Bank Argues District Court Has Jurisdiction Over Interest Claims

BANK OF AMERICA CORPORATION,
Plaintiff-Appellee,
v.
UNITED STATES OF AMERICA,
Defendant-Appellant.

In the
United States Court of Appeals
for the
Federal Circuit

On Appeal from the Order of the United States District Court
for the Western District of North Carolina
Case No. 3:17-cv-546
(Hon. Judge Robert J. Conrad, Jr.)

BRIEF FOR APPELLEE
BANK OF AMERICA CORPORATION

TIMOTHY S. BISHOP
MARJORIE M. MARGOLIES
Mayer Brown LLP
71 S. Wacker Drive
Chicago, IL 60606
(312) 782-0600

BRIAN W. KITTLE
GEOFFREY M. COLLINS
Mayer Brown LLP
1221 Avenue of the Americas
New York, New York 10020
(212) 506-2187

Counsel for Plaintiff-Appellee

CERTIFICATE OF INTEREST

Pursuant to Federal Circuit Rule 47.4, Brian W. Kittle, counsel for Appellee, certifies the following:

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

STATEMENT OF RELATED CASES

JURISDICTIONAL STATEMENT

STATEMENT OF THE ISSUE

STATEMENT OF THE CASE

SUMMARY OF THE ARGUMENT

ARGUMENT

CONCLUSION

CERTIFICATE OF SERVICE

CERTIFICATE OF COMPLIANCE

TABLE OF AUTHORITIES

Cases

Almendarez-Torres v. United States, 523 U.S. 224 (1998)

Amoco Prod. Co. v. United States., 1988 WL 9112 (N.D. Ill. Feb. 5, 1988)

Anthony v. Office of Personnel Mgmt., 58 F.3d 620 (Fed. Cir. 1995)

Bailey v. United States, 52 Fed. Cl. 105 (2002)

Bank of Am. Corp. v. United States, Case 3:17-cv-00546 (Sept. 7, 2018), ECF No. 33

Bank of Am. Corp. v. United States, No. 3:17-cv-00546 (Sept. 7, 2018), ECF No. 32

Chicago & N.W. Ry. v. United Transp. Union, 402 U.S. 570 (1971)

Citadel Indus., Inc. v. United States, 314 F. Supp. 245 (S.D.N.Y. Jun. 2, 1970)

Estate of Culver v. United States, 2019 WL 4930224 (D. Colo. Oct. 7, 2019)

Doolin v. United States, 737 F. Supp. 732 (N.D.N.Y.)

Draper v. United States, 62-2 USTC ¶ 9697 (E.D. Wash. Aug. 17, 1962)

E.W. Scripps Co. and Subsidiaries v. United States, 420 F. 3d 589 (6th Cir. 2005)

Elec. Welfare Tr. Fund v. United States, 907 F.3d 165 (4th Cir. 2018)

F.A.A. v. Cooper, 566 U.S. 284 (2012)

F.C.C. v. NextWave Personal Commc'ns Inc., 537 U.S. 293 (2003)

Flora v. United States, 362 U.S. 14 (1960)

Flora v. United States, 357 U.S. 63 (1958)

Ford Motor Co. v. United States, 132 Fed. Cl. 104 (2017)

Ford Motor Co. v. United States, 768 F.3d 580 (6th Cir. 2014)

Horizon Coal Corp. v. United States, 43 F.3d 234 (6th Cir. 1994)

Indian Harbor Ins. v. United States, 704 F.3d 949 (Fed. Cir. 2013)

Koprowski v. Commissioner, 138 T.C. 54 (2012)

Lorillard v. Pons, 434 U.S. 575 (1978)

Martin v. United States, 895 F.2d 992 (4th Cir. 1990)

Matson Navigation Co. v. United States, 130 F. Supp. 357 (Ct. Cl. 1955)

McNabb for McNabb v. Bowen, 829 F.2d 787 (9th Cir. 1987)

New York and Presbyterian Hosp. v. United States, 881 F.3d 877 (Fed. Cir. 2018)

Paresky v. United States, Case No. 18-cv-23569 (Oct. 21, 2019), ECF No. 104

Pfizer Inc. v. United States, 939 F.3d 173 (2d Cir. 2019)

Pfizer, Inc. v. United States, 2016 WL 6902196 (S.D.N.Y. Oct. 31, 2016)

Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380 (1993)

Richlin Sec. Serv. Co. v. Chertoff, 553 U.S. 571 (2008)

Shaw v. Gwatney, 795 F.2d 1351 (8th Cir. 1986)

Smietanka v. Indiana Steel Co., 257 U.S. 1 (1921)

Triangle Corp. v. United States, 592 F. Supp. 1316 (D. Conn. 1984)

United States v. Gonzales, 520 U.S. 1 (1997)

United States v. Mitchell, 463 U.S. 206 (1983)

United States v. Nordic Vill., Inc., 503 U.S. 30 (1992)

United States v. Sarubin, 507 F.3d 811 (4th Cir. 2007)

United States v. Williams, 514 U.S. 527 (1995)

Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202 (1997)

Wichita Ctr. for Graduate Med. Educ., Inc. v. United States, 2016 WL 4000934 (D. Kan. July 26, 2016)

Wyodak Res. Dev. Corp. v. United States, 637 F.3d 1127 (10th Cir. 2011)

Statutes, Rules and Regulations

26 U.S.C. § 6611

26 U.S.C. § 6621

26 U.S.C. § 7422

26 U.S.C. § 7806(b)

28 U.S.C. § 41 (1925)

28 U.S.C. § 1292(d)(4)

28 U.S.C. § 1346(a)

28 U.S.C. § 2411

Act of Feb. 24, 1925, Pub. L. 68-459, 43 Stat. 972

Act of June 30, 1926, Pub. L. 69-441, 44 Stat. 778

Act of May 24, 1949, Pub. L. 81-72, 63 Stat. 89

Act of July 30, 1954, Pub. L. 83-559, 68 Stat. 589

Judicial Code of 1911, Pub. L. 61-475, 36 Stat. 1087 (Mar. 3, 1911)

Judicial Code of 1948, Pub. L. 80-773, 62 Stat. 869 (June 25, 1948)

Pub. L. 81-72, 63 Stat. 89 (May 24, 1949)

Pub. L. 83-559, 68 Stat. 589 (July 30, 1954)

Revenue Act of 1921, Pub. L. 67-98, 42 Stat. 277 (Nov. 23, 1921)

Revenue Act of 1924, Pub. L. 68-176, 43 Stat. 253 (June 2, 1924)

Revenue Act of 1942, Pub. L. 77-753, 56 Stat. 798 (Oct. 21, 1942)

Tax Reform Act of 1969, Pub. L. 91-172, 83 Stat. 487 (Dec. 30, 1969)

Other Authorities

61 Cong. Rec. 7444 (Nov. 7, 1921)

AMERICAN DICTIONARY OF THE ENGLISH LANGUAGE (rev. ed. 1867)

AMERICAN UNIVERSITIES NEW UNABRIDGED DICTIONARY (rev. ed. 1916)

BLACK'S LAW DICTIONARY (10th Ed. 2014)

Civil Actions in District Court to Recover Taxes: Hearing on S.252 before the Subcomm. on Improvements in Judicial Machinery of the S. Comm. on the Judiciary, 83rd Congress 2 (1953)

Conference Report to Accompany S. 252, H.R. Rep. 2276 (July 19, 1954)

Report of the House Judiciary Committee to Accompany H.R. 3762, H.R. Rep. No. 81-352 (Mar. 30, 1949)

Report of the Senate Judiciary Committee to accompany H.R. 3762, S. Rep. No. 81-303 at 1 (April 26, 1949)

H.R. 246, 83rd Cong. (1953)

H.R. 4401, 83rd Cong. (1953)

H.R. Rep. 83-2276 (July 19, 2014)

H.R. Rep. 83-659 (June 25, 1953)

OXFORD UNIVERSAL DICTIONARY OF HISTORICAL PRINCIPLES (3d ed. 1955)

Sen. Comm. on the Judiciary Report to Accompany S.252, S. Rep. No. 83-115 (Mar. 20, 1953)

S. Rep. No. 81-303 (April 26, 1949)

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STATEMENT OF RELATED CASES

This matter has not previously been appealed to this or any other appellate court. United States of America v. Bank of America Corporation, Docket No. 3:18-cv-00410, is currently pending before the Western District of North Carolina and will be directly affected by this Court's decision in the pending appeal. Counsel for Bank of America Corporation are unaware of any other pending case in this or any other court or agency that will directly affect or be directly affected by this Court's decision in this pending appeal.

JURISDICTIONAL STATEMENT

Bank of America agrees that 28 U.S.C. § 1292(d)(4) is the basis for this Court's jurisdiction. The parties disagree, however, on the basis for the District Court's jurisdiction.

Bank of America sued the United States in the District Court for the Western District of North Carolina for (i) refunds of underpayment interest it previously paid and (2) for payment of additional statutory interest that it was owed (overpayment interest).¹

The U.S. filed a motion to dismiss or transfer the overpayment interest claims over $10,000 to the Court of Federal Claims.

On July 1, 2019, the District Court denied the government's motion. That order was immediately appealable to this Court under 28 U.S.C. § 1292(d)(4). On August 28, 2019, the government filed its Notice of Appeal to this Court.

STATEMENT OF THE ISSUE

Much of the government's brief, and many of the cases on which it relies, relate to two questions: (i) whether overpayment interest claims are refund claims and (ii) whether the refund procedures and statute of limitations apply to non-refund claims.

Neither question is in dispute. The parties and the court below agree that overpayment interest claims are not refund claims. And they agree that, as a result, neither the refund procedures nor the refund statutes of limitations apply to overpayment interest claims.

The only question here is whether 28 U.S.C. § 1346(a)(1) gives the District Court jurisdiction over Bank of America's stand-alone overpayment interest claims.

STATEMENT OF THE CASE

I. Procedural Background

On September 13, 2017, Bank of America sued the United States for refunds of underpayment interest it paid and for payment of additional overpayment interest it was owed. Bank of America filed its Third Amended Complaint (at issue) on August 15, 2018. Appx10–22. On September 7, 2018, the government filed a motion to dismiss or transfer only the overpayment interest claims above $10,000 to the Court of Federal Claims (leaving the remaining underpayment interest claims and one overpayment interest claim in the district court).² U.S. Mot. to Dismiss or Transfer, Bank of Am. Corp. v. United States, No. 3:17-cv-00546 (Sept. 7, 2018), ECF No. 32; Appx1088–114. On January 10, 2019, the Magistrate filed his Memorandum and Recommendation and Order denying the Motion to Transfer and recommending that the District Court deny the alternative Motion to Dismiss. Appx1210–14. On January 24, 2019, the government filed its objections to the Magistrate's Memorandum and Recommendations. U.S. Obj., Bank of Am., No. 3:17-cv-00546 (Jan. 24, 2019), ECF No. 49. On June 30, 2019, following additional briefing, the District Court affirmed and adopted the Magistrate's Memorandum and Recommendation and denied the government's Motion to Transfer or Dismiss. Appx1–9.

The District Court agreed with the Sixth Circuit's construction of the plain language of 28 U.S.C. § 1346(a)(1) (“section 1346(a)(1)”) in E.W. Scripps Co. and Subsidiaries v. United States, 420 F. 3d 589 (6th Cir. 2005), quoting the following passage:

The payment of statutory [i.e. overpayment] interest reflects an attempt to return the taxpayer and the Government to the same positions they would have been in if no overpayment of tax had been made. If the Government does not compensate the taxpayer for the time-value of the tax overpayment, the Government has retained more money than it is due, i.e., an “excessive sum.”

Appx4 (quoting 420 F.3d at 597). The court rejected the government's argument that it lacked jurisdiction for a stand-alone interest claim, because, “from the taxpayer's perspective, the United States did not take an 'excessive sum,' but rather paid out an insufficient sum.” Id. The court explained that “[i]n the overpayment scenario, even though the United States does not take an 'excessive sum' from the taxpayer at first, the government would retain an 'excessive sum' by keeping the accumulated interest on funds it was never owed.” Appx5.

The District Court also rejected the government's argument “that because 28 U.S.C. § 1346(a)(1) and I.R.C. § 7422(a) contain overlapping language, §7422(a)'s header describing 'refunds' should be transposed onto § 1346(a)(1) as well.” Appx5. First, the District Court noted that the two provisions serve different functions — section 1346(a)(1) grants concurrent jurisdiction and 26 U.S.C. § 7422(a) (“section 7422(a)”) “establishes pre-requisites for refund suits.” Id. Agreeing with the government that the headings were relevant — though reaching a different conclusion — the Court noted that “a plain reading of the qualifying header in [section] 7422(a) — 'No suit prior to filing claim for refund' — explicitly limits the rest of the paragraph to refund suits” while “[i]n contrast, [section] 1346(a)(1) includes no such heading.” Appx6. Finally, agreeing with the parties that overpayment interest claims are not refund claims (they are not claims for a refund of something that was previously paid), the Court rejected government's reliance on refund cases. Appx6–9.

II. Legal Background

Section 1346(a)(1) has a long history, which has informed both Congress's choices of language as it evolved and the Supreme Court's interpretation of that language. Accordingly, we include a brief overview of the development of section 1346(a)(1) and its application to overpayment interest claims, including stand-alone overpayment interest claims.

A. Jurisdiction for tax litigation before section 1346(a)(1) (and predecessors)

Before 1921, Taxpayers had three options³ for litigating tax-related claims: (i) sue the United States in the Court of Claims, (ii) sue the United States in the district court where they lived (but only if the amount were under $10,000), or (iii) sue the collector of internal revenue in the district court where the he lived.

Those options, however, were not equal. The interactions of the Tucker Act, principles of sovereign immunity, the personal nature of actions against the collector, and other statutory provisions created differences and inequities. First, even in district court, jury trials were available only against the collector.⁴ Second, there was a statutory prohibition on overpayment interest in the Court of Claims.⁵ Third, because suits against the collector were personal, they were limited to amounts collected by that particular collector and interest on those amounts and, were the collector to die or leave office, the taxpayer could not sue his successor.⁶ Fourth, where a taxpayer lived affected the convenience (and cost) of pursuing its case, because (i) the Court of Claims was located in Washington D.C.⁷ and (ii) a collector of internal revenue might not live in the same district as all the taxpayers from whom he collected.⁸

B. Initial enactment of section 1346(a)(1)'s predecessor (amendment to Section 177 of Judicial Code of 1911)

Congress enacted the initial version of what would become section 1346(a)(1) as part of the Revenue Act of 1921, Pub. L. 67-98, 42 Stat. 277 (Nov. 23, 1921). Section 1310(c) of the Act amended the twentieth paragraph of section 24 of the Judicial Code of 1911 by adding that district courts were to have jurisdiction as follows:

Concurrent with the Court of Claims, of any suit or proceeding, commenced after the passage of the Revenue Act of 1921, for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected, under the internal revenue laws, even if the claim exceeds $10,000, if the collector of internal-revenue by whom such tax, penalty, or sum was collected is dead at the time such suit or proceeding is commenced

Id. at §1310(c), 42 Stat. 310–11. This language was one of several provisions introduced by Senator Jones of New Mexico specifically to address inequities regarding overpayment interest. See Statement of Sen. Andrieus Jones, 61 Cong. Rec. 7444, 7506 (Nov. 7, 1921). In introducing the amendments, he noted that the Bill already provided for overpayment interest on refunds paid by the Commissioner of Internal Revenue⁹ and that “clearly it [wa]s the view of the Senate that[,] in case of the unlawful collection of an internal-revenue tax it shall be refunded with interest.” Id. But, as he explained, that left certain situations uncovered:

It leaves this situation: If a taxpayer had paid such a tax and he is entitled to a refund he may bring suit in the United States district court against the collector to whom he paid it and recover that sum with interest; but if the collector to whom he paid it goes out of office or dies, then he cannot sue the successor of that individual collector, and, of course, cannot recover any interest. If he goes into the Court of Claims, he cannot recover any interest, and he can not sue the United States in the district court if the claim amounts to more than $10,000.

Id. As to the predecessor to 28 U.S.C. § 1346(a)(1), Senator Jones went on to explain how it would solve the problem he had described:

What is here proposed is that we shall remedy that situation by providing that where the collector to whom the revenue was paid has died then the claimant may sue the United States. It simply brings about an equitable situation and prevents the taxpayer from having to suffer the hardships which would be brought upon him simply through the accident of the death of the collector to whom he paid the money. I offer the amendment for the purpose of remedying that situation.

Id. at 7506–07. In addition to the predecessor to section 1346(a)(1), another amendment to the 1921 Act that was offered (and later enacted) at the same time addressed the same inequity from the other direction. It amended section 177 of the Judicial Code to eliminate the prohibition on overpayment interest in cases litigated before the Court of Claims.¹⁰ See also, Flora v. United States, 357 U.S. 63, 70–72 (1958) (Flora I) (describing history).

C. Revisions to section 1346(a)(1) (and predecessors)

i. Expansion of Section 24 of Judicial Code

In February 1925, Congress addressed a similar situation where a collector is no longer in office. At the time, the statute allowing taxpayers to sue the collector authorized suit only against the current collector.¹¹ As a result, if the collector who wrongfully collected an amount were no longer in office, the effect was the same as it had been (before 1921) when he was dead: the taxpayer could not sue in district court.¹² Congress amended the twentieth paragraph of section 24 of the Judicial Code to extend district court jurisdiction to cases where the collector was “not in office.” Act of Feb. 24, 1925, Pub. L. 68-459, 43 Stat. 972, 972.

ii. Re-designation as 28 U.S.C. § 41(20)

In 1926, the new U.S. Code — reporting laws in force on December 7, 1925 — moved section 24 of the Judicial Code (including the predecessor language to 28 U.S.C. § 1346(a)(1)) to 28 U.S.C. § 41. See 28 U.S.C. § 41(20) (1925); see also Act of June 30, 1926, Pub. L. 69-441, 44 Stat. 778. It remained there until 1948.

iii. Division of 28 U.S.C. § 41(20) into sections 1346(a)(1) (claims under the internal revenue laws) and 1346(a)(2) (other)

In 1948, the Judicial Code of 1948 split former 28 U.S.C. § 41(20) into separate provisions for tax- and non-tax related civil actions. Judicial Code of 1948, Pub. L. 80-773 § 1346, 62 Stat. 869, 933 (June 25, 1948). Under the new Judicial Code, section 1346(a)(1) governed district court jurisdiction for tax-related civil actions. Id. And section 1346(a)(2) governed district court jurisdiction for non-tax-related civil actions. Id.

The following year, Congress enacted Public Law 81-72 to correct errors in and clarify the language of the Judicial Code of 1948. Act of May 24, 1949, Pub. L. 81-72, 63 Stat. 89.¹³ Section 80 of Pub. L. 81-72 clarified section 1346(a)(1) “with respect to jurisdiction over suits involving tax claims where the amount involved is less than $10,000,” S. Rep. No. 81-303 at 4, by adding a clause specifying that, besides situations where the collector was dead or out of office, it applied “if the claim does not exceed $10,000” as well. Pub. L. 81-72 § 80, 63 Stat. 89, 101.

iv. Final Revision to section 1346(a)(1)

a. Removing $10,000 limit

The final revision to section 1346(a)(1) occurred in 1954 when Congress eliminated the $10,000 limit. Act of July 30, 1954, Pub. L. 83-559, § 1, 68 Stat. 589, 589. Striking the $10,000 limit also eliminated the need for the second clause related to the collector:

Section 1346(a)(1) Before Pub. L. 83-559

Section 1346(a)(1) After Pub. L. 83-559

(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims, of (1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws, (i) if the claim does not exceed $10,000 or (ii) even if the claim exceeds $10,000 if the collector of internal revenue by whom such tax, penalty or sum was collected is dead or is not in office as collector of internal revenue when such action is commenced.

(a) The district courts shall have original jurisdiction, concurrent with the Court of Claims, of (1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws, (i) if the claim does not exceed $10,000 or (ii) even if the claim exceeds $10,000 if the collector of internal revenue by whom such tax, penalty or sum was collected is dead or is not in office as collector of internal revenue when such action is commenced.

As explained by its sponsor, the bill had “two purposes — [1] to preserve the right of trial by jury to the taxpayers [not at issue here] and [2] to permit the claimant, the plaintiff, to bring his suit in the district court in the district in which he lives.” Senate Hearing at 2 (statement of Hon. Walter F. George).

The first purpose, related to juries, was controversial, and held the bill up for nearly a year.¹⁴ But the second, eliminating the $10,000 limit and thereby allowing taxpayers to litigate tax-related money claims close to home, regardless of size, enjoyed near unanimous support. In the House Judiciary Committee's words:

There appears to be no valid reason for thus restricting the district court's jurisdiction. . . . It is our opinion that all taxpayers, regardless of their financial status, should be permitted to pursue his remedy in the jurisdiction where he resides, or where the tax accrued, and not be required to go to the expense and practical difficulty of taking himself, his records, and his witnesses to Washington, procuring Washington counsel, and trying his case before the Court of Claims.

H. Judiciary Rep. at 2 (1953). Said another way, the Committee “believe[d] that the jurisdictional limitation of $10,000 . . . is an unreasonable restriction which serves no useful purpose and should be removed.” Id. at 3.

b. Verifying coverage for stand-alone overpayment interest claims

Whether the existing language for section 1346(a)(1) covered stand-alone overpayment interest claims was specifically addressed during the Senate Hearing. One witness, a representative of the ABA tax section (speaking in his personal capacity), asked if it covered “interest on any amount paid [by a taxpayer] in connection with internal revenue.” Senate Hearing at 11. Previewing the government's argument here, he stated that he was “afraid that you [i.e., the government] cannot be said to retain interest that you [i.e., the government] owe on amounts you have collected [i.e., that the taxpayer overpaid].” Id. In other words, he was concerned that overpayment interest might not be covered, because one might argue that the government does not retain an excessive sum if all it owes a taxpayer is interest on an amount that taxpayer overpaid. Along similar lines, even the Associate Chief Counsel admitted — speaking in his personal capacity only — that he “personally would not like the [existing] language because I think it is confusing.” Id. at 12.

But no witness, Senator, or other participant suggested that overpayment interest should not be covered. To the contrary, the Treasury Department supported retaining the existing language. Senate Hearing at 3. And the Associate Chief Counsel of the Bureau, then speaking in his official capacity, argued to keep it in place because it was already well understood to cover overpayment interest. He explained that the Bureau had litigated a number of cases under the prior version of section 1346(a)(1) with stand-alone overpayment interest cases. Id. at 12 (describing a series of cases). The Committee requested that he provide the citations to those cases following the hearing, and the Treasury Department did so by letter the following week, listing cases involving stand-alone claims for under-and overpayment interest in the district courts. Id. at 13 (reproducing the letter in the hearing transcript). Nothing in the letter suggested that Treasury disagreed that the existing language covered stand-alone overpayment interest suits.

One witness suggested revising section 1346(a)(1) to provide simply that district courts “shall have jurisdiction . . . of any case arising under the internal revenue laws, period.” Senate Hearing at 14. The concern was raised, however, that doing so could have unintended consequences, including unintentionally giving district courts jurisdiction to redetermine deficiencies (by statute, deficiency jurisdiction is the exclusive province of the Tax Court).¹⁵

Based on the understanding that the existing language achieved their goal to cover stand-alone overpayment interest claims and based on the concern that any changes would have required further study (perhaps by the Finance Committee), the Senate Judiciary Committee ultimately approved the language without change and as it was ultimately enacted. Senate Hearing at 14–15; S. Rep. No. 83-115.

The result in the House was the same. Representative Dolliver introduced a bill, H.R. 246, 83rd Cong. (1953), to give the district courts concurrent jurisdiction with the Tax Court of the United States.¹⁶ Similar to the Senate, the House ultimately declined to do so, instead enacting H.R. 4401, 83rd Cong. (1953), which was identical in respect to section 1346(a)(1). See Conf. Rep. The Senate Bill was passed as originally proposed. Pub. L. 83-559, § 1, 68 Stat. at 589.

SUMMARY OF THE ARGUMENT

The government's concedes that Congress gave district courts jurisdiction for overpayment interest claims, regardless of amount, so long as the IRS both (i) failed to refund the overpayment and (ii) failed to pay the interest on it. But, it erroneously contends that where the IRS failed only to pay the interest, the government claims Congress chose to withhold jurisdiction from the district courts claims over $10,000.

The government's brief is strikingly silent on one important question — Why? It implies that Congress did this because the former is a refund claim while the latter is not. But that merely restates the same distinction. It still doesn't answer the question — Why?

Below, the government did offer a rationale, claiming that Congress wanted “large claims [to] remain[ ] centralized at the seat of government so that department heads would be better able to protect the government's interests.” Brief in Support of Def't Motion to Transfer or Dismiss, Dkt. 3:17-cv-00546, Doc. 33, at 5 (Sept. 7, 2018) (citing Shaw v. Gwatney, 795 F.2d 1351, 1355 (8^th Cir. 1986).

This rationale makes sense in the context of government contracting, where the plaintiffs voluntarily choose to enter business with the government. But taxpayers make no such choice: regardless of where they live, they are obligated to pay taxes, and, where they overpay those taxes, they are entitled to interest on those overpayments. There is nothing about a stand-alone overpayment interest claim that justifies discriminating against taxpayers living far from Washington, D.C. by requiring them to travel great distances to enforce their rights. Congress chose to eliminate the $10,000 restriction that used to be in section 1346(a)(1) in 1954, because:

It is our opinion that all taxpayers, regardless of their financial status, should be permitted to pursue his remedy in the jurisdiction where he resides, or where the tax accrued, and not be required to go to the expense and practical difficulty of taking himself, his records, and his witnesses to Washington, procuring Washington counsel, and trying his case before the Court of Claims.

H. Judiciary Rep. at 2 (1953). In other words, Congress chose to allow taxpayers to bring money claims under the internal revenue laws in the district court where they lived, regardless of amount. The plain meaning of the broad language it chose to carry out that policy did precisely what it was intended to do, including as to overpayment interest claims.

Section 1346(a)(1) has three clauses that define the amounts that can be recovered — the “any internal-revenue tax” clause, the “any penalty” clause, and the “any sum” clause. Each has its own limitations: (i) “any internal-revenue tax” applies only to taxes erroneously or illegally “assessed” or “collected,” (ii) “any penalty” applies only to penalties “collected without authority,” and (iii) “any sum” applies only to sums “under the internal-revenue laws” that are either “excessive” or “wrongfully collected.”

A claim for overpayment interest is a claim for an excessive sum under the internal revenue laws. The government's contrary interpretation of section 1346(a)(1) ignores the statutory language's ordinary meaning, renders entire clauses superfluous, and construes disjunctive phrases as conjunctive.

The ordinary meaning of “recover” interest in this context (i.e., litigation) is to obtain it by judgment. The phrase “any sum . . . under the internal-revenue laws” means any amount (without limitation) under the internal revenue laws. And there is no dispute that overpayment interest is an amount under the internal revenue laws (nor could there be — it is the Internal Revenue Code (26 U.S.C. § 6611) that provides for it).

Thus, the remaining question is whether unpaid overpayment interest owed is “excessive . . . or wrongfully collected.” In E.W. Scripps Co., the Sixth Circuit held that it was, because, by failing to pay interest along with the overpayment, the government retained a sum that was excessive under the internal revenue laws. 420 F.3d at 596-97.

This approach was consistent with the Supreme Court's guidance on how the principles of statutory interpretation apply to section 1346(a)(1). For example, in Flora v. United States, the Supreme Court held that “any sum” should be interpreted to cover amounts other than internal-revenue taxes or penalties: otherwise, it would be rendered superfluous. 362 U.S. 145, 149 (1960) (Flora II). In other words, the three clauses are independent, disjunctive clauses. The Supreme Court followed a similar analysis in United States v. Williams, 514 U.S. 527 (1995). There, the question was whether the first clause (“any internal-revenue tax erroneously . . . assessed or collected”) of section 1346(a)(1) could apply to a tax that was not “assessed” against the plaintiff (who paid a third party's tax). 514 U.S. at 529. The Court rejected that government's argument that both assessment and collection was required. Id. at 540.

The Sixth Circuit's interpretation of “excessive” as applying to sums that had not been collected (wrongfully or otherwise) is consistent with these principles. Otherwise, “excessive or wrongfully collected” means either “wrongfully collected” or “excessive and wrongfully collected,” both of which are contrary to the plain text.

Section 1346(a)(1)'s context and contemporaneous understanding confirm this plain language meaning. The statute's legislative history shows that jurisdiction over claims for overpayment interest was one of Congress' key considerations. Congress understood that its language covered overpayment interest claims and understood that courts interpreted that language in the same way. Indeed, it chose not to modify the language based on the testimony of the Associate Chief Counsel of the Bureau of Internal Revenue and on the written confirmation by the Treasury Department, that the then-existing language (still in force today) already covered stand-alone claims for overpayment interest.

The government's interpretation of Section 1346(a)(1) is inconsistent with the statute's language, context, and history. And its position would restore the very kind of arbitrary jurisdictional distinctions that Congress spent decades (from 1921 to 1954) eliminating and would once again force taxpayers to litigate claims in Washington rather than their home districts. Accordingly, this Court should affirm the District Court's decision and remand for proceedings on the merits.

ARGUMENT

I. Section 1346(a)(1) grants district courts jurisdiction to resolve tax related money claims against the United States, including claims for overpayment interest.

A. The historical meaning of “recovery of . . . any sum alleged to be excessive . . . under the internal revenue laws” specifically included overpayment interest.

In interpreting statutes, courts look to the “'ordinary, contemporary, common meaning'” of words in a statute. See, e.g., Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202, 207 (1997) (quoting Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 388 (1993)); Indian Harbor Ins. v. United States, 704 F.3d 949, 954 (Fed. Cir. 2013). In doing so, courts also presume that Congress was aware of prior judicial interpretations of statutory language. See, e.g., Lorillard v. Pons, 434 U.S. 575, 580 (1978); Anthony v. Office of Personnel Mgmt., 58 F.3d 620, 626 (Fed. Cir. 1995).

This is not, however, a case where this Court need infer Congress's understanding of contemporaneous meaning or judicial decisions. Here, we know that Congress understood these terms to apply to overpayment interest from testimony of the Associate Chief Counsel of the Internal Revenue Bureau himself:

[QUESTION]: Is it your opinion that under the language of the bill as it stands a taxpayer could bring his action for the recovery of interest which he alleges was due him on money improperly withheld?

[ANSWER]: Yes.

Senate Hearing, at 14.

We also know that Congress understood that courts already interpreted the language at issue to grant jurisdiction for overpayment interest claims, again from the Associate Chief Counsel's testimony:

We have had a number of suits in the last few years which were brought for interest. I believe, alone.

Senate Hearing, at 12. A few days after the hearing, the Treasury department verified that understanding in writing, providing citations to a number of cases involving stand-alone claims for interest (both under- and over-payment interest). Senate Hearing, at 13 (publishing letter in the hearing transcript).

That contemporaneous understanding of the existing language was important to Congress's choice to enact it. The Senate Committee considered whether the language covered stand-alone overpayment interest claims and, based on the understanding that it did, chose to use that language to carry out its intent.

The Supreme Court has long held that statements of interested parties during Congressional hearings are entitled to “great weight,” particularly where — as here — the interested party has expertise in the subject matter. Chicago & N.W. Ry. v. United Transp. Union, 402 U.S. 570, 576 (1971); see also Bailey v. United States, 52 Fed. Cl. 105, 111 (2002) (citing Chicago, 402 U.S. at 576 and noting that the Supreme Court has “accorded weight to the views of interested parties with a particular expertise in the subject matter at issue.”). This is more true here, because the “interested party” is the relevant administrative agency for the statute at issue. McNabb for McNabb v. Bowen, 829 F.2d 787, 793 n.6 (9th Cir. 1987). As the Ninth Circuit explained, “[w]e may assume that the members of Congress took the [agency] at its word in explaining its implementation of [the statute].” Id.

B. The plain text of section 1346(a)(1) includes stand-alone overpayment interest claims.

Section 1346 grants the district courts jurisdiction over certain cases in which the United States is the defendant. And section 1346(a)(1) defines jurisdiction for tax-related cases:

(a) The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of:

(1) Any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.

section 1346(a)(1) (2016). Overpayment interest suits are “civil action[s] against the United States for the recovery of . . . [a] sum alleged to have been excessive . . . under the internal revenue laws” and therefore fall squarely within section 1346(a)(1). See, e.g., Ford Motor Co. v. United States, 768 F.3d 580, 584 (6th Cir. 2014), cert. denied, 135 S. Ct. 2858 (2015); E.W. Scripps Co. & Subsidiaries v. United States, 420 F.3d 589 (6th Cir. 2005); cf. Pfizer Inc. v. United States, 939 F.3d 173 (2d Cir. 2019) (Pfizer III) (disagreeing with Scripps Co.).

i. The term “recovery” means the obtainment of a thing by judgment.

BLACK'S LAW DICTIONARY offers four definitions for the term “recovery”, two of which relate specifically to litigation: “2. The obtainment of a right to something (esp. damages) by a judgment or decree . . . [and] 4. An amount awarded in or collected from a judgment or decree.” Appx1166. Neither definition implies a limit to amounts previously paid.¹⁷ And both are consistent with other dictionaries and uses.¹⁸

Courts use the phrases “recover interest” and “recovery of interest” in a variety of tax contexts to refer to non-refund claims. For example, where a taxpayer sued the government for unpaid overpayment interest, the Southern District of New York stated that the taxpayer sought “recovery of interest on an overpayment of income tax.” Citadel Indus., Inc. v. United States, 314 F. Supp. 245, 246 (S.D.N.Y. Jun. 2, 1970) (emphasis added). Similarly, where a taxpayer had not paid the interest on an underpayment and the government sued him, the Fourth Circuit observed that the government “was statutorily entitled to recover interest on unpaid taxes.” United States v. Sarubin, 507 F.3d 811, 812 (4th Cir. 2007) (emphasis added). And, in dealing with interest netting claims involving overpayment interest, the Court of Federal Claims stated that the taxpayer sued “to recover interest that the government . . . allegedly owe[d] as a result of [the taxpayer's] overpayment of taxes.” Ford Motor Co. v. United States, 132 Fed. Cl. 104, 105–06 (2017); accord Matson Navigation Co. v. United States, 130 F. Supp. 357, 357 (Ct. Cl. 1955) (“Action by taxpayer to recover interest allegedly due on overpayment of excess profits tax.”) (emphasis added).

Even the IRS uses “recovery of . . . interest” to describe taxpayers' overpayment interest claims. For example, when a taxpayer files a claim for overpayment interest, the Internal Revenue Manual (“IRM”) instructs IRS employees to use the following language in any response:

This request does not extend the 6-year period of limitations for filing suit for the recovery of allowable interest provided for in sections 2401 and 2501 of Title 28 of the United States Code.

IRM pt. 20.2.14, Exhibit 20.2.14-14 (2017) (emphasis added); see also IRM pt. 5.1.14.3(3) (2009) (stating that the IRS can “recover interest” on certain unpaid taxes).

ii. The term “any sum” is a catch-all that includes overpayment interest.

a. The Supreme Court has held that “any sum” in section 1346(a)(1) should be interpreted as a catch-all phrase capturing amounts that are neither tax nor penalties.

“Any sum” serves to ensure that section 1346(a)(1) covers all quantities of money under the internal revenue laws. In Flora v. United States, the Supreme Court explained that “any sum” in section 1346(a)(1) should be interpreted to refer to amounts that are neither taxes nor penalties, such as interest. 362 U.S. 145, 149 (1960) (Flora II). The Court reasoned that “this construction, under which each phrase is assigned a distinct meaning, imputes to Congress a surer grammatical touch than does the alternative interpretation, under which the 'any sum' phrase completely assimilates the other two.” 362 U.S. at 150.

In other words, “any [quantity of money] under the internal revenue laws” is a catch-all phrase to ensure that section 1346(a)(1) covers all federal tax-related money claims, regardless of whether they are taxes or penalties. Flora II, 362 at 149 (“A catchall the phrase [“any sum”] surely is. . . . [T]he function of the phrase [“any sum”] is to permit suit for recovery of items which might not be designated as either 'taxes' or 'penalties' by Congress or the courts. One obvious example of such a 'sum' is interest.”).

b. The Supreme Court has rejected the government's proposed use of noscitur a sociis in interpreting “any sum” in section 1346(a)(1): it would make “any sum” superfluous.

The issue in Flora I and Flora II was the “full payment” rule for tax refund suits. That rule requires a taxpayer to pay the full amount of an income tax deficiency (as opposed to paying only part of the deficiency) as a jurisdictional prerequisite to a tax refund suit. See Flora I, 357 U.S. at 74 (1958).

In Flora II, the taxpayer argued that the “any sum” clause of section 1346(a)(1) permitted partial — rather than full — payments. Specifically he argued that the phrase “any sum” referred to amounts that were taxes or penalties, not to amounts that were neither. Flora II, 362 at 149. And, as a result, he reasoned that it permitted taxpayers to make partial payments (and sue for refunds of those payments), because “any sum . . . under the internal revenue laws” allowed them to sue for any amount of the tax due.

In other words, the taxpayer made the same noscitur a sociis argument to interpret “any sum” that the government makes here. In Flora II, the taxpayer argued that “any sum” included taxes. Here, the government argues that “any sum” (i) includes underpayment interest because it is treated as part of the tax and (ii) excludes overpayment interest because it is not. U.S. Brief. at 50–51.

In Flora II, however, the Supreme Court rejected this argument, instead concluding that “the statute more readily lends itself to the disjunctive reading which is suggested by the connective “or.” Flora II, 362 U.S. at 149. From there, it concluded that “any sum” referred “to amounts which are neither taxes nor penalties” and that the “function of the phrase [any sum] is to permit suit for recovery of items which might not be designated as either 'taxes' or 'penalties.'” Id.

a. By choosing to use the broad phrase “any sum,” Congress covered all types of money claims under the internal-revenue laws.

The ordinary meaning of “any sum” is extremely broad. The ordinary meaning of “sum” is “a quantity of money.” BLACK'S LAW DICTIONARY (10th Ed. 2014). “Read naturally, [the] word 'any' has an expansive meaning, that is, 'one or some indiscriminately of whatever kind.'” United States v. Gonzales, 520 U.S. 1, 5 (1997).

iii. The phrase “to have been excessive” refers to amounts other than amounts wrongfully collected: interpreting it otherwise violates the anti-surplusage canon, treats a disjunctive phrase as conjunctive, or both.

The government argues that stand-alone overpayment interest claims do not fit within the phrase “to have been excessive.” In doing so, it makes the same mistake described above, interpreting “to have been excessive” to refer to the same thing as “wrongfully collected” In other words, it interprets both to mean only “amounts paid to the government.”

The government's reading violates the anti-surplusage canon. See F.C.C. v. NextWave Personal Commc'ns Inc., 537 U.S. 293, 302 (2003) (explaining that a reading that would make some exceptions in a statute superfluous “of course, . . . must be rejected.”). Either all “wrongfully collected” amounts are “excessive” or vice versa. Either way, one or the other is surplusage. The better reading is that, even if “excessive” were unclear in isolation, it is clear in context: it refers to amounts other than amounts that were wrongfully collected. Accord Flora II, 362 at 150 (“[T]his construction, under which each phrase is assigned a distinct meaning, imputes to Congress a surer grammatical touch than does the alternative interpretation, under which the 'any sum' phrase completely assimilates the other two.”).

Alternatively, the government's reading impermissibly rewrites the statute, changing “or” to “and,” effectively requiring that the sum claimed be both “excessive” and “wrongfully collected.” But that is not what the statute says. See Flora II, 362 at 149 (stating on “any sum” that “we believe that [section 1346(a)(1)] more readily lends itself to the disjunctive reading which is suggested by the connective 'or.'”).

The Supreme Court rejected a similar government argument substituting “and” for “or” in the phrase “any internal-revenue tax alleged to have been erroneously or illegally assessed or collected.” United States v. Williams, 514 U.S. 527, 530 (1995). There, the tax at issue was assessed against a third party, but the plaintiff had paid it under protest to remove a federal tax lien from her property. Id., at 531. The government argued that only the person against whom the tax was assessed (the third party) could seek a refund under section 1346 (a)(1), conflating the disjunctive terms “assessed or collected.” Id. at 532. Rejecting the government's argument, the Supreme Court held that “the statute uses broad language” and that the plaintiff's “plea to recover a tax 'erroneously . . . collected' f[ell] squarely with th[at] language.” Id., at 531–32; see also Martin v. United States, 895 F.2d 992, 994 (4th Cir. 1990).

As Williams plainly shows, for “any sum alleged to have been excessive or any manner wrongfully collected under the internal revenue laws,” the term “excessive” means something other than “collected.”

II. The plain meaning of section 1346(a)(1) conflicts with neither section 7422 nor 28 U.S.C. § 2411.

A. Sections 7422 and 1346(a)(1) have different language and different purposes.

The government argues that, because section 7422 is limited to refunds — a proposition with which Bank of America and the court's decision below agree — and because section 1346(a)(1) includes some language from section 7422, section 1346(a)(1) must also be limited to refunds. But Section 7422 includes a restrictive heading and additional restrictive language that Section 1346(a)(1) does not. Any plausible reading of Section 1346(1)(1) must give meaning to those differences, which the government fails to do.

i. Section 7422 has restrictive headings that do not appear in section 1346(a)(1).

Below, the government argued that the heading of section 7422 indicates that section 1346(a)(1) is restricted to refunds. Appx1110 (“in interpreting the phrase 'any sum . . . alleged to have been excessive,' the Court should take the heading of [26 U.S.C.] § 7422(a) into account”); Def.'s Reply at 12, Dkt. No. 41 (“the heading of [26 U.S.C.] § 7422 — 'Civil actions for refund' . . . clarifies that the word 'recovery' in that statute is synonymous with 'refund.'”).

Bank of America agrees — as did the district court — that a fair reading of the statutes here takes their headings into account. But contrary to the government's argument, doing so requires that the statutory language be interpreted in light of the different language in the headings, which show the different intent of the two sections.

As the District Court recognized, the better interpretation is that, (i) because section 7422 has the restrictive heading, it is restricted, and (ii) because section 1346(a)(1) does not, it is not.¹⁹ Now — in a footnote — the criticizes the district court's taking the heading of section 7422(a) into account. U.S. Brief, at 43–44 n.16. The reasons for this switch need no further consideration.²⁰

ii. Section 1346(a)(1) lacks the references to refunds appearing in 26 U.S.C. § 7422 and includes another limit that would be superfluous if it applied only to refunds.

Beyond the headings, the texts of section 7422 and section 1346(a)(1) are simply different. First, section 7422 discusses “refunds,” as one would expect for a statute dealing with refund claims. But the word “refund” is not in section 1346(a)(1). Second, because section 7422 contains the restriction to refunds, there was no need to restrict “any sum” to amounts under the “internal revenue laws.” But, in section 1346(a)(1), which is not restricted to refunds, the additional restrictive phrase “under the internal revenue laws” was required to prevent it from granting jurisdiction to district courts in non-tax related cases. Indeed, as discussed in part IV.B below, it is typically whether a sum is “under the internal revenue laws” that ultimately controls the jurisdictional grant under section 1346(a)(1).

iii. The different purposes of sections 7422 and 28 U.S.C. § 1346(a)(1) confirm that section 1346(a)(1) is not restricted to refunds.

Consistent with their differing language, section 7422 and section 1346(a)(1) serve different functions.

The function for section 7422 is not in question: it was enacted to restrict taxpayers' ability to bring refund suits by requiring taxpayers to file refund claims. In contrast, section 1346(a)(1) was enacted not to restrict taxpayers' ability to bring suits but to expand it. Initially, its predecessor dealt with cases where the collector of internal revenue died, requiring a taxpayer to go to the Court of Claims and stripping the taxpayer of its right to overpayment interest. See Pub. L. 67-98, § 1310(c), 42 Stat. 277, 310–11 (Nov. 23, 1921); Statement of Mr. Jones, 61 Cong. Rec. 7444, 7506 (Nov. 7, 1921) (explaining the proposed language's purpose). Later, it addressed the same inequities when the collector left office, Pub. L. 68-459, 43 Stat. 972, 972 (Feb. 24, 1925). And in 1954, the final change to section 1346(a)(1) removed the $10,000 limit. Act of July 30, 1954, Pub. L. 83-559, § 1, 68 Stat. 589, 589 (July 30, 1954). See Part I.B, supra.

In sum, as the Sixth Circuit explained, “although [28 U.S.C.] § 1346(a)(1) and [26 U.S.C.] § 7422(a) use parallel language, the two provisions serve different functions and thus have their own independent meanings.” E.W. Scripps Co., 420 F.3d at 597–98 (6th Cir. 2005) (citing Horizon Coal Corp. v. United States, 43 F.3d 234, 239–40 (6th Cir. 1994). Indeed, they serve not just different functions but opposite ones.

B. Section 1346(a)(1) does not make 28 U.S.C. § 2411, which was enacted to allow overpayment interest in the Court of Claims, superfluous.

The government brief adds a new argument: if section 1346(a)(1) covers overpayment interest, it makes 28 U.S.C. § 2411 (“section 2411”) superfluous. U.S. Brief at 52–54. It does not.

Section 2411 is not a jurisdictional provision. It lacks the word “jurisdiction” and does not appear in Part IV (Jurisdiction and Venue), Chapter 85 (District Courts; Jurisdiction) of title 28 of the U.S. Code. Instead, it is a substantive provision, establishing that “[i]n any judgment of any court” for an overpayment of an internal revenue tax, interest “shall be allowed,” setting the rate for that interest (by reference to 26 U.S.C. § 6621), and authorizing the Commissioner to pay the judgment and interest. 28 U.S.C. § 2411 (2016) (emphasis added).

Section 2411's purpose was to alleviate the inequity on the availability of overpayment interest between district courts and the Court of Claims. Originally, overpayment interest was not available in the Court of Claims. Pub. L. 61-475, § 177, 36 Stat. 1087, 1141 (Mar. 3, 1911). A taxpayer could sue the collector in the district court and recover overpayment interest, but if the collector died, a taxpayer could not sue his successor in office. Smietanka v. Ind. Steel Co., 257 U.S. 1, 4–5 (1921). The taxpayer would then have to go to the Court of Claims, which could not award overpayment interest. See Statement of Mr. Jones, 61 Cong. Rec. 7444, 7506 (Nov. 7, 1921) (explaining issue). Section 1324(a) of the Revenue Act of 1921, which enacted the predecessor to section 1346(a)(1), was only one provision in the Act that was offered to address the issue. See Revenue Act of 1921, Pub. L. 67-98 § 1324, 42 Stat. 277, 316 (Nov. 23, 1921); 61 Cong. Rec. 7444, 7507. Section 1324(b) was another.

Section 1324(b) provided the predecessor to 28 U.S.C. § 2411 when it amended section 177 of the Judicial Code to provide an exception to the rule against interest in the Court of Claims for tax related cases. Pub. L. 67-98, § 1324(b), 42 Stat. at 316. As it does today, that exception applied to “any judgment of any court.” 28 U.S.C. § 2411. And it authorized the Commissioner to pay both the judgment and interest. Id.

In sum, 28 U.S.C. § 2411 is a substantive rather than a jurisdictional provision.

III. The legislative history of section 1346(a)(1) confirms that it grants jurisdiction for overpayment interest claims.

The maturation of section 1346(a)(1) illustrates Congress's intent to allow taxpayers sue on tax matters in their local district court. Under the government's argument, no stand-alone overpayment interest case can be brought in a taxpayer's local district court unless there is a refund of tax claimed by the taxpayer. Thus, if the government paid the refund of tax or applied that amount to a future tax liability but failed to pay the taxpayer overpayment interest, the taxpayer's only recourse would be to bring a suit in the Court of Claims. Such a result is not only nonsensical but also contravenes the purpose of the changes to section 1346(a)(1).

A. The government's position would restore the same type of formalistic and arbitrary jurisdictional differences and inequities that section 1346(a)(1) was intended to eliminate.

i. In the early days of the income tax, tax related cases involved a number of formalistic and arbitrary jurisdictional differences and inequities.

Before the predecessor to section 1346(a)(1), taxpayers had two options to challenge tax-related claims for more than $10,000 in court: (i) sue the United States in the Court of Claims or (ii) sue the collector of internal revenue in his local district court.

An action in the Court of Claims had disadvantages for many taxpayers. First among those was location: the Court of Claims was located in Washington D.C., and litigating there constituted a serious disadvantage for taxpayers in other locations. Senate Hearing at 3. Second, was interest: under the Judicial Code of 1911, the Court of Claims was prohibited from awarding interest. See Pub. L. 61-475, § 177, 36 Stat. 1087, 1141 (Mar. 8, 1911).

Actions against the collector gave rise to other issues. Because an action against the collector was personal, it had to be brought against him while he was still alive. Smietanka v. Indiana Steel Co., 257 U.S. 1, 6 (1921). And it could not be brought against his successor in office. Id. at 5. In addition, the collector might not live in the same district as all the taxpayers from whom he collected, meaning that only some taxpayers had the right to bring any action in their home district. Senate Hearing at 6. These differences occurred even though Courts recognized that an action against the collector was — in substance — an action against the United States.

ii. Congress enacted the predecessor to section 1346(a)(1) to eliminate some of those differences, including differences related to overpayment interest.

In 1921, the Supreme Court affirmed that, because an action against the collector was personal, when a collector died, a taxpayer was not entitled to sue his replacement. A short time later, while considering the Revenue Act of 1921, Senator Jones highlighted the effect this decision had on a taxpayer's ability to recover overpayment interest.

As he explained, because the taxpayer could not sue the new collector, he was required to bring his case in the Court of Claims. But, section 177 of the Judicial Code of 1911 prohibited recovery of interest in the Court of Claims. For that reason, he introduced a series of amendments to the Revenue Act of 1921 to “bring[ ] about an equitable situation and prevent[ ] the taxpayer from having to suffer the hardships which would be brought upon him simply through the accident of the death of the collector to whom he paid the money.” 61 Cong. Rec. 7506–7507. The first of those amendments, amended the twentieth paragraph of section 24 of the Judicial Code to allow taxpayers to bring claims against the United States in district court, regardless of whether the claims exceeded $10,000, if the collector died. A few years later, Congress added another exception, allowing suits against the United States where the collector, though still alive, was no longer in office. Pub. L. 68-459.

iii. The 1948 Judicial Code moved all tax-related claims (including those under $10,000) to section 1346(a)(1).

In 1948, Congress enacted the 1948 Judicial Code. Pub. L. 80-773, 62 Stat. 869 (June 25, 1948).

In doing so, it split what had been 28 U.S.C. § 41(20) (with the introduction of the U.S. Code, section 24 of the Judicial Code of 1911 had become 28 U.S.C. § 41) into two provisions — sections 1346(a)(1) and (a)(2). Pub. L. 80-773 § 1346, 62 Stat. at 933. The first (section 1346(a)(1)) included all tax-related claims. Id. The second (section 1346(a)(2)) included non-tax-related claims. Id.

As noted above, this left an ambiguity for tax-related claims under $10,000: were they intended to be brought under (a)(1) or (a)(2)? The following year, among many corrections to the Judicial Code of 1948, Congress clarified that it intended for tax-related claims under $10,000 to be brought under section 1346(a)(1) — as opposed to section 1346(a)(2) — when it added the phrase “if the claim does not exceed $10,000” to that provision. Pub. L. 81-72, § 80, 63 Stat. 89, 101 (May 24, 1949); S. Rep. No. 81-303, at 4 (Apr. 26, 1949) (“This amendment perfects the amendment proposed . . . to section 1346(a)(1) of title 28 so as to clarify that subsection with respect to jurisdiction over suits involving tax claims where the amount involved is less than $10,000.”).

Thus, by 1954 — when Congress made the final revision to section 1346(a)(1) — there were three categories of tax-related money claims that could be litigated against the United States in district court: (i) claims under $10,000, (ii) claims where the collector had died, and (iii) claims where the collector was otherwise out of office. And all three types of claims were brought under section 1346(a)(1), not section 1346(a)(2).

iv. In 1954, Congress eliminated the $10,000 jurisdictional limit because it was unreasonable and unfair.

As described above, Congress enacted the current version of section 1346(a)(1) in 1954. Pub. L. 83-559, 68 Stat. 589. Before then, section 1346(a)(1) was identical to the current version, except that it was subject to a $10,000 limit, unless the collector was dead or out of office.

The 1954 Act eliminated the $10,000 limit (thereby also eliminating the need for exceptions to that limit when the collector was dead or out of office). The reason for doing so was simple. As explained by the House Judiciary Committee, “the jurisdictional limitation of $10,000 . . . is an unreasonable restriction which serves no useful purpose and should be removed.” H.R. Rep. No. 83-659, at 3 (June 25, 1953). The Committee emphasized the taxpayer's “right to pursue his remedy in the jurisdiction where he resides” and that taxpayers should “not be required to go to the expense and practical difficulty of . . . trying his case before the Court of Claims” instead. Id. at 2.

B. Congress rejected using different words to convey jurisdiction because (i) section 1346(a)(1) was already understood to have conveyed jurisdiction for overpayment interest and (ii) changing it might inadvertently expand district court jurisdiction to tax deficiency cases.

This is not a case where this Court is left to wonder why Congress did not choose some arguably clearer language. We know both how Congress understood the meaning of the words it used in section 1346(a)(1) and why it chose not to change those words.

First, Congress's contemporaneous understanding of the language was that it already carried out their intent. As described above, during the Senate hearing, a witness raised the potential of the very argument the government raises here. Although he acknowledged in his personal capacity that the language could be improved, in his official capacity, the Bureau of Internal Revenue's Associate Chief Counsel objected to changing it, because (i) Treasury had already carefully considered the language, (ii) the language already covered overpayment interest, and (iii) courts already exercised jurisdiction in stand-alone overpayment interest cases under that language. Senate Hearing, at 13–14. Treasury affirmed that testimony by providing citations to, among other things, stand-alone interest cases under the prior statute. Id. at 13.

Second, as also described above, both the House and Senate committees considered proposals to modify the language of section 1346(a)(1). Before the Senate Committee, a witness suggested that the statute would be clearer on stand-alone overpayment interest claims if it provided jurisdiction for “any case arising under the internal revenue laws, period.” Senate Hearing, at 14. The Assistant Commissioner of Internal Revenue objected to that change because it would change the bill's nature from one removing a restriction to one granting jurisdiction to other types of actions, such as deficiency actions (then — and today — the Tax Court's exclusive jurisdiction).²¹ Id. He represented to the Committee that the plain language as understood by the Bureau and interpreted by the courts already provided district court jurisdiction for stand-alone overpayment interest cases. And the Committee abandoned the change on that basis. Id.

C. Contrary to the government's statement about the legislative history: (i) the history shows Congress specifically intended to cover overpayment interest and (ii) the report it cites is discussing the jury provision, not the scope of section 1346(a)(1).

The government states that “[t]here is no suggestion in the relevant legislative history . . . that when Congress enacted the precursor to § 1346(a)(1), Congress intended the provision to encompass anything other than 'refund suits.'” U.S. Brief, at 57 (citing Flora v. United States, 357 U.S. 63, 72 (1958) (Flora I). And it quotes the Conference Committee report for the proposition that whether a taxpayer sued the Government or the tax collector, “recovery [was] limited to the amount of taxes erroneously or illegally collected.” U.S. Brief, at 57 (citing Conference Report to Accompany S. 252, H.R. Rep. 2276, at 3 (July 19, 1954)).

The government misunderstands the legislative history of section 1346(a)(1), which clearly demonstrates that overpayment interest was a central concern of Congress. And the Supreme Court has recognized that fact. In Flora I, the Supreme Court observed that “[i]n addition to the extra expense and inconvenience of litigating in Washington, a Court of Claims judgment carried no interest” and it then recited Senator Jones's remarks (quoted above) about the statute's purpose being to “bring[ ] about an equitable situation and prevent[ ] the taxpayer from having to suffer the hardships which would be brought upon him simply through the accident of the death of the collector. . . .” Flora I, 357 U.S. at 70–71 (citing 61 Cong. Rec. 7506–07). In other words, since 1921, one of the main issues section 1346(a)(1) was intended to address has been overpayment interest.

The excerpt the government quotes from the Conference Committee Report is not related to the scope of section 1346(a)(1). The report focuses solely on the availability of a jury trial, which was the area of disagreement between the House and Senate. Conference Report to Accompany S. 252, H.R. Rep. 2276 (July 19, 1954). In doing so, it mentions neither “penalties” nor “any sum,” focusing exclusively on “taxes erroneously or illegally assessed or collected.” And the quoted language merely observes that the amount in dispute is the same whether a taxpayer sues the collector or the United States:

There appears to be no more danger of excessive jury verdicts in cases where the Government itself is sued than in cases where the collecting officer of the government is sued. In either case[,] recovery is limited to the amount of taxes erroneously or illegally collected. It is therefore the conclusion of the House conferees that the Senate bill, in granting jury trials in actions of this nature by express statutory provisions rather than by use of a legal fiction [a suit against the collector], is the more desirable method.

Id. at 3. In short, the quoted excerpt has nothing to do with the scope of “any sum.” It deals instead with whether jury trials carried additional risk to the government where the United States was the defendant rather than the collector.

IV. By using the broadest possible language in section 1346(a)(1), Congress demonstrated its intent to waive sovereign immunity.

Jurisdiction over any suit against the United States requires the government's consent to suit through a statement waiving sovereign immunity. See United States v. Mitchell, 463 U.S. 206, 212 (1983). Beginning with the statute's language reviewed in light of traditional interpretive tools, a court's task is to “discern the 'unequivocally expressed' intent of Congress, construing ambiguities in favor of immunity.” Williams, 514 U.S. at 531 (quoting United States v. Nordic Vill., Inc., 503 U.S. 30, 33 (1992)). Courts may also look to the context in which the waiver was enacted, including its purpose, its history, and the contemporaneous meaning of its terms. See, e.g., F.A.A. v. Cooper, 566 U.S. 284, 290–91 (2012) (reviewing contemporaneous meaning of term and legislative history to confirm the reasonableness of Court's interpretation of scope of statutory waiver); Wyodak Res. Dev. Corp. v. United States, 637 F.3d 1127, 1132–34 (10th Cir. 2011) (engaging in a detailed discussion of legislative history in interpreting the scope of waiver under section 1346(a)(1)); accord Williams, 514 U.S. at 532 (discussing the common law action that preceded actions under the predecessor to section 1346(a)(1)); Flora I, 357 U.S. at 65 (“a thorough consideration of the relevant legislative history is required”).

When the scope of Congress's waiver is “clearly discernable from the statutory text in light of traditional interpretive tools,” Cooper, 566 U.S. at 291, there is no ambiguity left for a court to construe in favor of the government because the waiver of sovereign immunity is clear, Richlin Sec. Serv. Co. v. Chertoff, 553 U.S. 571, 589–90 (2008). Thus, courts give effect to the breadth of “broad language” that Congress uses to “unequivocally express[ ]” its intent to waive sovereign immunity. Williams, 514 U.S. at 532.

A. Congress made a broad, unequivocal statement here.

Congress made an unequivocal statement of its intent to waive sovereign immunity as broadly as possible for tax related money claims. In section 1346(a)(1), it used “broad language” that “mirrors the broad common-law remedy the statute displaced.” Williams, 514 U.S. at 532. That language covered three categories: (i) “any internal-revenue tax alleged to have been erroneously or illegally assessed or collected,” (ii) “any penalty claimed to have been collected without authority,” or (iii) “any sum alleged to have been excessive or in any manner wrongfully collected under the internal revenue laws.” Section 1346(a)(1) (2016) (emphasis added).

The final catch-all category used the broadest imaginable language for a money claim — ”any sum,” meaning any quantity of money. See Part I.A.ii, supra. Congress restricted the breadth of that phrase's reach in only two ways. First, as recognized in Flora v. United States, “any sum” applies only to amounts that are neither taxes nor penalties: otherwise it would make those categories superfluous, potentially overriding the full payment rule in refund cases, or both. Flora II, 362 U.S. at 149. Second, “any sum” applies only to amounts that are allegedly “excessive . . . under the internal revenue laws” or “in any manner wrongfully collected under the internal revenue laws.” 28 U.S.C. § 1346(a)(1) (2016). And, unless one is to read those categories to be surplusage — contrary to the Supreme Court's guidance in Flora II and the Supreme Court's interpretation of the restrictions on “internal-revenue tax” in Williams — ”excessive” here means amounts other than those “in any manner wrongfully collected”: that is, amounts owed under the internal revenue laws that were not collected from the taxpayer, a category that includes overpayment interest.

B. The case law cited by the government demonstrates that “any sum . . . under the internal revenue laws” unambiguously includes amounts owed under the Internal Revenue Code.

The government is correct that, as a waiver of sovereign immunity, section 1346(a)(1) must be construed narrowly. But, as discussed above, the phrase “any sum” is unambiguous. And under Flora II and Williams, the term “excessive” must be interpreted to mean something other than amounts collected from the taxpayer. This leaves the phrase “under the internal revenue laws,” a phrase that unambiguously covers amounts under the Internal Revenue Code. Overpayment interest is such an amount. See 26 U.S.C. § 6611 (2016).

In Wyodak Resources, the Tenth Circuit applied this narrow-construction principle to determine if a reclamation fee under the Surface Mining Control and Reclamation Act of 1977 was an “internal-revenue tax” under section 1346(a)(1). 637 F.3d at 1131–32. Having concluded that “internal-revenue tax” was ambiguous on whether the reclamation fee was included, the court noted that it was not required to “consider the three-word phrase in isolation” but instead “must also consider the context in which the statute was drafted.” Id. at 1132; accord Williams, 514 U.S. at 532 (discussing the breadth of the common-law remedy that the predecessor to section 1346(a)(1) displaced). After a detailed review of the legislative history (including the same Senate Hearing transcript and committee reports discussed above), the court held that “internal-revenue tax” was limited to taxes of the type assessed or collected by the Internal Revenue Service and hence did not include the reclamation fee at issue. Wyodak Resources, 637 F.3d at 1134; see also Elec. Welfare Tr. Fund v. United States, 907 F.3d 165, 169 (4th Cir. 2018) (concluding that a reinsurance payment under the Affordable Care Act was not an “internal-revenue tax” for section 1346(a)(1) purposes).

When the sums at issue are related to the Internal Revenue Code, however, courts have recognized the broad reach of section 1346(a)(1). For example, in United States v. Williams, the Supreme Court held that, due to what it described as the “broad language” of section 1346(a)(1), a plaintiff could sue for a refund of a tax that she paid even though it was assessed against a third party. 514 U.S. at 532, 535. And, before the Second Circuit's decision in Pfizer III (discussed in Part V.B. below),²² every court but one to consider whether section 1346(a)(1) covered overpayment interest claims concluded the same thing (though occasionally for different reasons): it did. Compare Ford Motor Co., 768 F.3d at 584 (refusing to reconsider precedent holding that section 1346(a)(1) applied to overpayment interest); E.W. Scripps Co., 420 F.3d at 596–97, 598 (“In sum, we believe that, through the 'any sum' provision of [28 U.S.C.] § 1346(a)(1), the federal government has waived its sovereign immunity with respect to suits for interest on overpayments of tax that are brought in federal district court.”), aff'g, 2002 WL 31477137 (S.D. Ohio Sept. 16, 2002); Pfizer, Inc. v. United States, 2016 WL 6902196, at *2 (S.D.N.Y. Oct. 31, 2016) (Pfizer I) (“The weight of authority supports the conclusion that [28 U.S.C.] § 1346(a)(1) grants district courts subject matter jurisdiction over actions seeking overpayment interest”), rev'd, 939 F.3d 173 (2d Cir. 2019); Wichita Ctr. for Graduate Med. Educ., Inc. v. United States, 2016 WL 4000934, at *4 (D. Kan. July 26, 2016) (agreeing with the Sixth Circuit's view in Scripps); Doolin v. United States, 737 F. Supp. 732, 734 (N.D.N.Y.) (“[A] federal district court [has] subject matter jurisdiction over . . . disputes . . . regarding the interest required by Congress to be paid on tax overpayments. . . .”), rev'd on other grounds, 918 F.2d 15 (2d Cir. 1990); Trs. of Bulkeley Sch. v. United States, 628 F. Supp. 802, 803 (D. Conn. 1986) (holding that the court had jurisdiction under section 1346(a)(1) and noting in regard to the government's argument that the $10,000 limit applied that “[i]t is unlikely that the Congress would have enacted sub silentio so significant a restriction on the tax jurisdiction of the federal district courts.”), abrogated by Pfizer III, 939 F.3d 173 (2d Cir. 2019); Triangle Corp. v. United States, 592 F. Supp. 1316, 1317–18 (D. Conn. 1984) (holding that the court had jurisdiction under section 1346(a)(1) and noting that “[t]o construe the statutes otherwise would emasculate enforcement of the right to interest and thus fail to effectuate the intent of Congress”), reconsideration granted and ruling clarified by 597 F. Supp. 507, 509 (D. Conn. 1984) (“[T]his court may exercise its jurisdiction over this matter, and . . . the taxpayer may elect [its] forum between the alternative jurisdictions created by Congress.”), abrogated by Pfizer III, 939 F.3d 173 (2d Cir. 2019); Draper v. United States, 62-2 USTC ¶ 9697, at 85, 825–26 (E.D. Wash. Aug. 17, 1962) (holding that the Court had jurisdiction under section 1346(a)(1)), with Amoco Prod. Co. v. United States., 1988 WL 9112, at *6 (N.D. Ill. Feb. 5, 1988) (holding that the district court lacked jurisdiction under section 1346(a)(1)).

V. The Court should follow the Sixth Circuit's opinion in E.W. Scripps Co.

Accordingly, until earlier this year, every court but one to consider whether section 1346(a)(1) granted jurisdiction for stand-alone overpayment interest claims concluded that it did. The preeminent case on the issue is the Sixth Circuit's detailed opinion in E.W. Scripps Co. & Subsidiaries v. United States, 420 F.3d 589 (6th Cir. 2005). In September 2019, however, the Second Circuit issued its opinion in Pfizer III, concluding that a stand-alone claim for overpayment interest was neither an “internal-revenue tax” nor a “sum alleged to have been excessive or in any manner wrongfully collected” under section 1346(a)(1). Pfizer III, 939 F.3d at 179. Two district courts followed that opinion with little additional analysis. Estate of Culver v. United States, 2019 WL 4930224, at *2 (D. Colo. Oct. 7, 2019); Paresky v. United States, Case No. 18-cv-23569 (Oct. 21, 2019), ECF No. 104.

A. E.W. Scripps Co. is consistent with the Supreme Court's approach to interpreting section 1346(a)(1), the statute's purpose, and its term's contemporaneous meaning.

First and foremost, the Sixth Circuit's analysis in E.W. Scripps is consistent with the principles the Supreme Court has applied in interpreting the plain meaning of section 1346(a)(1). As it does here, the government argued that “any sum” does not encompass overpayment interest, because it is “(1) not 'collected' by the Government, (2) not collected 'under the internal-revenue laws,” and (3) not 'wrongfully' collected.” E.W. Scripps, 420 F.3d 597. Consistent with the Supreme Court's interpretation of the “any internal-revenue tax” clause of section 1346(a)(1), see Williams, 514 U.S. at 532, the Court emphasized that the “any sum” clause is disjunctive:

We believe [the government's] arguments lack merit because they ignore the fact that the 'any sum' clause is disjunctive; not only does [28 U.S.C.] § 1346(a)(1) provide the district courts with jurisdiction over suits for 'any sum alleged to have been . . . in any manner wrongfully collected under the internal-revenue laws,' but also § 1346(a)(1) confers the district courts with jurisdiction over suits seeking 'the recovery of . . . any sum alleged to have been excessive . . . under the internal revenue laws.

420 F.3d at 597. This approach — giving both “excessive” and “wrongfully collected” independent meaning rather than reducing one or the other to surplusage — is also consistent with the Supreme Court's approach to the meaning of “any sum” itself: in Flora II, the Court concluded that “any sum” must be given independent meaning from the terms “any tax” and “any penalty.” 362 U.S. at 149, 155.

Second, the result in E.W. Scripps is consistent with the purposes of both section 1346(a)(1) and the substantive provisions for overpayment interest. As explained by the Sixth Circuit, “Congress, in enacting 26 U.S.C. § 6611 (which is part of the [Internal Revenue Code] and thus an 'internal-revenue law[ ]” has made clear that it believes that taxpayers should be compensated for the lost time-value of their money when they make overpayments of tax.” E.W. Scripps, 420 F.3d 589, 597. As explained above, the original purpose for the predecessor to section 1346(a)(1) (the amendment to section 24 of the Judicial Code of 1911) was to eliminate the inequities that resulted when the collector's death forced a taxpayer to go to the Court of Claims, including inequities regarding overpayment interest. See 61 Cong. Rec. 7444, 7506 (daily ed. Nov. 7, 1921) (statement of Sen. Jones). And the provision's maturation over the following three decades reflected that purpose: next eliminating inequities when the collector left office and finally eliminating inequities when the claim exceeded $10,000. H.R. Rep. No. 83-659, at 3 (June 25, 1953). In removing the final $10,000 restriction, Congress explained that it was “an unreasonable restriction which serves no useful purpose and should be removed.” Id. The Sixth Circuit's result — allowing taxpayers to pursue all stand-alone overpayment interest claims without the expense and difficulty of litigating away from their home districts — is consistent with that view.

Third, as explained above, we know Congress's contemporaneous understanding of the terms of section 1346(a)(1), and we know Congress's contemporaneous understanding of the courts' interpretation of those terms. Based on the Associate Chief Counsel's testimony and on the Treasury Department's written submission, Congress understood that the terms of section 1346(a)(1) included stand-alone overpayment interest claims and that both courts and the government interpreted it that way. Senate Hearing, at 13. The Sixth Circuit's opinion is consistent with that understanding.

B. Pfizer III conflicts with Supreme Court precedent, is inconsistent with the text, restores long-eliminated arbitrary inequities related to overpayment interest, and fails to apply the contemporaneous understanding of the terms of section 1346(a)(1).

In Pfizer III, the Second Circuit considered whether overpayment interest claims fall under the “any internal-revenue tax” or “any sum” categories of section 1346(a)(1). On the first question, consistent with both the parties' positions and the district court's holding below, the Second Circuit correctly concluded that overpayment interest is not an “internal-revenue tax.” Pfizer III, 939 F.3d at 177. The Second Circuit erred, however, in answering the second question in four important ways.

First, the Second Circuit's position conflicted with the Supreme Court's approach to section 1346(a)(1). The Second Circuit ignores the Flora II opinion by deeming its discussion of “any sum” and interest a dictum. Pfizer III, 939 F.3d at 177 (criticizing the Sixth Circuit's reliance on “dictum in Flora [II]”). While that is arguably true about the particular example of interest that was given by the Supreme Court (no interest question was before the Court in Flora II), it is untrue about the Supreme Court's approach to “any sum.” Flora II, 362 U.S. at 149. As the Second Circuit admits a few sentences later, “the [Supreme] Court held that 'any sum' was not 'related to “any internal-revenue tax” and “any penalty.”'” Pfizer III, 939 F.3d at 177–78 (emphasis added) (quoting Flora II, 362 U.S. 149). And — dicta or not — the example of interest as a sum under the internal revenue laws that is neither tax nor penalty is indeed, as the Supreme Court stated, “obvious.” Flora II, 362 U.S. at 149.

Second, to reach this result, the Second Circuit had to substitute “assessed” for “excessive” in the phrase “any sum alleged to have been excessive . . . under the internal-revenue laws.” Pfizer III, 939 F.3d at 176 (citing section 1346(a)(1)). Thus it observes that “deficiency [i.e., underpayment] interest — not overpayment interest — fits squarely into the types of assessments that may be added to a payment that are not strictly a 'penalty' or a 'tax.” Id. at 178 (emphasis in original). That reasoning ignores that — as the government concedes here — the Code treats underpayment interest (but not overpayment interest) as part of the tax. U.S. Brief, at 51. And it also fails to account for Williams, which gives independent meaning to “assessed” and “collected” in the “internal-revenue tax” clause of section 1346(a)(1). 514 U.S. at 532. Nor does it account for why the term “assessed” is used in the “internal-revenue tax” clause of section 1346(a)(1), but not the “any sum” clause, if it is required for both.

Third, the Second Circuit's result leads to the kind of arbitrary distinction that section 1346(a)(1) was designed to eliminate. Based on whether the IRS (i) refuses to refund the overpayment and to pay the overpayment interest or (ii) refuses only to pay the overpayment interest, taxpayers with claims over $10,000 lose the benefit of litigating their cases close to home. Like the government here, the Second Circuit offers no reason (let alone evidence that Congress had such a reason) for making that distinction.

Fourth, the Second Circuit fails to consider — let alone apply — the contemporaneous understanding of the terms of section 1346(a)(1). As discussed above, there is ample evidence that, when it last revised section 1346(a)(1), Congress understood that provision to include stand-alone overpayment interest and understood the judicial interpretation of those terms to be the same. The Second Circuit failed to consider or address those understandings, though it bears no fault for that failure, because neither party brought these issues to its attention.

CONCLUSION

Accordingly, the Court should affirm the District Court's decision and remand for further proceedings on the merits.

Respectfully submitted,

Brian W. Kittle
Geoffrey M. Collins
MAYER BROWN LLP
1221 Avenue of the Americas
New York, New York 10020
(212) 506-2187
bkittle@mayerbrown.com

Timothy S. Bishop
Marjorie M. Margolies
MAYER BROWN LLP
71 S. Wacker Drive
Chicago, IL 60606
(312) 782-0600

Counsel for Plaintiff-Appellee

DECEMBER 16, 2019