No Sovereign Immunity From Bankruptcy Trustee’s Preference Action Against State

In Central Virginia Community College v. Katz, No. 04-885 (U.S. Jan. 23, 2006), the U.S. Supreme Court considered the intersection between the federal law of bankruptcy and the doctrine of sovereign immunity.

In this case, a book-seller transacted business with a state university before filing for bankruptcy. The court-appointed liquidating trustee commenced proceedings in Bankruptcy Court to avoid and recover alleged preferential transfers made to state parties when the debtor was insolvent. The state parties moved to dismiss on the basis of sovereign immunity, but the motions were denied.

In a 5-4 ruling, the Court held that Congress properly abrogated the states’ sovereign immunity in the Bankruptcy Code (11 U.S.C. § 106(a)), although the majority also held that the enactment of that particular statute was not necessary in this case because the Bankruptcy Court already was authorized to conduct preference avoidance proceedings involving state creditors.


U.S. Supreme Court Holds Failure To Renew Rule 50(a) Motion Waives Appeal

Parties to a federal jury trial may attempt to avoid having the jury decide particular issues pursuant to Rule 50. Under Rule 50(a), a party may file a motion for judgment on particular issues as a matter of law after the close of the evidence. If the court denies the motion and the issues proceed to jury verdict, the party has ten days to renew its motion for judgment as a matter of law under Rule 50(b) and/or to move for a new trial under Rule 59(e).

It turns out that renewing the motion for judgment as a matter of law is the only way to preserve the issue for appeal.

In Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., No. 04-597 (U.S. Jan. 23, 2006), the U.S. Supreme Court held that if a party fails to renew its motion after the jury reaches its verdict, that party waives the right to appeal the sufficiency of the evidence. The Court cited precedent finding that courts of appeals only have jurisdiction to overturn a jury verdict if the appellant asked the district court to do so first.