Thursday, December 11, 2008

Judge Kozinski-led Ninth Circuit Panel Denies Petition for En Banc Rehearing: Espinosa, Major Student Loan Opinion Still Stands

By Andrew Toth-Fejel, Bankruptcy Litigation Support for Attorneys,

Espinosa v. United Student Aid Funds, Inc.
9th Circuit No. 06-16421
Originally filed October 2, 2008, Amended December 10, 2008
Order Amending Opinion, and Amended Opinion

The Original Opinion
The day after the Ninth Circuit originally released this opinion, I wrote the following entitled Bulletin:

Major New Student Loan Opinion: 9th Circuit Allows Chapter 13 Discharge of Student Loans WITHOUT Adversary Proceeding by Mere Inclusion in Plan

That Bulletin started as follows:
Can a Chapter 13 debtor discharge a student loan by including it in the plan but without filing an adversary proceeding to determine debtor's undue hardship, if the student loan creditor fails to object to the plan? In this opinion filed by the 9th Circuit yesterday, its Chief Judge Kozinski emphatically answered: "yes."

This is an amazing opinion. It is one of the most colorful opinions I've read in months (see some of that "color" quoted below). In overturning the District Court appellate decision and following its own 9th Circuit precedents, it strongly rejected constitutional arguments to the contrary by the 4th, 6th & 7th Circuits as well as statutory arguments to the contrary by the 2nd and [en banc]10th Circuits.

The Amended Opinion
Now just released yesterday is this
Order Amending Opinion, and Amended Opinion which is unusual in two respects.

1) The Amendments
First, there are an unusual number of amendments to the original opinion. Characteristically, there are one or two corrections or insertions when an opinion is amended. Here, there are seven, covering two full pages. I am speculating, but given that the author is the idiosyncratic Chief Judge Kozinski, and the opinion goes against the grain of other Circuit opinions, including an en banc one, the good judge decided to try to tweak his arguments to try to present the best case for when the argument eventually lands in the Supreme Court.

2) Denial of Petition for Rehearing En Banc
Second, the Order Amending Opinion concludes as follows:

The petition for rehearing en banc is denied. See Fed R. App. P. 35. No further petitions may be filed and all pending motions are denied.
Fed R. App. P. 35 states in pertinent part as follows:
Rule 35. En Banc Determination

(a) When Hearing or Rehearing En Banc May Be Ordered.

A majority of the circuit judges who are in regular active service and who are not disqualified may order that an appeal or other proceeding be heard or reheard by the court of appeals en banc. An en banc hearing or rehearing is not favored and ordinarily will not be ordered unless:

(1) en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or

(2) the proceeding involves a question of exceptional importance.

(b) Petition for Hearing or Rehearing En Banc.

A party may petition for a hearing or rehearing en banc.

(1) The petition must begin with a statement that either:

(A) the panel decision conflicts with a decision of the United States Supreme Court or of the court to which the petition is addressed (with citation to the conflicting case or cases) and consideration by the full court is therefore necessary to secure and maintain uniformity of the court’s decisions; or

(B) the proceeding involves one or more questions of exceptional importance, each of which must be concisely stated; for example, a petition may assert that a proceeding presents a question of exceptional importance if it involves an issue on which the panel decision conflicts with the authoritative decisions of other United States Courts of Appeals that have addressed the issue.

Note that the Rule in the last sentence above in effect defines "questions of exceptional importance" in such a way that it seems highly applicable to this panel opinion. As stated in my quote from my Bulletin on the original opinion, this Espinosa "panel decision" clearly "conflicts with authoritative decisions of other United States Courts of Appeals that have addressed the issue." Yet Judge Kozinski denies the petition for rehearing en banc summarily, without any explanation whatsoever why this is not "a question of exceptional importance," how it does not conflict with other Courts of Appeals "authoritative decisions" when it so plainly does so.

I finished the earlier Bulletin on the original opinion with a section entitled "Not Need En Banc Revi
ew," which stated:
The coup de grace of Judge Kozinski's opinion was his repeated assertions that his three-judge panel did NOT need to call for an en banc rehearing in spite of conflicts with so many other Circuits, as well as with a number of decisions in the 9th Circuit BAP and 9th Circuit bankruptcy courts. Why?: He simply did not find those other cases persuasive.
I finished my earlier Bulletin with:

[Judge Kozinski] is pushing a rationale based in large part on a 10th Circuit case that was repudiated last year by an en banc decision of the 10th Circuit. Principled and gutsy, or stubborn and erroneous, in any event it's an entertaining opinion.
Now in Judge Kozinski's (and his fellow 3-judge panel mates') summary denial of the petition for rehearing en banc and his sprucing up of the opinion with his amendments, he is showing that the Chief Judge is boss and is presenting his best case for knowing better than the other Circuits.

by Andrew Toth-Fejel
Bankruptcy Litigation Support for Attorneys

Please note that this writer is not licensed to practice law in Oregon. This means that he is not legally permitted to give any legal advice or provide and legal services. This Bulletin and the entire contents of this website is written only for attorneys. and is not intended for the public. If any non-attorney is reading this, you must consult an attorney about ANYTHING you read here. Nothing in this website is intended to be nor should be read as being legal advice to anyone.

© 2008 Bankruptcy Litigation Support for Attorneys