Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Federal courts should "turn to state law to resolve" a "fight over a tax refund," held a unanimous U.S. Supreme Court on Feb. 25, 2020. Rodriquez v. FDIC (In re United W Bancorp., Inc.), 589 U.S. ___, 2020 WL 889191 (Feb. 25, 2020). Vacating a Tenth Circuit decision, the Supreme Court remanded the case for the lower court to apply state law in resolving "the distribution of a consolidated corporate tax refund." The bankruptcy trustee of a bank holding company was litigating against the Federal Deposit Insurance Corporation (FDIC), as receiver for the subsidiary bank that had incurred losses generating the refund. According the Supreme Court, it was not deciding "[w]ho is right about all this …." Id. at 4. Instead, the Court rejected the Tenth Circuit's application of the Ninth Circuit's so‑called Bob Richards rule. In re Bob Richards Chrysler‑Plymouth Corp., 473 F.2d 262, 265 (9th Cir. 1973) (in absence of tax allocation agreement, refund belongs to group member responsible for losses that led to it). In so doing, the Court rejected the Bob Richards rule as inappropriate federal "common lawmaking."
The Court granted certiorari in Rodriguez not only to resolve a split among the circuits, but also "to decide Bob Richard's fate." Id. at 3. As it evolved over time, Bob Richards supplied a federal common law rule that, absent a clear agreement to the contrary, tax refunds belong to a taxpayer group member responsible for the losses that led to the refund.
The Internal Revenue Service (IRS) in Rodriguez paid a tax refund to the bank holding company, although the tax refund had resulted from losses incurred by its bank subsidiary. The bankruptcy trustee of the holding company sued the FDIC, as receiver for the bank, claiming ownership of the refund. The Tenth Circuit, applying Bob Richards, affirmed the district court's judgment that the tax refund belonged to the FDIC, finding that the parties' tax allocation agreement was "ambiguous." Nevertheless, the Tenth Circuit relied on the terms of the document providing that any "ambiguity … shall be resolved … in favor of any insured depository institution." The parent holding company had an agency relationship "with respect to federal tax refunds" and had agreed to an "equitable allocation of tax liability." According to the agreement, tax benefits would be computed "on a separate‑entity basis for each" member of the affiliated corporate group.
The Court explained how federal courts should resolve a dispute when "the group members dispute the meanings of the terms found in their agreement …. State law is replete with rules readymade for such tasks — rules for interpreting contracts, creating equitable trusts, avoiding unjust enrichment, and much more." Id. at 2.
Limited Federal Common Law
The Court stressed that "there is 'no federal general common law.'" Id. at 3, quoting Erie R. Co., v. Tompkins, 304 U.S. 64, 78 (1938). Federal judges "may appropriately craft the rules of decision" in such limited areas as admiralty disputes and "certain controversies" between States. But unless Congress authorizes it, "common lawmaking must be 'necessary to protect uniquely federal interests.'" Id., quoting Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640 (1981). Id.
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
UCC Sections 9406(d) and 9408(a) are one of the most powerful, yet least understood, sections of the Uniform Commercial Code. On their face, they appear to override anti-assignment provisions in agreements that would limit the grant of a security interest. But do these sections really work?