail, why can't

every attorney who represents a creditor who has a

credit card or a promissory note providing for

attorneys' fees file something in bankruptcy and get

55




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


attorneys' fees for the filing of the claim?

MR. BRUNSTAD: That already happens, Justice

Kennedy. In all the circuits that recognize that

attorneys' fees are allowed as unsecured claims, that

already happens. And that has not cause any disaster or

any problem. It's been a practice for 100 years. If

Congress had wished to change the practice, it would

have when it codified the Bankruptcy Code in 1979. The

fact that it hasn't perceived it to be a problem

demonstrates that Congress wanted to leave the practice

unchanged.

Now, what happens, though, again, Justice

Kennedy, is that creditors don't bother to file claims

for those amounts. And where it matters is in cases

where it should matter, like in this case, in the PG&E

case, where a solvent debtor is simply trying to get out

of its contractual relationships. And under principles

of absolute priority they are not allowed to do that for

the benefit of shareholders where creditors are not

being paid in full. And I think it's important to

underscore again, Justice Kennedy.

JUSTICE STEVENS: It's interesting. You're

of course a teacher too. The amicus brief by a bunch of

professors has a different view of the history than

you're describing.

56




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


MR. BRUNSTAD: Justice Stevens, what I take,

what I take from their analysis is a hostility towards

attorneys' fees being allowed in bankruptcy. And

perhaps maybe as a matter of policy, if we were to start

from scratch, well, maybe we shouldn't allow attorneys'

fees to be allowed in bankruptcy. Maybe we shouldn't

allow tort claims to be allowed in bankruptcy. Maybe we

shouldn't allow certain kinds of environmental claims to

be allowed in bankruptcy. They don't like the rule,

apparently, but their analysis of the history is wrong.

And we cite innumerable cases and law review

articles that demonstrate that the practice is as we say

that it is. And policy reasons are no grounds to sort

of create these Federal common law rules or these

categorical rules of preclusions.

JUSTICE STEVENS: Would you say a word about

Justice Holmes' opinion in the Scruggs case.

MR. BRUNSTAD: Yes, Justice Stevens. The

Randolph case was decided in 1903 and the law changed

dramatically since then. For example, in 1903

contingent claims were not provable under the Bankruptcy

Act. That changed in 1938 when contingent claims became

provable under the Bankruptcy Act.

Randolph & Randolph versus Scruggs involved

the claim of a custodian, a custodian, an assignee, who

57




1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


took control of all the debtor's assets before the

bankruptcy filing. Now under Section 503(b)(3)(E), the

Randolph versus Scruggs analysis as it pertains to the

claims of the assignee, those are now treated as an

administrative expense under Section 503 dealing with

administrative expenses.

In Randolph, it's interesting, the fees --

Justice Kennedy, the fees incurred in preparing the

assignment were allowed as an unsecured claim in the

bankruptcy case. Justice Holmes for the Court said they

are allowed. So in fact Randolph I think refutes their

analysis rather than supports it.

CHIEF JUSTICE ROBERTS: Thank you, counsel.

The case is submitted.

(Whereupon, at 12:01 p.m., the case in the

above-entitled matter was submitted.)

58





Page 59

A able 6:18 53:8above-entitled

1:14 58:16absence 44:15absolute 41:6

53:15 56:18absolutely 10:21

10:22 19:2321:12 26:2431:7 32:8,2142:5 43:1149:19 50:1052:3abuse 49:14accept 33:24,25

accepted 22:1,2accomplishes

10:21accurate 32:8acknowledges

26:17act 20:15 48:15

51:24 57:22,23action 5:17activities 38:23

39:25

Adams 40:11add 29:10 42:2055:16,17,18added 41:24addition 17:7

55:10additional 6:24

29:10 53:25address 40:22

41:5 42:2addressed 21:23

40:9adequately

11:13administering

49:8,10administration

49:6administrative

37:13,18 38:5

38:8 39:1658:5,6administrators

52:16adopts 18:21

37:19advance 50:9advantage 54:5adverse 43:22

43:22affirmative

29:17age 37:19agree 26:9 30:5

41:15agreed 12:23

50:6agreement 19:7ah 44:22ahead 8:18aired 29:1allow 33:10 49:2

57:5,7,8allowability

40:2allowable 18:4

27:20 32:13,2051:25 54:16,1854:20 55:8allowed 16:13

20:13 30:24,2532:23 33:11,2234:1,2,4 35:3,338:19 39:351:18 52:653:16 55:456:4,18 57:3,657:7,9 58:9,11Allowing 43:15

allows 55:5,9all-loss 9:1alternative

21:21 22:2541:21 53:8alternatively 4:2ambush 27:24

28:1

amended 14:8,9AMERICA 1:5amicus 56:23amount 6:25

15:7 18:14,15

29:16 48:1655:14,16amounts 56:14analogize 30:4analogy 10:3analysis 5:3 27:7

57:2,10 58:358:12answer 7:13

28:16 30:20,2232:20 33:21

37:24,25 41:1344:10 46:18anybody 34:20anyway 19:11apologize 27:13

38:16 42:14apparently

57:10appeal 22:3appeals 21:22

22:1 23:4,1128:3,6,7,9 40:440:8,20 54:6APPEARAN...

1:17appendices

38:17appendix 47:21

49:20 50:15,2051:8applicable 53:5application 46:3applies 26:11,16

26:18,25 27:527:5apply 32:8 37:17

38:4 44:8 45:553:3,5applying 48:23appreciate

42:13

appropriate 25:1 52:22argue 19:2 29:4

31:4 41:250:10

argued 23:131:2 50:552:17arguing 32:14

44:2,3 46:4,8argument 1:15

2:1,4,7 3:3,79:10 22:2523:10 25:6,1229:13,15 30:430:19 33:6,25

36:23 42:1147:5 49:1351:9,14 53:2554:11 55:6arguments 23:7

28:19 51:353:8 54:2arises 5:20 8:7

8:15arising 26:21article 22:18

51:22articles 57:12articulating

43:6asbestos 8:14asked 21:22

45:15asking 39:16

40:22assert 6:13 11:4

11:5 13:20,2214:12 15:11

asserted 14:1815:1asserting 6:15assets 20:9 58:1assignee 57:25

58:4assignment 58:9assume 14:2,2

18:3 36:1assumed 49:23assuming 6:9

7:11,13 30:1130:11

assure 12:14asterisk 50:19asterisks 50:15Atherton 24:9attention 42:17attorney 4:15,16

4:17 7:24,2521:1,2 38:2139:5,7,9 54:2055:23attorneys 3:15

3:18,25 4:124:17,23,23 7:27:18,23 9:139:13 13:22,2419:8,17 20:1320:17 21:4,2422:4,10 24:325:23 26:12,2027:21 30:24,2531:11,19,2432:1,22 33:1934:8,11,17,1934:20 35:736:5,11 37:1,637:7,8,13,1437:15,17,2138:1 39:22,2441:17,19 42:443:10 44:11,1644:19,20 45:145:5,8,1848:13 51:18,2552:5 53:25

54:15,18,19,2555:4,7,17,2556:1,4 57:3,5attorney's 8:5authorized 24:4authorizes 4:1authorizing

15:22





Page 60

available 4:236:5 37:8avoid 31:12a.m 1:16 3:2

B baby 40:13back 6:1 18:24

28:18 32:734:6 47:21balance 24:19

25:1ball 48:1banc 54:10bank 43:12bankrupt 4:14

4:14 20:935:13,13bankruptcy

3:13,13,17,173:20,22 4:104:16,18 5:105:15 6:3,8,136:19 7:2,9,248:1,2,6 9:8,119:16,17,18,1910:23 11:7,911:11,15,19,20

12:11,18,20,2313:8,11,17,2016:1,10 17:1317:23 18:4,1318:18,21 19:920:15,18,2121:1,25 22:2,722:14,19 24:1626:22 27:431:22 33:135:25 48:8,24

49:10 50:5,7,750:13 51:2452:1,2,3,9,1852:20,24 53:1855:25 56:857:3,6,7,9,2157:23 58:2,10bar 16:16,17

22:15barred 16:18based 7:6 9:14

21:24 42:1basic 4:10 49:10

basically 3:235:10basis 4:5 25:16bathroom 35:12

35:14 48:3,6Bear 43:10bed 51:6,6began 36:15beginning 10:5

10:7,9 15:1916:5,16

begins 51:1behalf 1:18,21

2:3,6,9 3:825:7 38:2451:15behold 35:12believe 23:17

41:5,8 47:22benefit 13:9

52:14 53:1956:19benefits 15:25better 37:21bill 4:16binds 11:12body 21:8bond 13:14bonds 9:4 15:20bother 7:10,14

52:8 56:13bothers 6:12Breyer 17:25

18:2,23,24

19:13,20,23,2420:11 22:12,1731:12,18 32:732:10,15,2534:13,25 35:1035:17 37:12,2438:6,8,12,1438:25 39:11,20

41:12 46:11,2047:1,4 48:251:16brief 5:8 20:12

23:13 24:5

27:17 31:533:24 40:445:11 46:251:16,22 53:453:9,23 56:23briefing 23:13briefs 22:18,21

29:13bright 17:18broader 26:10broadly 10:15

10:18brother 40:4Brunstad 1:18

2:2,8 3:6,7,94:19 5:1,7,186:5,11,23 7:87:16 8:3,12,259:7,15,23 10:310:14,22 11:1011:21 12:813:2,5 14:1314:19,24 15:215:4 16:10,1516:22 17:1918:6,10,1619:12,19,2320:11,19,2321:10,14,2022:16,23 23:823:21 24:2525:4 51:13,1451:16 56:257:1,18

Brunstad's 51:3built 43:8bunch 51:21

56:23burdened 49:6business 10:1

C

C 3:1call 9:19called 35:24cancels 46:8card 43:12

55:24case 4:1 5:16 6:6

6:8,10,13 8:2310:4,5,7,9,1311:2 13:1115:17,18,19,2116:1,5,11 17:117:16 18:9,1019:1,1,2,5,2119:21 20:2421:1 22:6

24:13,14 25:1926:3 28:7,1831:7,8 32:941:9,25 42:142:11,21 43:1943:25 44:653:21,22 54:1056:15,16 57:1757:19 58:10,1458:15cases 5:6 6:14

6:16 7:1,3,4,107:12,17,2116:16 19:1620:12 21:1724:14 44:449:1 51:17,2151:23 56:1457:11Casualty 1:3 3:4categorical

24:12 57:15category 8:24

34:10cause 56:5center 40:23cert 22:22 42:11

42:15,15 47:2150:14certain 8:19

57:8

certainly 21:15certiorari 23:3

23:15,24,2427:11 42:10cert-worthy

27:15cetera 5:13 19:4

20:22CF 24:13change 56:7changed 57:19

57:22Chapter 7:3

16:16characterized

11:17

Chief 3:3,9 6:622:20,23 25:325:5,8 26:8,1426:15,19 27:127:9 28:130:14 36:8,1940:3,17,2441:24 42:650:2 51:1253:6 58:13circuit 17:18

21:4,6,13 23:623:22 24:1626:4,4 28:1929:5,5,18,2040:8,10,11,1350:6 53:2354:7,9,10circuits 56:3Circuit's 3:11

3:21 20:2442:1circular 9:10

circumstances 14:10,11 43:2citation 45:10cite 5:8 15:18

20:12 31:851:17,21 53:2257:11cited 20:24





Page 61

36:18 46:2cites 38:16 52:13

54:13claim 3:19 4:16

4:18,18 5:10

5:11,15 6:136:15,24 7:2,247:24,25 8:4,148:16 10:6,9,1110:12,13,1511:19 12:3,1914:1,4,12,1715:1,5 16:4,1216:14,17,2317:2,2 18:719:21 20:21

21:3,5 22:5,8,923:17 26:12,2027:20 31:17,1931:22,23 32:1232:13,18,19,2033:13,23 34:134:2,4,4,1135:3,4,5,14,1635:17,20,22,2236:1,2,6 37:1137:15 38:1,1938:21,22 39:1740:1 45:16,1645:19 48:1551:19 54:16,1954:21 55:8,1656:1 57:2558:9claimants 34:8

34:11claiming 50:23claims 6:17 7:9

10:16 13:8,11

13:12 17:5,6,717:8,12,1518:22 20:1324:15 26:1129:19,25 32:2333:2,10,1639:5 47:1448:16 49:8

50:1,3 52:1,4,552:16,18,2453:4 55:5 56:456:13 57:7,857:21,22 58:4

class 32:2234:16 37:939:23classic 48:5classified 11:25

52:25clear 20:7 26:24

27:2,4 39:1051:6clearer 21:6clearly 5:19 19:9

21:4 53:3client 9:12 30:19Close 52:1code 3:13,14,23

5:11 11:1113:1 21:2522:7 27:18,1927:22,24 31:231:8 32:20,2133:9 35:9 37:737:19 38:1939:10 40:1443:8 44:19,2245:7 46:847:11 52:2456:8codified 56:8Cohen 22:5collateral 55:13

55:15collect 19:6,22

38:1,10 39:2441:17,19

collection 4:2419:8collectors 34:9Collier 5:5,8,19

19:15 20:831:13,15,1745:10 46:12Colliers 32:7

34:21 45:13,1346:2,17,19colloquy 50:22come 5:20 9:17

11:3,15 12:18

13:16,19 14:329:17 40:21comes 11:4

29:22 40:10,1145:13coming 19:25

43:9commenced

16:1 17:11common 3:12

4:4 17:21 24:1

24:3 27:2243:3 57:14comp 8:21 9:12

9:22,25 14:3,514:8 15:2549:16Company 1:4,9

3:4,5compared 21:14compensation

12:7 49:2152:14complete 30:20completely

33:23 46:17,2447:2 50:2352:10complication

41:25concede 41:4conceded 40:23conceding 25:15concept 5:19

17:22 53:15concern 39:15

39:17concerned 48:12conclude 29:18concluded 16:2

22:9 29:24conclusion 11:3

25:19conduct 6:4 8:5

8:11confirmation

12:13 31:3

conflict 4:617:22 24:7,10Congress 24:7

30:22,22 33:834:10,16,2335:1,2 36:2,436:25 37:5,7,839:22 43:744:10 48:949:4 54:15,2354:25 55:2

56:7,10Conn 1:18connection 4:24

45:19consider 23:6,11

23:12 25:1128:19 29:1139:15considered

54:11consistently

51:24constituting

32:2construct 24:1construction

11:9 21:2524:22 25:1142:24construe 11:7

22:6contend 54:6context 33:7

46:13contingency

8:22,22 16:1235:21,23 47:1648:5contingent 5:12

10:16 16:2317:4 32:2

35:17,20,2236:1 47:1457:21,22continue 15:22contract 5:21

8:7,10 13:2319:3,6 23:2023:21 24:2230:12 31:2534:21 43:12,1343:14 44:848:22 49:9,22contracts 48:14

49:23 52:1453:2,4contractual 4:1

4:20,21 6:1830:9 48:2251:20 52:1553:18 56:17control 58:1Corning 53:22

54:9correct 7:12,17

8:4,12 16:817:19 18:320:19,23 22:2425:19,20 27:2343:19 46:3cost 6:24 9:3

20:20,21 48:7counsel 25:3

26:9 40:351:12 52:1354:13 58:13course 13:21

34:13 39:246:5 49:1253:6 56:23

court 1:1,153:10 8:1,2 9:1810:20 11:16,1911:20 12:19,2313:17,20 14:618:4,18,2121:11,13,14,1721:22,25 22:2





Page 62

22:6,9,9,2423:3,9,11,1223:23 24:1425:9,11 26:1628:2,6,7,24,25

29:10,14,1730:1 31:2237:4 40:4,1940:22 41:4,942:18,23,2443:1 45:747:13 49:750:5,7,7,13,1450:17,22,2551:8 52:18,2054:6 55:11

58:10courts 21:19

23:11 24:1527:4 28:9,2229:1,12,2333:1 40:848:25 51:18,2452:4 53:11Court's 4:5

24:13 27:742:17cover 33:18,19covered 5:2,3

33:15covers 19:3,9

26:3create 24:15

57:14creates 3:11creation 4:4,7

17:20credit 43:12

55:24

creditor 3:184:13 6:1219:16,17 26:1126:20 30:631:19 34:4,738:9 43:2,2345:18 55:23creditors 6:14

7:1 13:2125:22,22 26:1726:18 27:6,2029:25 30:16,2331:1 32:22,23

33:17 34:7,937:9,17,21,2338:2,4 39:2343:9,16,1746:10 48:11,2252:8 53:16,2053:20 55:13,2056:13,19critical 11:20Cruz 22:6crystal 48:1

custodian 57:2557:25cut 38:25

D D 3:1damages 22:10date 3:16,16,19

16:16,17 35:335:5 47:23,24day 29:20 43:4De 22:5deal 22:24 33:2dealing 58:5deals 23:25dealt 44:10debt 5:24 19:6,7

22:7,10 38:10debtor 3:14,16

5:14 6:8,8,167:18 8:6 9:149:17 12:2416:6 38:24

39:8,9 42:344:23 49:2353:14,24 54:454:21 56:16debtors 31:10

54:24debtor's 58:1decide 40:18

41:4,12 42:7,842:12decided 23:2

44:10 51:2357:19

decides 42:23decision 20:24

28:3 42:150:13decisions 21:11

22:2 28:6declares 30:1deemed 49:23default 8:20,21

9:11,14,16,209:21,24 10:19

12:10defaulted 15:25defend 17:11

28:11 41:342:7defined 5:11

10:15,17 22:8definition 37:11

40:1delighted 41:18

41:20demolishes 51:9demonstrate

57:12demonstrates

54:14 56:10depends 4:19,20

9:10 18:6 30:4DeRoche 42:1,3

42:11,21described 5:9describing

49:14 56:25

deserves 23:12despite 46:15detail 33:25determination

18:5,11determine 18:15

18:19detour 40:15

develop 54:1devoted 24:5dictum 40:9,10

40:12different 9:1

11:22 37:346:17,25 47:248:18,21 49:1356:24directed 12:23

52:20direction 40:16directly 38:18disagree 45:10

45:12,24,25disagreement

21:19disallow 17:6,8

44:19 52:4disallowance

36:10,11disallowed

16:24 36:238:20 39:144:21disallowing

29:19 43:9disallows 45:1disaster 56:5discharge 12:17discharged

12:12,16discretion 41:4discussion 46:25disposition

28:18dispute 30:9

31:16disputes 32:18

distinct 3:14distinction

28:15distinguish

11:22distribution 7:9

7:12distributions

52:9doing 13:22Dow 53:22 54:9dozen 27:17draft 36:25

49:19drafters 35:9dramatically

57:20draws 28:15drew 17:18driving 39:12D.C 1:11

E E 1:20 2:5 3:1,1

25:6earlier 40:545:15 47:17effect 8:19effort 6:15,22eight 51:13either 29:13

30:25 47:15,22Electric 1:8 3:5Eleventh 54:9eliminated

50:21 53:1eliminating

50:19else's 34:20employees 11:24

13:7 15:9,10en 54:10endorsed 40:5enforce 12:19enforcement

4:25enormous 29:16

37:9entirely 24:5entitled 8:1 15:6

15:7 30:6 54:4environmental

57:8equality 46:10equitable 21:3





Page 63

ERIC 1:18 2:2,83:7 51:14especially 28:14

45:6essentially 55:12

estate 3:17 48:849:7,11estimate 47:15

47:22,25 48:6et 5:13 19:4

20:21everybody

41:15 48:14exactly 5:9 6:11

10:18 21:1623:9 24:16

34:13 39:1241:23 42:1949:2example 3:14

7:3 26:11 36:936:25 57:20exceeded 54:21exceeds 38:22exception 20:4

43:5 44:2154:17exclusio 33:5excuse 11:17

46:6 50:9exec 52:13executory 49:22

49:23 52:1353:2,4exercising 31:22exhausted 34:20existence 37:5exists 3:12expanding

37:22expected 27:10expense 58:5expenses 37:14

37:18 39:1648:7 58:6experience 7:6explain 20:10

32:15 33:2453:3explained 5:19

55:11explaining

44:20explicitly 49:21

50:5exposure 8:14

8:19expressly 53:23

54:19extensive 40:10extent 26:24

27:5 36:6,1638:20 54:21

extinguished 11:1,15 12:212:11 13:12,19

F fact 6:12 29:22

35:8 48:652:19,23 53:1156:9 58:11facts 43:19,22

43:24factual 41:6failure 42:7Fair 39:19,21fairly 5:6fall 8:23false 10:22far 8:20 9:5 16:1

16:7 25:21,2526:1,2 34:15farther 52:12favorable 49:24

50:3

Federal 3:12,243:25 4:4,617:21 24:2,3,424:10 26:2128:15 57:14fee 4:17,23 8:1

19:3 43:10fees 3:15,18,25

4:12,17,245:22 6:7,13,157:7,18 9:13,1410:21 13:22,2418:4,5 19:8,18

20:13,17 21:421:24 22:5,1024:4 25:2326:12,20 27:2130:7,24,2531:11,20,2432:1,1,3,2233:15,16,1934:8,12,17,1934:20 35:736:5,11 37:2,6

37:7,8,13,1437:15,17 38:139:22,24 41:1741:19 42:443:10 44:12,1644:19,20 45:145:5,8,18,2148:13,14,2349:8,9,9,951:18,25 52:553:25 54:15,1854:20,21 55:455:7,17,2556:1,4 57:3,658:7,8fewer 27:17field 24:8figure 27:22

42:18file 4:15 7:2 10:6

12:19 16:1731:21,21 55:2556:13

filed 8:6 9:8,1113:7,8 15:2116:4 17:1 21:2files 3:16 5:14

7:24,25 9:17filing 4:17 6:24

8:2,4 20:2021:2 35:3,5

45:3 47:23,2448:15 56:158:2filled 50:21find 4:11 20:1

22:19fine 52:19first 28:24 29:2

29:11 34:140:7,10 49:1950:17,18 51:1fit 6:10fix 35:11fixed 5:12 16:13

16:18 32:3floods 35:13

Fobian 3:11,2117:17,17,2018:2 22:2523:25 24:1125:16,18,2026:9,16,22,2427:5,7,15,2228:7,8,12,1429:8 40:2541:2,14 42:742:16,25 50:11focused 36:14

38:23 42:15focuses 36:23focusing 27:13

27:14follow 20:8followed 20:8

29:20footing 37:2footings 37:3forever 11:15

16:18

forget 18:2519:1forth 6:25forward 12:21

13:15 14:442:18found 20:3four 37:17 38:4

friend 50:2front 40:23full 6:17 53:17

56:20fully 15:12

17:14 28:2129:12 53:10function 33:20further 24:18furthermore

34:2futile 29:4future 10:6

13:10 15:6,8

G G

1:18 2:2,8 3:13:7 51:14

Gas 1:8 3:5general 12:16,16

24:3 30:1639:25 40:149:14generally 44:20

45:1 52:9getting 6:22

10:10,20Ginsburg 11:18

11:21 12:5,912:25 13:3,416:8,11,15,2016:22 17:3,1617:19 23:5,823:18,19 25:1428:10,23 29:733:14 44:14,25gist 51:7give 37:21go 25:21,25

goes 4:14 26:146:14going 7:21 10:5

11:6 12:6 13:914:7 29:1435:23 36:1337:20 41:542:8 55:3





Page 64

Gotshal 35:24gotten 49:25granted 22:22

23:25 42:10grounds 57:13

group 22:13guarantee 5:23

8:8guaranteed 5:24guessing 23:24

H half 40:14happen 10:6happened 20:1,4

20:15

happening

20:14happens 20:11

34:19 56:2,556:12harm 29:17,22Hartford 1:18headings 27:18hear 3:3 27:10held 21:4 26:16

50:5 51:2553:23hidden 37:10

39:25hides 43:16hiding 51:5higher 51:24hire 7:1 21:1historic 55:3history 56:24

57:10holder 4:12,15

7:22

holding 40:19Holmes 57:17

58:10Honor 18:11

20:19,23 25:1825:20 26:13,2327:3,12 28:528:13,20 29:4

29:9 30:8,1030:13,21 31:631:14 32:6,1132:17 33:3,833:21 34:23

35:1,15 36:1236:22 37:1638:3,11 39:1039:19,21 40:740:21 41:1,442:5,13,2143:20,24 44:944:17 45:12,2046:1,16 47:1247:20 48:4,2049:18 50:4,12

51:11Honors 27:23hook 13:13hostility 57:2house 35:10huge 39:23

48:15hypothetical

6:10 7:7,20 8:8

I images 42:22impact 43:22impair 30:16impermissible

4:3 17:20implication

53:20implies 46:21important 21:21

37:18 43:846:9 53:1354:14 56:20

impossible 47:25inadequate

19:11 42:9inappropriately

24:11include 10:15

14:7

included 22:1031:23includes 5:11including 13:24

27:18 51:22

incorrect 31:7incur 9:3 13:22

13:24 31:20incurred 5:23

6:25 32:4 35:758:8incurring 9:12

9:13incurs 31:19

45:18indemnification

11:5,6 16:12indemnity 9:1,2indicates 36:19indications 36:3

36:24inevitable 10:12

10:13infer 25:25inference 33:5injured 11:24

13:6,8 14:1417:8 52:11injury 8:15innumerable

57:11insider 38:21insisted 52:23insofar 34:17

39:1,3insolvency 6:9insolvent 6:9

31:1 44:23instance 20:2,3

29:2 34:1instances 19:10

19:14intend 9:25intended 37:3,8intercepts 3:21interest 14:23

31:10 33:19

36:10,19 37:246:6,7 55:1855:21,21interested 28:11

39:13

interesting 56:22 58:7interests 50:9interpretation

23:10,20 30:954:3 55:18interventions

50:8invalid 12:13involve 37:13,14involved 7:15

57:24irrelevant 39:20issue 17:17 21:8

21:18 22:423:14 24:2225:12 26:727:13 28:2140:20 41:942:2,7 44:1053:9issues 3:24

23:22 24:2,2126:21 42:19

J January 1:12 joint 50:20 51:8JOSHUA 1:20

2:5 25:6Journal 22:19JR 1:18 2:2,8

3:7 51:14 judge 18:14

20:21 judgment 41:3Justice 3:3,9 4:9

4:19,22 5:1,4,75:16,18 6:1,66:11,20 7:1,5,67:11,13,16,208:5,10,12,17

8:25 9:5,9,159:19,24 10:3,810:17,22 11:211:10,18,2112:5,8,25 13:2

13:4 14:2,1414:16,22,24,2515:2,3,13 16:816:11,15,20,2217:3,16,19,2417:25 18:1,2,618:9,13,16,1818:23,24,2519:13,20,23,2420:11,16,2021:7,10,12,15

21:16,20 22:1222:17,20,2323:5,8,18,1924:20,25 25:325:5,8,14,2426:8,14,15,1927:1,9 28:1,1028:10,17,2329:7 30:3,1130:14,18 31:431:12,18 32:732:10,15,2533:4,14 34:1334:25 35:10,1736:8,18,1937:12,24 38:638:8,12,14,2539:7,11,2040:3,17,2441:12,24 42:643:18,21 44:544:14,25 45:945:17,21,24

46:11,20 47:147:4,18 48:248:12 49:1250:2 51:12,1653:6,14 55:2256:2,12,21,2257:1,16,17,1858:8,10,13





Page 65

justified 17:21 justify 4:7 24:6

24:8

K keep 10:1Kennedy 4:9,19

4:22 5:1,4,7,165:18 7:20 8:517:24 18:1,6,918:13,16,18,2520:16,20 25:2428:10 33:436:18 39:745:9,17,21,2448:12 55:22

56:3,13,2158:8Kennedy's 7:6

7:13key 5:19 20:24kind 19:3kinds 48:13 57:8knew 39:22know 4:10 6:21

8:20 9:5,2010:5 14:1618:2 22:13

27:8 28:2443:3,25 51:5

L La 22:5language 12:24

19:9law 3:12,15,18

3:25 4:4 11:7,711:9 17:2118:7,11,15,20

21:8 24:1,2,3,424:23 26:2227:22 28:1529:21 43:3,443:15 44:7,850:11 52:353:5 57:11,1457:19lawyer 6:4,7

52:2lawyers 38:24

43:16leak 35:12 48:7leaks 35:11

leaky 48:3leave 56:10leaves 34:5left 15:15 17:12

34:5 55:15legal 10:21 41:7

41:8lens 45:6let's 5:25 14:2,2

18:3 19:527:24 36:1

liability 16:1822:8likelihood 48:6line 17:18 44:11liquidate 47:15

47:23literally 5:14litigating 3:24

24:2litigation 17:10

28:16 43:3little 42:16lo 35:12loan 43:13local 34:9logic 20:8 29:19

30:17long 15:25look 5:5 11:11

31:7 32:739:14 42:1845:6 50:19looked 4:10

looking 44:549:3 50:17looks 18:14lose 12:20loses 13:20loss 9:3 13:24lost 10:25 16:5

16:14

lot 17:3 41:1053:7love 34:7,8,9,10low 52:9lower 21:11,13

21:19 22:123:11 28:2129:1,12,14,2353:10LTV 10:4,7

15:18,19,2416:6

M MAHONEY

18:20

majority 44:448:24 49:1

maker 4:13,14making 54:11Manufacturers

20:25 54:8materials 47:19matter 1:14 24:2

28:25 35:854:3 56:1557:4 58:16matters 26:21

56:14matured 5:13mean 5:6 9:20

9:21 10:929:24 39:1141:14,21 45:446:14 47:649:9means 22:7

29:22 42:845:4 46:22

49:24mentioned 36:4

42:9 47:17Merchants

20:25 40:1354:8methodically

51:9

middle 50:1651:23million 5:25

15:20millions 5:5

mind 43:10minute 9:10minutes 51:13mirror 42:22mischaracteri...

17:5mischief 41:10misleading

36:21misplaced 33:6missing 50:15

50:20momentarily

13:6money 10:12

37:20 44:646:13,15,2354:24monitor 35:24morning 35:23mortgage 19:7,7

N N 3:1narrower 26:9natural 44:18nature 5:22 32:2necessary 24:9

50:8,24need 11:22

13:18 55:9needs 42:18negative 33:5never 8:21 12:6

20:1,4 23:1,1431:2 35:848:10 52:1755:8New 1:20nine 22:11Ninth 3:11,21

17:18 23:6

24:16 26:3,428:19 29:5,529:18,19 41:2550:6nobody's 39:16

Nolan 24:13normal 7:14normally 7:7,8note 4:11,13,13

4:14,15,24,256:22 7:22,237:25 8:20,2410:11,11 55:24noteworthy

39:10no-asset 7:3

number 51:17numerous 36:3N.Y 1:20

O O 3:1object 14:4,5

17:3objected 17:2objection 31:3obligation 8:21

9:12,22,25

10:19 32:344:7 46:5,6,8,949:16obligations 6:19

46:12 53:18oblivious 37:5observation

37:4obvious 19:6occasions 37:6occur 15:8

occurred 35:9odd 36:25office 55:11oh 21:23 46:20Okay 8:17old 37:19one's 13:20on-off 31:1





Page 66

open 24:2129:21 30:2opinion 29:14

50:16 57:17oppose 11:6

opposite 52:6opposition 23:2

23:15 27:1142:10,15oral 1:14 2:1,4

3:7 25:6order 12:13

15:22 33:155:13ordinary 44:7orient 50:17,25

ought 22:13outside 3:12Overage 19:20overlay 27:23oversecured

26:17,18,2030:6 32:2333:18 36:655:20overstates 55:10overturned 22:3overwhelming

48:24 49:1overwhelmingly

29:23

P P 3:1Pacific 1:8 3:5page 2:1 45:10

46:21,22 47:2249:20 50:14,2050:25 51:22,23

pages 23:13 51:851:17paid 19:8 46:13

53:16 56:20Pair 37:4 55:12papers 15:19paragraph

50:16,18,19,21

51:1,2,2parent's 5:24part 4:18 21:5

22:5 52:5 55:8particular 24:24

34:16 40:645:14 46:12parties 11:13

16:25 19:2passes 3:17pay 6:17 12:6

15:9,22,2325:23 34:843:16 44:748:16 53:2455:15

paying 15:2417:14 49:15payment 5:12

5:13,14 8:713:25 15:5,1716:7 32:19payments 13:9

13:15 14:3,5,816:3payout 7:22pays 24:23people 20:9

22:13 34:16perceived 56:9performed 6:3

11:23 20:1721:2 54:22performing 8:4periodic 13:9pertains 58:3petition 3:16,19

31:21 35:4,639:6 42:15

45:4,18 47:2147:24,25 50:15petitioned 32:1Petitioner 1:6

1:19 2:3,9 3:851:15PG&E 5:24 9:4

9:7 13:7,10,15

13:18 15:7,2115:22 17:2,317:14 21:2144:1 48:1952:15,17 56:15

phone 35:24pick 35:24place 26:5places 37:12plan 11:12,14

12:1,6,9,10,1312:14,15,2413:11 14:4,5,714:9,20 15:1415:24 31:349:15,19 52:10

52:13,19plate 16:3please 3:10 25:9plenty 44:6Plus 17:7point 10:15

27:18 35:636:21 37:1838:18 39:2245:9 47:5,5,9,947:10,13 48:1352:10 53:13pointed 19:15

42:22pointing 34:15policy 4:6,7

17:23 24:1057:4,13position 15:20

30:20 40:15post 45:18posture 10:4post-petition

5:17,23 6:48:16 27:2030:24 31:10,1131:20,20 32:334:11 35:736:10 37:1,2,639:24 45:546:7 48:15

51:20 55:17,20pot 37:22practical 52:7practice 7:14

55:3 56:6,7,10

57:12practitioners

27:4pre 32:1precedents 4:5precise 21:18

28:6precisely 10:14preclusions

57:15predicate 26:6

27:7,10,1641:6,7,8 43:1preempting

24:8preemption 4:5

17:22 24:6prepared 20:3preparing 58:8present 9:18

10:23 26:1052:8presented 23:1,2

23:15,23 25:1240:19 42:19,2052:7presenting

25:21 26:7presents 51:10preserved 13:1

13:18preserving

11:23prevail 55:22

prevent 26:22preventing

25:22pre-petition

5:21,22 8:7,108:11,13,15,1613:23 31:17,1931:23 32:2,12

38:23 39:445:16,19,2246:5,5,6,7,1251:19 55:14,16pre-petitioned

51:21principles 24:7

24:13 56:17prior 10:19priority 53:15

56:18probably 5:2,2problem 12:8

25:20 41:2254:24,24 55:155:3 56:6,9

proceeding 20:18 35:2551:8processing

24:15products 8:15professors 19:25

56:24programs 49:22

52:14promise 35:11promissory 4:11

7:22,25 8:2410:11 55:24proof 8:4 12:19

15:5 16:4 17:117:2 21:3proper 23:5,16

28:18properly 10:25

11:16,25 12:1413:10 21:554:12

proposed 42:2proposition

31:16 36:14protected 15:13

52:11protecting 21:3

31:23 45:19provable 57:21





Page 67

57:23provide 11:7

14:6 43:14provided 11:13

13:10 34:21

36:2 39:554:17,19provides 3:23

4:12,20 11:1212:4 18:2030:12 55:12providing 55:24provision 4:23

9:2 12:17 14:831:8 36:2538:15 44:15,16

44:25 46:149:15 52:1254:23provisions 39:13

43:11 47:7pro-rata 19:22purports 37:1purpose 33:9,9

33:12,15 36:2348:9pursue 7:2put 12:24 33:8

37:1,3 40:2348:7 53:9puzzled 20:7puzzlement

34:25puzzling 34:14p.m 58:15

Q question 7:13

17:25 18:2

19:24 22:2124:20 26:1027:15 28:4,628:11,16 29:229:21 30:2,330:23 37:2540:9,18,2242:20,24 43:1

43:4 45:14,1546:18,18questions 24:18queue 19:22quick 24:20

quite 36:8 39:1243:14quote 36:5 49:21

51:23 52:1quoted 46:22quotes 31:15quoting 38:18

R R 3:1racked 10:20

raised 23:1442:14 53:10

raising 44:14Randolph 57:19

57:24,24 58:358:7,11rational 26:6

27:6,9,16rationale 26:3reach 40:18 50:8reaches 25:19read 19:15 26:5

27:18,19,2444:19 45:3reading 27:21reads 40:14ready 46:21reality 52:7really 40:17reason 6:17 10:1

14:12 30:1541:16,18 48:23reasonable

38:22 39:354:22reasonableness

18:5,12,19,2223:21reasonably 19:2

50:8,24reasons 29:10

43:8 46:9 49:457:13rebuttal 2:7

24:19 51:14receive 13:9

recipients 14:3recognize 56:3reconsideration

16:24record 42:9recourse 13:18

16:6recover 13:25

31:24 53:16recoverable

4:18

recovered 7:7recoveries 53:20recovers 6:7refer 50:14reference 53:2references 47:10referring 46:1

47:3refers 51:3

52:13refutes 58:11regardless 41:20

44:12reimbursement

15:7,16 16:2317:4rejected 21:23

23:3 54:7,7,954:12relationships

52:15 56:17relies 31:8relying 44:16

remaining 38:951:13remand 23:6,10

23:16 24:2125:1 53:1254:1remedied 55:1remote 8:22

render 55:19rendered 11:25rendering 15:14renders 55:6reorganization

11:12 15:24repeats 47:7reply 5:8 23:13

31:5 40:445:11 46:253:3,9,23represents

55:23required 52:24requirement

18:12

requiring 15:2325:22reserve 24:19

25:1 29:2043:4resolving 42:25resoundingly

54:7respect 14:19,21

14:22 19:1723:17 55:3respond 17:10Respondent

1:21 2:6 23:125:7 55:10Respondents

55:6response 23:13

32:4,6 49:1649:18responsible

17:14rest 45:7

result 13:12review 28:25

57:11rid 53:18right 3:15,17,18

3:19,25 4:1,205:12,13,14,155:20,21 6:5 8:6

11:2,4,5 13:2513:25 14:715:12 21:1631:23,25 32:432:19 38:6

43:4 50:1651:20rights 3:22 4:1,2

9:18 10:24,2411:14,16,24,2512:2,11,14,2012:22,22 13:113:6,17,20,2215:11,16 17:417:5,11 21:330:16 52:11

risk 51:7Roberts 3:3 6:6

22:20,23 25:325:5 26:8,1426:19 27:1,928:1 30:1436:8 40:3,1740:24 41:2442:6 50:251:12 53:758:13Ron 37:4 55:12Rosenkranz

1:20 2:5 25:5,625:8,18 26:226:13,15,2327:3,12 28:528:13,20 29:329:9 30:8,1330:17 31:6,1432:6,11,1733:3,8,2134:23 35:1,15

35:19 36:12,2237:16 38:3,738:11,13,1539:4,9,19,2140:7,21 41:141:23 42:5,1343:20,24 44:944:17 45:2,12





Page 68

45:20,23,2546:16,24 47:247:12,20 48:448:20 49:1850:4

routine 52:6routinely 6:7

22:3 52:4rudimentary

5:6rule 3:11,12,21

4:4,7 12:1017:20 21:2122:25 23:2524:1,6,1125:16,18,20

26:9,16,2227:15 28:8,1228:14 29:837:19 40:2542:12,16 43:543:25 44:2,2,344:4,22,2350:11 57:9rules 24:15 44:8

57:14,15running 10:1

S S 3:1saw 54:23saying 6:7 15:16

21:23 29:1833:15 35:18,1935:20,22 41:945:2 46:11,1349:1,2says 3:23 4:15

12:10 19:8

27:17 32:2133:12 34:2135:2 37:1938:18 39:144:15,22 45:445:17 46:1447:22 49:2050:2,18 51:3

SCALIA 47:18scenario 5:9scratch 57:5Scruggs 57:17

57:24 58:3

second 6:2 20:2421:4,6,1340:11 51:154:7Secondly 29:16section 5:11

10:25 11:11,1412:2,12 13:1,216:24 18:7,1718:23 26:6,1829:21 31:9,9

34:5 36:1947:3 52:2453:5 54:2,1354:14,16,1755:5,6,7,10,1155:18,19 58:258:5secured 19:20

26:11,12 30:633:2,13,2334:4,4 55:12security 19:11

19:12,14 33:1633:18 34:2,1734:18,19see 27:16 29:1

46:21 47:5,549:20 50:1551:1seeking 42:3sell 35:10send 28:18sending 54:24

sends 4:16sense 9:1 28:2

41:2sentence 46:14

46:15serve 33:14serves 33:11services 6:3

20:17 21:224:24 38:21,2239:5 54:22set 16:16 46:12setoffs 47:3

setting 6:25share 19:22shareholders

53:15,19 56:19shifting 43:11shoes 15:10

48:19SHORR 30:21short 16:1side 19:25 21:8

23:14 29:13

40:12 50:11silent 33:23simple 19:16simply 3:24

15:15,15 29:1737:14 42:1547:6 51:4 54:356:16single 23:3

29:13sir 9:23situation 10:18

36:9six 38:4,6,8Sixth 40:13

53:23 54:8sliver 42:16smuggling 27:25

28:2solely 26:21solution 42:2solvent 6:16

7:18 30:19

31:1,10 44:144:12,23 53:1453:24 54:456:16somewhat 47:8

47:8sorry 27:3 41:7

45:2 47:1

sort 18:24 24:135:21 47:1651:4 57:13sorts 43:10sought 17:6,7,8

Souter 8:17,259:5,9,15,19,2410:4,8,17,2311:2,10 14:214:14,16,22,2414:25 15:2,315:13 49:12so-called 17:17speaking 13:6

21:17specified 53:1

spend 15:8spending 49:7

49:10spent 11:3split 23:22splits 40:13spoke 37:7stand 15:10

33:17 48:18standard 4:11

4:22,23 18:22start 57:4started 9:12

15:24 18:25state 3:15,18 4:2

4:6 18:7,11,1118:15,20,2224:23 28:1543:3,15 44:749:6 50:11statement 31:13

31:14 32:1240:1 46:3

States 1:1,1518:21status 19:16statute 4:2 25:16

26:5statutes 43:15statutory 23:10

23:19 25:11,12

36:3 42:20,2443:5step 8:17 16:2

25:15 32:17,19stepped 12:21

13:15steps 50:24Stevens 6:1,12

6:20 7:1,5,117:16 8:10,1321:7,10,12,1521:16,20 24:2024:25 28:1730:3,11,1831:4 43:18,2144:5 53:14

56:22 57:1,1657:18stipulated 16:25stipulation 17:1stopped 15:25straightforward

19:5strange 35:21

47:16structural 36:23structure 3:13

3:14 36:14subject 16:24submit 4:3

17:20 24:12submitted 58:14

58:16subordinate

17:7subrogated

15:10subrogation

12:22 13:1

15:12 17:5,6subsequently

6:15 16:7substantial 7:18

7:19successful 17:12summarizes

50:22





Page 69

superfluous 47:8 55:7,19supplying 9:3support 34:18

39:14,15

supports 58:12suppose 10:2

30:15 35:10supposed 9:2

47:14,15Supposing 6:2Supreme 1:1,15sure 7:23 11:16

11:24 18:1426:8surety 1:4 3:4

9:2,4 12:3,2113:14 15:19,2016:2,4,5 48:1848:21switch 31:1

T take 19:5 25:14

29:2 30:537:20 54:457:1,2takes 40:15talk 5:8talking 9:21

16:20 20:17,2144:18 46:17tax 34:9teacher 56:23teaching 52:3tell 4:9 19:25

25:15 27:1933:1 48:17,2549:3

telling 7:5 46:23Tellingly 52:17tells 7:23 34:3,3

47:13 55:12term 22:7terms 4:25Thank 25:3,4

51:11,12 58:13

theory 40:5 54:555:20they'd 30:6thief 51:5thing 22:8 23:16

35:2 39:2052:22things 11:20,22

15:6 53:11think 5:23,23

7:21 8:8,1311:22 21:2033:6 36:2037:10 39:1445:13 46:1347:4 51:4,6

53:6,13 55:256:20 58:11thoroughly

22:14thought 11:19

12:25 16:1222:12 40:2451:5thousands 48:10

48:10three 28:9 40:8threshold 25:10Timbers 36:9,13

36:14,18,20,2245:7time 6:2 11:4

12:6 16:1320:12 24:1925:2 45:3 49:7times 27:18told 40:5tomorrow 35:23tort 8:13 34:8

57:7totally 9:10 20:6trade 34:9transaction 6:24transcript 52:21Travelers 1:3

3:4 12:23,2413:13,14,16

14:11,23 15:124:23 26:727:13,17,1731:2,15 33:2535:21 38:16

40:12,23 41:641:7 44:248:17 50:21,2351:9 52:20,23treated 10:25

12:15 49:22,2258:4treatment 14:20

15:14 49:2552:25treble 22:10

true 23:17 30:1452:4,6truth 52:12try 26:10 42:18trying 41:3

53:17,17 56:16Tuesday 1:12turn 36:17two 11:22 15:6,9

20:5 27:1829:10 32:1938:9,12Typically 7:16

U ubiquitous

43:11ultimately 17:12unchanged

56:11underlay 28:8underscore 34:6

43:7 56:21

underscored 36:15,16underscores

36:13 38:17understand

10:10 11:423:23 29:3,742:17 43:22

48:21understood

54:15,25unimpaired

12:1 15:15

17:13 50:3United 1:1,15

20:25 40:1254:8unius 33:5unmatured 5:13unreasonable

19:4 39:2unsecured 7:9

18:7,22 19:1719:21 20:13

21:5 22:5 27:627:19 29:2530:23 33:1737:9,15,2138:1,10 39:1739:23 43:9,1543:17,23 46:1048:11 50:151:18 52:1,554:16,19 55:555:8 56:4 58:9unwarranted

3:12 4:8urge 32:7

V v 1:7valid 3:15 26:1,2

54:5,6value 35:4,5

38:22 54:2255:15,15vast 44:4

ventilated 28:2129:12 53:10ventilating

41:10versus 3:5 22:5

40:11 53:2157:24 58:3view 22:14,24

24:6 28:2456:24violation 24:12virtually 43:13visualize 9:16

W wait 29:1want 39:17

40:17 41:1343:7 48:22wanted 39:23

48:10 49:556:10wants 52:20Washington

1:11wasn't 19:14way 24:8 28:3

29:14 39:140:11,14,2043:9 44:1845:14 46:15,1846:23Weil 35:24Wellsville 54:10weren't 12:15We'll 3:3we're 6:9 10:10

10:18 35:2341:8 42:850:17we've 25:12

44:18whatsoever 9:3

43:23wished 56:7wondering

41:13

word 34:1857:16words 26:4

36:15 46:20work 8:3 11:23

12:4 14:1451:19,20worker 14:14





Page 70

workers 8:21 05-1429 1:7 3:4 501(b)(1) 18:89:22,25 10:2412:7,22 13:7,8 1 18:17

502 26:6 36:1014:20 15:14,24 10 29:23 36:11 54:3,1617:9,12,14 100 20:14 55:4 55:5

49:16,21,24 56:6 502(b) 29:21,2452:11,14,16,18 1015 5:11 42:24 45:3,652:25 53:4 11 16:16 37:25 49:2works 5:10 39:13 502(b)(1) 18:23

16:10 11:01 1:16 3:2 502(b)(2) 55:19worth 6:14,21 1123 52:24 502(b)(4) 38:17

6:21 35:6 1141 10:25 38:17,18 54:1342:17 11:11 12:2 54:17 55:7,10wouldn't 6:20 1141(d) 11:14 502(c) 47:13,19

6:21 39:14,25 12:12 47:20written 43:13 12:01 58:15 502(e)(1) 16:21

wrong 11:8 16:9 140a 50:20 502(j) 16:25

25:17 26:5 141 50:20,25 503 58:528:14 29:18 15 37:6,12 51:7 503(b)(3)(E) 40:25 41:2,14 15-page 50:22 58:241:16,17,19,21 16 1:12 506 32:25 33:2049:19 50:10,23 17 52:3 36:14,20 54:357:10 19 19:24 54:11 55:11,11

X 1903 57:19,201938 57:22

506(a) 34:2,347:7

x 1:2,10 1979 56:8 506(b) 26:18

Y yards 22:11years 20:14 28:8

29:23 41:1052:2,3 55:456:6York 1:20

Z

1998 20:15

2 20 28:8 41:10

52:220-page 23:12

53:92007 1:1224a 50:1425 2:6 51:17

29:21,24 33:933:11,12,2234:5 36:4,2437:1 45:8 47:447:6 49:3 55:655:9,18509 13:251 2:9

7 zero 35:6Zimmerman

40:11

26 51:1728 47:22 49:20

7 7:3726 31:9,9

$ 3 2:3 3

8

80 23:13

Documents

US Supreme Court: 05-1429