Ford Motor Co. Asks Supreme Court to Review Denial of Overpayment Interest

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It is settled that waivers of sovereign immunity must be strictly construed in favor of the government. But this Court has further admonished that this strict construction canon does not apply to substantive provisions establishing one's rights against the government. See, e.g., Gomez-Perez v. Potter, 553 U.S. 474, 491 (2008); United States v. White Mountain Apache Tribe, 537 U.S. 465, 472 (2003); United States v. Mitchell, 463 U.S. 206, 218-19 (1983). In other words, plaintiffs are not required to surmount the onerous strict construction canon twice in a suit against the government. As Justice Cardozo observed, "[t]he exemption of the sovereign from suit involves hardship enough where consent has been withheld," so the Court is "not to add to its rigor by refinement of construction where consent has been announced." Anderson v. Hayes Constr. Co., 153 N.E. 28, 29-30 (N.Y. 1926); United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 383 (1949) (quoting Anderson); Mitchell, 463 U.S. at 219 (same). Although simply stated, lower courts have struggled with these principles as the government repeatedly, and reflexively, seeks refuge in the canon when fighting claims on the merits.

This case underscores that further guidance is needed from the Court on this critical issue. It involves a claim under 26 U.S.C. § 6611 for hundreds of millions of dollars of interest on tax overpayments that Ford indisputably made. Section 6611 unambiguously creates a substantive right to overpayment interest. But the government disputes that such interest begins to accrue when the funds at issue are remitted to the IRS and placed in the U.S. Treasury. From the outset of this case, the government has conceded that 28 U.S.C. § 1346(a)(1) supplies the jurisdictional basis for this suit -- and thus the necessary waiver of sovereign immunity for Ford's overpayment-interest claim. Yet, the Sixth Circuit invoked the strict construction canon in interpreting § 6611, and then specifically anchored its ruling that Ford is not entitled to the interest at issue on its conclusion that Ford had failed to pass the strict construction hurdle. App. 20a-21a.

The Sixth Circuit's decision directly conflicts with this Court's precedents holding that the strict construction canon does not apply to separate, substantive provisions where, as here, a valid waiver of sovereign immunity exists. It improperly expands the canon from a tool to ensure that the government has actually consented to suit into a significant, unintended advantage for the government in construing the applicable substantive provisions on the merits. And it exacerbates the conflict and confusion in the lower courts on when the canon may be invoked. This Court's review is therefore warranted.

This case concerns the interest that a taxpayer is due under § 6611 on amounts that a taxpayer has overpaid to the government, an issue that frequently recurs with corporate taxpayers. Often years go by between when a corporation files and pays its income taxes, and when the IRS completes its audit and ultimately assesses the corporation's tax liability. It frequently takes even longer before the correctness of that liability is finally determined. To address this delay, Congress enacted two parallel and symmetrical provisions governing interest on tax payments, which address in complementary terms the possibility that taxes may be overpaid or underpaid up front.

Section 6611 provides that, when a taxpayer overpays his taxes, the IRS "shall" pay it interest on the overpayment from "the date of the overpayment" to a date within 30 days of the refund check. 26 U.S.C. § 6611(b)(2). Section 6601 provides that, when a taxpayer underpays his taxes, it must pay the IRS interest on the amount of underpayment from "the last date prescribed for payment" to "the date paid." Id. § 6601(a). Both provisions effectuate the use-of-money principle: taxpayers are '"compensated for the lost time-value of their money when they make overpayments of tax,'" App. 14a (citation omitted), and the IRS is compensated for the lost time-value of the government's money when taxpayers do not fully pay their taxes. And both statutory provisions express the trigger for interest in the same terms -- the date of payment. 26 U.S.C. § 6611(b)(2) ("date of the overpayment"); id. § 6601(a) ("date paid").

The IRS adopted a revenue procedure to implement this scheme. Subsection 5.01 of Revenue Procedure 84-58, as in effect at the time of the events at issue (App. 66a), states that underpayment interest "stop[s] on the date the remittance is received." Subsection 5.05 provides the general rule for overpayment interest: "[r]emittances treated as payments of tax will be treated as any other assessed amount and compound interest will be paid on any overpayment under section 6611 of the Code." Id. at 67a. It then carves out an exception: When a deposit is "posted to a taxpayer's account as a payment of tax pursuant to subparagraph 3 of section 4.02 [a unique situation not presented here], interest will run on an overpayment later determined to be due only from the date the amount was posted as a payment of tax." Id. (emphasis added).

In this case, the Sixth Circuit acknowledged that the statutory provisions for underpayment and overpayment interest are "functionally parallel," id. at 4a, and that the Revenue Procedure implements those provisions in a symmetrical fashion, id. at 15a-17a. But -- believing it was required to narrowly construe § 6611 as a waiver of sovereign immunity rather than a substantive rule on the merits -- the court embraced an illogical interpretation of these provisions that assigns the same remittance a different date of payment based on whether overpayment or underpayment interest is at stake. As a result, Ford was deprived of nearly a half billion dollars of overpayment interest due to it under any even-handed interpretation. Id. at 18a-20a.

B. Underlying Facts

The facts are undisputed. Ford seeks interest pursuant to § 6611 on taxes that Ford overpaid for the 1983-89, 1992, and 1994 tax years. After the IRS advised Ford that it had underpaid its taxes for 1983-89, Ford submitted an additional $875 million to the IRS in 1991, 1992, and 1994, as deposits pursuant to Revenue Procedure 84-58, 1984-2 C.B. 501. It is undisputed that those remittances stopped the accrual of underpayment interest under § 6601 on the date that they were received by the IRS. Ford later requested that the IRS treat the deposits as advance payments towards any additional taxes Ford might owe. Several years after that, the IRS used Ford's remittances to satisfy tax liabilities it assessed against Ford. Ultimately, however, years later still, the IRS found that Ford had overpaid its taxes -- by hundreds of millions of dollars -- for the years at issue, refunded the overpayments to Ford, and paid Ford some of the overpayment interest it claimed under § 6611 but not the overpayment interest at issue here.

The parties disputed when the overpayment interest began to accrue. Ford claimed that, under § 6611 and Revenue Procedure 84-58, interest began to accrue on the date that Ford first remitted the funds to the IRS. After all, the funds went directly to the U.S. Treasury and the government had complete use of the funds from the date of remittance on. Moreover, the remittances stopped the accrual of underpayment interest (§ 6601) on later assessed taxes as soon as the remittances were received, so it follows that overpayment interest (§ 6611) -- which operates based on the same date-of-payment trigger -- would begin accruing at the same time. Contradicting its own Revenue Procedure and prior pronouncements, however, the IRS paid interest only from the date that Ford told the IRS to treat the deposits as advance payments, not from the date Ford gave the funds to the IRS. Because of the large sum Ford overpaid, the difference in interest amounts to over $470 million.

C. District Court Proceedings

Ford filed suit against the United States in the U.S. District Court for the Eastern District of Michigan, seeking the overpayment interest that the IRS had refused to pay. Ford's complaint invoked the district court's jurisdiction under, inter alia, 28 U.S.C. § 1346(a)(1), which grants district courts jurisdiction over claims against the United States for the recovery of erroneously assessed taxes "or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws." Id.; see Complaint for Interest and Jury Demand ¶ 3, Ford Motor Co. v. United States, No. 08-cv-12960 (E.D. Mich. filed July 10, 2008). In its Answer, the government did not raise a jurisdictional sovereign immunity defense but rather agreed with Ford that jurisdiction was proper under § 1346(a)(1). United States' Answer to Complaint ¶ 3, Ford Motor Co. v. United States, No. 08-12960 (E.D. Mich. filed Dec. 19, 2008).

The district court granted the government's motion for judgment on the pleadings, ruling -- on the merits -- that Ford was not entitled to overpayment interest from the dates that it remitted the deposits to the dates the deposits were converted to payments. App. 37a. The court recognized that there was "merit" to Ford's statutory interpretation and "d[id] not believe the Government addresse[d] sufficiently" § 5.05 of Revenue Procedure 84-58, but the court nevertheless found reasonable the government's interpretation of § 6611 and concluded that it was obliged to defer to that interpretation. Id. at 31a-37a. The government has since abandoned any argument for deference.

D. Sixth Circuit Proceedings

The Sixth Circuit affirmed. On appeal, both the government and Ford recognized in their briefs that § 1346(a)(1) supplied subject-matter jurisdiction in the case. See Ford Br. at 2; Govt. Br. at 1. Although the court of appeals recognized that § 1346(a)(1) provides a waiver of sovereign immunity (which the government has conceded applies to this case), the court dismissed the relevance of that provision on the ground that it was a "different provision than the one at issue." App. 13a-14a. Instead, the court treated § 6611 -- the substantive provision governing when "[i]nterest shall be allowed and paid upon any overpayment," 26 U.S.C. § 6611(a) -- as the waiver of sovereign immunity and repeatedly applied the canon of strict construction to that provision. As we explain later, that distinction was grounded in the court's failure to distinguish between a (strictly construed) waiver of sovereign immunity and a separate, substantive provision that should be interpreted in a straightforward fashion once the valid waiver of sovereign immunity is identified.

The court grounded its merits decision on the strict construction canon. At the outset, the court stated that "when interpreting § 6611, we bear foremost in mind that Ford's challenge involves construing a waiver of sovereign immunity," and that it was "bound to 'strictly construe[ ]' the waiver" in favor of the government. App. 7a (citation omitted). The court then proceeded to recognize that Ford's interpretation of § 6611 was "strong" (id. at 11a); that Ford's interpretation of Revenue Procedure 84-58 was "superior" to the IRS's "strained" reading of that provision (id. at 17a); and that the government's position was "contradicted" by a prior IRS pronouncement (id. at 18a n.6). But ultimately, the court nevertheless sided with the government's position on that ground that Ford had not overcome the strict construction canon. Id. at 20a-21a.

In a footnote, the court observed that "the Supreme Court has arguably softened its use of the strict construction principle since the 1990s," "when a party sought to apply the strict construction principle to a statute or section of a statute entirely separate from the one that supplied the waiver of sovereign immunity itself." Id. at 9a n.3 (citing Gomez-Perez and White Mountain). But the court concluded that, "[h]ere, § 6611 itself" is the waiver of sovereign immunity, so "the strict construction principle applies." Id.

The court denied rehearing. Id. at 40a-41a.

In its broadest sense, the question presented implicates what "sovereign immunity" means, and the interests that this doctrine was designed to protect.

The sovereign immunity doctrine is not explicit in the Constitution, but it is historically rooted in the English common law concept that the King could not be sued without his consent. See, e.g., Aaron Tang, Double Immunity, 65 Stan. L. Rev. 279, 286 (2013); Gregory C. Sisk, A Primer on the Doctrine of Federal Sovereign Immunity, 58 Okla. L. Rev. 439, 443 (2005). As Alexander Hamilton wrote in The Federalist No. 81, "[i]t is inherent in the nature of sovereignty not to be amenable to the suit of an individual without its consent." Caleb Nelson, Sovereign Immunity As A Doctrine of Personal Jurisdiction, 115 Harv. L. Rev. 1559, 1575 (2002). In other words, an unconsenting sovereign "could not be commanded to appear or otherwise brought within a court's power." Id. at 1576.

This Court first recognized the doctrine in 1821 when Chief Justice Marshall explained that "[t]he universally received opinion is, that no suit can be commenced or prosecuted against the United States." Cohens v. Virginia, 19 U.S. (6 Wheat.) 264, 411-12 (1821). That view is consistent with the Court's more recent explanations. "Sovereign immunity is jurisdictional in nature." FDIC v. Meyer, 510 U.S. 471, 475 (1994). It establishes that the United States "is immune from suit save as it consents to be sued," and that "the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit." United States v. Sherwood, 312 U.S. 584, 586-87 (1941); Hercules, Inc. v. United States, 516 U.S. 417, 422-23 (1996) (same). In other words, sovereign immunity is an immunity from suit, and a waiver of sovereign immunity is "a consent to be sued." United States v. Bormes, 133 S. Ct. 12, 16 (2012) (emphasis added).

As a "necessary corollary" to the principle of sovereign immunity, Block v. North Dakota ex rel. Board of University & School Lands, 461 U.S. 273, 287 (1983), the Court has long applied the canon "that the Government's consent to be sued 'must be construed strictly in favor of the sovereign.'" United States v. Nordic Vill., Inc., 503 U.S. 30, 34 (1992) (quoting McMahon v. United States, 342 U.S. 25, 27 (1951)); see also The Davis, 77 U.S. (10 Wall.) 15, 19 (1870). Accordingly, sovereign immunity "shields the United States from suit absent a consent to be sued that is 'unequivocally expressed.'" Bormes, 133 S. Ct. at 16 (quoting Nordic Vill., 503 U.S. at 33-34).

B. This Court Repeatedly Has Made Clear That The Strict Construction Canon Does Not Apply To Separate, Substantive Provisions

Although the Court has held that waivers of sovereign immunity must be strictly construed, it has also long recognized that "the exemption of the sovereign from suit involves hardship enough where consent has been withheld," so courts are '"not to add to its rigor by refinement of construction where consent has been announced.'" United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 383 (1949) (citation omitted). Accordingly, the Court has repeatedly held that the strict construction canon applies only to the waiver of sovereign immunity -- not to separate provisions that define the substantive rights at issue.

In United States v. Mitchell, 463 U.S. 206 (1983), the plaintiff filed suit in the Court of Federal Claims pursuant to the Tucker Act, which provides jurisdiction for claims against the United States "founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department," 28 U.S.C. § 1491(a)(1). The Court explained that the Tucker Act is a "clear" waiver of sovereign immunity -- or "consent to suit for claims founded upon statutes or regulations that create substantive rights to money damages." 463 U.S. at 218. "Because the Tucker Act supplies a waiver of immunity for claims of this nature, the separate statutes and regulations need not provide a second waiver of sovereign immunity, nor need they be construed in the manner appropriate to waivers of sovereign immunity." Id. at 218-19. Instead, courts must look at the "analytically distinct" question whether the "source of substantive law can fairly be interpreted as mandating compensation by the Federal Government for the damages sustained." Id. at 218.

The Court further emphasized the distinction between waivers of sovereign immunity and substantive rights in United States v. Navajo Nation, 537 U.S. 488 (2003). The Court explained that the Indian Tucker Act confers jurisdiction upon the Court of Federal Claims and the plaintiff must "invoke a rights-creating source of substantive law that 'can fairly be interpreted as mandating compensation by the Federal Government for the damages sustained.'" Id. at 503 (citation omitted)). As in Mitchell, the Court emphasized that, because the Indian Tucker Act provides the necessary consent to suit, the "rights creating statute or regulation need not contain a second waiver of sovereign immunity." Id. (citation and internal quotations marks omitted).

The Court again emphasized the distinction in United States v. White Mountain Apache, 537 U.S. 465 (2003). The Court noted at the outset that "[j]urisdiction over any suit against the Government requires a clear statement from the United States waiving sovereign immunity," and also "a claim falling within the terms of the waiver." Id. at 472. The Court reiterated that "[t]he terms of consent to be sued may not be inferred, but must be 'unequivocally expressed."' Id. (citation omitted). But the Court also stressed that the interpretation of the existence or scope of the substantive right at issue was different. As the Court explained, a statute creates a substantive right "capable of grounding a claim within the waiver of sovereign immunity [under the Indian Tucker Act] if, but only if, it 'can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained.'" Id. (quoting Mitchell, 463 U.S. at 217). But that standard, the Court held, is "demonstrably lower than the standard for the initial waiver of sovereign immunity." Id.

Importantly, the Court has also recognized the distinction between substantive rights and waivers of sovereign immunity outside of the Tucker Act context. In Gomez-Perez v. Potter, the plaintiff brought a retaliation suit under the Age Discrimination in Employment Act of 1967. 553 U.S. 474 (2008). The Court identified 29 U.S.C. § 633a(c) -- which authorizes individuals to bring "Civil actions" in federal court for violations of § 633a(a) -- as the waiver of sovereign immunity from suit that must satisfy the strict construction rule. 553 U.S. at 491. By contrast, the Court explained, § 633a(a) -- which states that federal personnel actions "shall be made free from any discrimination based on age" is "a substantive provision." Id. The Court then explained that the fact "that the waiver in § 633a(c) applies to § 633a(a) claims does not mean that § 633a(a) must surmount the same high hurdle as § 633a(c)." Id. In doing so, the Court again relied on the Mitchell rule: "where one statutory provision unequivocally provides for a waiver of sovereign immunity to enforce a separate statutory provision, that latter provision 'need not . . . be construed in the manner appropriate to waivers of sovereign immunity.'" Id. (citation omitted). Gomez-Perez therefore refutes any argument that the Mitchell line of cases is confined to Tucker Act cases.

And just last year, in Bormes, the Court likewise held that the Little Tucker Act, 28 U.S.C. § 1346(a)(2), satisfied the strict construction canon for waivers of sovereign immunity because it "unequivocally provides the Federal Government's consent to suit for certain money-damages claims." 133 S. Ct. at 16. Like the Tucker Act, the Court explained, the Little Tucker Act is a '"jurisdictional provision[ ] that operate[s] to waive sovereign immunity for claims premised on other sources of law,'" and a separate statute creates the '"substantive rights'" to be enforced in exercising that jurisdiction. Id. at 16-17 (citation omitted).

In short, the Court has repeatedly held that the strict construction canon applies only to the waiver of sovereign immunity -- the jurisdictional provision that provides the government's consent to be sued. Conversely, the Court has emphasized, the canon does not apply to the separate substantive provision that governs the merits of the underlying dispute. That paradigm is built on the understanding that the strict construction canon is "hardship enough" when it comes to establishing the government's consent to be sued. Anderson v. Hayes Constr. Co., 153 N.E. 28, 29-30 (N.Y. 1926) (Cardozo, J.). And it preserves the historical role of sovereign immunity -- as a means of ensuring that the sovereign is not made to answer for claims without having consented to suit.

C. The Sixth Circuit's Decision Directly Conflicts With This Court's Teachings

This case fits hand-in-glove with the paradigm recognized by this Court's cases, with one statutory provision waiving sovereign immunity from suit (§ 1346(a)(1)) and another (§ 6611) conferring the substantive right underlying the claims asserted. Yet, in direct conflict with this Court's precedents, the Sixth Circuit invoked the strict construction canon to construe not the waiver of sovereign immunity, but instead the separate, substantive provision. That error stacked the deck against the taxpayer in construing the statutory provision at issue on the merits, and undeniably resulted in the Sixth Circuit's disposition rejecting Ford's overpayment-interest claim.

Section 1346(a)(1) is a prototypical waiver of sovereign immunity because it allows suit against the United States to enforce particular claims or rights. This Court and others have repeatedly recognized that § 1346(a)(1) is a waiver of sovereign immunity. See United States v. Williams, 514 U.S. 527, 530-31 (1995); Dunn & Black, P.S. v. United States, 492 F.3d 1084, 1088 (9th Cir. 2007); Roberts v. United States, 242 F.3d 1065, 1067 (Fed. Cir. 2001); Begner v. United States, 428 F.3d 998, 1002 (11th Cir. 2005); E.W. Scripps Co. v. United States, 420 F.3d 589, 498 (6th Cir. 2005). In Williams, the Court explained that § 1346(a)(1) "waives the Government's sovereign immunity from suit by authorizing federal courts to adjudicate" certain claims. 514 U.S. at 530. Indeed, § 1346(a)(1) was initially adopted as an amendment to the Tucker Act. See Flora v. United States, 362 U.S. 145, 151-52 & n.8 (1960). And just as the Court recognized for the Tucker Act itself, "by giving the Court of Claims" and the district courts "jurisdiction over specified types of claims against the United States," § 1346(a)(1) "constitutes a waiver of sovereign immunity with respect to those claims." Mitchell, 463 U.S. at 212.

Overpayment interest claims under § 6611 clearly fall within § 1346(a)(1)'s waiver of sovereign immunity. Section 1346(a)(1) allows for claims for the recovery of "any sum alleged to have been excessive . . . under the internal-revenue laws." 28 U.S.C. § 1346(a)(1). This Court explained in Flora that "[o]ne obvious example of such a 'sum'" fitting within § 1346(a)(1)'s "'any sum"' provision "is interest." 362 U.S. at 149; see also Scripps, 420 F.3d at 597-98 ("through the 'any sum' provision of § 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"). The government acknowledged from the outset of this case that the district court had jurisdiction over Ford's § 6611 claim under § 1346(a)(1). Supra at 7. And the Sixth Circuit decided this case on the basis of that premise, which was embedded in the court's own case law. Scripps, 420 F.3d at 596-97.¹

Section 6611, in turn, creates the substantive right underlying Ford's claims. Unlike § 1346(a)(1), § 6611 does not speak of opening the courts to claims or jurisdiction. Instead, it creates a substantive right to overpayment interest, providing that "[i]nterest shall be allowed and paid" on tax overpayments. 26 U.S.C. § 6611(a). In that regard, § 6611 is directly analogous to the substantive provision in Gomez-Perez, which provided that federal personnel decisions '"shall be made free from any discrimination based on age.'" 553 U.S. at 479 (quoting 29 U.S.C. § 633a(a)). Section 6611 also specifies the rate at which interest shall be paid, § 6611(a), and the period of time for which it will be paid, § 6611(b)(2). In other words, it governs the merits of Ford's interest claim. Indeed, the district court rejected Ford's claim on the merits when it granted the government's motion for judgment on the pleadings, which presented only merits arguments. And the Sixth Circuit affirmed that merits ruling, rather than dismissing for lack of jurisdiction on the ground that the United States was immune from suit.

This case thus presents the same situation presented by the Mitchell line of cases: one statute is a "jurisdictional provision[ ] that operate[s] to waive sovereign immunity for claims premised on other sources of law" and another statute creates the "substantive rights" to be enforced thereunder. United States v. Navajo Nation, 556 U.S. 287, 290 (2009). As explained, in that situation, the Court has repeatedly held that the strict construction canon applies only to the waiver of sovereign immunity, not the separate substantive provision. The Sixth Circuit's decision directly contravenes this Court's decisions -- both in failing to appreciate the distinction between the waiver of sovereign immunity (§ 1346(a)(1)) and the separate, substantive provision creating the rights underlying Ford's claims (§ 6611), and in holding that the latter provision must meet the "same high hurdle" as the former. Gomez-Perez, 553 U.S. at 491.

1. One of the central errors committed by the Sixth Circuit below was failing to recognize what constitutes a waiver of sovereign immunity and what constitutes a substantive provision -- which is the on/off switch for applying the canon. There is a broader conflict and confusion on this issue. For example, in Federal National Mortgage Ass'n v. United States, 379 F.3d 1303, 1305 (Fed. Cir. 2004), the taxpayer brought a claim for interest under the so-called "Special Rule" (26 U.S.C. § 6621(d)), arguing that a zero net interest rate applied to overlapping periods in which the taxpayer owed underpayment interest and the IRS owed overpayment interest. The Federal Circuit applied the strict construction canon to the Special Rule, stating that it "authorizes claims against the government to recover interest paid, if the taxpayer satisfies certain specified conditions." 379 F.3d at 1310. But that was clearly wrong. The Special Rule is a substantive provision, not a waiver of sovereign immunity from suit. The court failed even to discuss the actual waiver of sovereign immunity -- the statutory provision that gave the Court of Federal Claims jurisdiction over the claim at issue, 28 U.S.C. § 1491(a) (the Tucker Act).

In direct conflict with the Federal Circuit's holding, the Second Circuit (correctly) declined to apply the strict construction canon to the Special Rule on the ground that it is not a waiver of sovereign immunity. Exxon Mobil Corp. v. Commissioner, 689 F.3d 191, 201 (2d Cir. 2012). The court explained that the Special Rule "does not create jurisdiction or authorize claims against the United States," but instead "merely allows for the interest-netting provision of section 6621(d) to be applied retrospectively to claims raised under section 6611(a)." Id. at 201-02. Relying on Gomez-Perez, White Mountain, and Mitchell, the court recognized that the strict construction canon applies only to the waiver of sovereign immunity, not to the separate provision that governs the merits of the dispute. Id. at 202. Yet the court still erred by treating § 6611 as a waiver of sovereign immunity (when, for the reasons discussed above, it plainly is not), and the court failed to recognize that the actual waiver of sovereign immunity was the statutory provision that granted the lower tribunal (the Tax Court) jurisdiction over the claims at issue. See id.²

Not only do the Federal Circuit's and the Second Circuit's holdings directly conflict, but the courts both committed the same error that the Sixth Circuit committed here -- all three courts treated a substantive provision as a waiver of sovereign immunity. In Federal National Mortgage, the Federal Circuit treated the Special Rule as a waiver of immunity, and in this case and Exxon Mobil, the Sixth Circuit and Second Circuit treated § 6611 as a waiver of sovereign immunity. In order to properly apply the Mitchell rule, the lower courts need further guidance from this Court on what constitutes a waiver of sovereign immunity and what constitutes a substantive provision.

2. Lower courts are also confused and divided on what can be characterized as an issue of the "scope" of a waiver of sovereign immunity, which also affects when to apply the strict construction canon. This Court has stated that the strict construction canon applies to issues of the "scope" of the waiver of sovereign immunity, see, e.g., Lane v. Pena, 518 U.S. 187, 192 (1996), but the application of that rule has caused confusion in the lower courts and tension in this Court's cases on whether the canon applies to an issue.

For example, the Ninth Circuit and the Federal Circuit have held that the strict construction canon does not apply when determining the rate at which the government pays overpayment interest. The Federal Circuit explained that the sovereign immunity canon was "irrelevant" because "the dispute concerns not whether interest runs against the United States but how the interest is to be calculated." J.F. Shea Co. v. United States, 754 F.2d 338, 340 (Fed. Cir. 1985). The Ninth Circuit similarly explained that § 6621(a)(1) "is not a waiver of immunity from an award of interest," but instead "governs the manner in which the interest available on . . . a wrongful levy judgment is calculated." Steven N.S. Cheung, Inc. v. United States, 545 F.3d 695, 699 n.9 (9th Cir. 2008) (emphasis added). But the issue in these cases also could have been characterized as an issue of the scope of the waiver -- e.g., whether the government waived sovereign immunity for interest above a certain amount.

Moreover, other courts have characterized issues relating to the calculation of interest as questions of "scope" and applied the strict construction canon to those issues. Here, for example, the Sixth Circuit stated that the date from which interest runs is a question of "scope" to which the canon applies (after erroneously concluding that the canon applied to § 6611 at all). App. 8a & n.2. Similarly, the Federal Circuit held that the canon applies in determining the applicability of the Special Rule because the issue is "whether" interest runs against the United States. Federal National Mortgage, 379 F.3d at 1310. But the issues in these cases could just as easily have been phrased in terms of calculating the amount of interest due, which the J.F. Shea and Steven N.S. Cheung courts held does not trigger the canon.

It is hard to blame these courts for the confusion, given the tension in this Court's own case law about what qualifies as an issue of the scope of a waiver of sovereign immunity. Finding that the issues were not "scope" issues, the Court has often held that the canon does not apply when construing exceptions to the Federal Tort Claims Act waiver of sovereign immunity, see, e.g., Dolan v. United States Postal Serv., 546 U.S. 481, 484-85 (2006), or when construing time limits in a waiver of sovereign immunity. See Scarborough v. Principi, 541 U.S. 401,419-23 (2004).

But in other cases, the Court has held that the strict construction canon applies to the issue of what remedy is authorized because that is an issue of the "scope" of the waiver. See FAA v. Cooper, 132 S. Ct. at 1448 (whether the Privacy Act's authorization of suits for '"actual damages'" includes emotional distress damages "concerns the scope of the waiver"); Lane, 518 U.S. at 192-93 (whether § 504 of the Rehabilitation Act waives immunity from monetary claims is an issue of scope); Nordic Vill., 503 U.S. at 34-36 (1992) (applying strict construction canon to question whether 11 U.S.C. § 106(c) of the Bankruptcy Code's waiver of immunity from suit includes suits for money damages); cf. Sossamon v. Texas, 131 S. Ct. 1651, 1660 (2011) (whether the Religious Land Use and Institutionalized Persons Act of 2000's waiver of sovereign immunity for "appropriate relief" is an issue of scope).

One scholar recently criticized this line of cases as improperly imposing "double immunity," noting that before Nordic Village the Court applied the strict construction canon only "to determine whether a particular lawsuit was intended to be within the scope of a waiver of immunity, but not to define the remedial scope of the waiver." Tang, Double Immunity, 65 Stan. L. Rev. at 317. As he explained, if the "scope" of the waiver "extends beyond the question of whether a particular suit is authorized and reaches to questions of remedies," there is no logical stopping-point. Id.

Indeed, this Court's treatment of the question of remedy as an issue of "scope" that is subject to the strict construction canon is in tension with the Mitchell line of cases. In Mitchell, the Court explained that the Tucker Act waives sovereign immunity "for claims founded upon statutes or regulations that create substantive rights to money damages," but the issue of whether a statute falls within that category -- i.e., whether a statute creates a substantive right to money damages -- is "analytically distinct" and the canon does not apply to that issue. 463 U.S. at 218. The question whether a substantive claim fits within the waiver could easily have been framed as an issue of the "scope" of the waiver to which the canon applies.

This case directly implicates the confusion in the lower courts and this Court's cases over which issues qualify as issues of the "scope" of a waiver of sovereign immunity. Here, the Sixth Circuit improperly treated the "date of the overpayment" that triggers interest in § 6611(b)(2) as governing the "scope" of the waiver, when it should have recognized that § 6611 is a substantive provision -- separate from the waiver of immunity altogether. App. 8a & n.2. If the court of appeals had properly appreciated that § 6611 is not a waiver of sovereign immunity from suit at all, or that issues concerning the "scope" of waivers of immunity do not extend beyond the consent to suit itself, it might have properly concluded that the strict construction canon does not apply to the "date of the overpayment" in § 6611(b)(2). Further guidance is needed from this Court to preserve the distinction stressed in the Mitchell line of cases between waivers of sovereign immunity and separate substantive provisions.

3. As this case underscores, the courts of appeals are also confused and in conflict about when the strict construction canon applies to interest provisions, and whether the rule that the canon does not apply to separate, substantive provisions is any different when the separate provision creates a right to interest. This confusion has been exacerbated by the government's aggressive reading of this Court's decision in Library of Congress v. Shaw, 478 U.S. 310, 314 (1986).

In Shaw, a Title VII case, this Court held that the United States is immune from claims for prejudgment interest on damages, absent a waiver "separate from a general waiver of immunity to suit." Id. at 314. The Court explained that this requirement "reflects the historical view that interest is an element of damages separate from damages on the substantive claim." Id. (citing Charles T. McCormick, Handbook on the Law of Damages § 50 (1935)). But in this case -- which involves a claim for overpayment interest on taxes, not prejudgment interest on damages -- the Sixth Circuit effectively transformed Shaw into a rule requiring double immunity for interest claims. Here, § 1346(a)(1) clearly provides a waiver of immunity from suit for interest claims -- separate from the general waiver of immunity from suit for refund claims. See supra n.1. Yet the Sixth Circuit still applied the strict construction canon in construing the substantive provision creating a right to overpayment interest.

As the Solicitor General has recently recognized, the courts of appeals are divided on the related issue of whether a party may recover interest on seized property in forfeiture actions, when the relevant statute does not unambiguously provide for such interest. See U.S. Br. in Opp., Craig v. United States, No. 12-1046 at 7 (filed July 5, 2013) ("disagreement exists among the circuits on whether sovereign immunity bars recovery of interest on seized money"); id. at 11 (same); Petition for Writ of Certiorari, Craig v. United States, No. 12-1046 (filed Feb. 25, 2013) (presenting issue); United States v. Craig, 694 F.3d 509, 513 (3d Cir. 2012) (discussing conflict). Some circuits have held that interest is part of the res that the government must return and have distinguished Shaw as governing only pre-judgment interest on damages awards.³ Other circuits have held that interest on seized property is barred by Shaw because there is no clear waiver of sovereign immunity for interest.⁴

In this case, Shaw presents no obstacle because the "any sum" provision of § 1346(a)(1) provides any necessary waiver of immunity on interest claims in particular -- and the case was litigated below on the undisputed premise that § 1346(a)(1) supplied the United States' consent to be sued for overpayment interest. See supra n.1. Holding that Shaw obligates a separate, substantive interest provision (like § 6611) to surmount the strict construction canon in these circumstances would contravene this Court's later cases, such as Gomez-Perez, which teach that the strict construction canon does not extend beyond the waiver of sovereign immunity to such substantive provisions.

But in any event, even if the "any sum" provision of § 1346(a)(1) did not apply here, Shaw should not govern under the rationale of the circuits that have distinguished Shaw in the seized property cases. Overpayment interest is directly analogous to interest that the government accrues during its possession of seized property because both forms of interest effectuate the use-of-money principle rather than compensating the plaintiff for an injury (like prejudgment interest). Moreover, just like interest on seized property, overpayment interest does not implicate the unique history underlying the Shaw rule concerning the treatment of prejudgment interest on damages. Accordingly, even without the separate waiver for interest in § 1346(a)(1), Shaw would not compel the result reached by the Sixth Circuit here. This Court's review is also warranted to clarify whether Shaw applies to interest claims -- like those for overpayment interest on taxes, or interest on seized property -- that do not involve pre-judgment interest as a component of damages for a substantive injury.

In short, the application of the strict construction canon has continued to confound the lower courts. That confusion is in full display in the decision below. This Court's guidance is sorely needed.

The issue is not going away. The government reflexively asserts -- and over asserts -- the canon of strict construction when it is sued. The Court has had to rein in the government's use of the canon in recent years. See, e.g., Scarborough, 541 U.S. at 419-21; Dolan, 546 U.S. at 485; Gomez-Perez, 553 U.S. at 491. Twice this year, Justices questioned the government's reliance on the canon during oral arguments. See Transcript of Oral Argument at 26-29, Levin v. United States, 133 S. Ct. 1224 (2013) (No. 11-1351) (Chief Justice questioning counsel for the government on why the government should get the benefit of the canon beyond the "waiver of sovereign immunity in the first instance"); Transcript of Oral Argument at 14-15, Sebilus v. Cloer, 133 S. Ct. 1886 (2013) (No. 12-236) (Justice Scalia stating that once the Court finds a clear waiver of sovereign immunity "I don't think we nitpick the following language to unrealistically narrow it as much as possible"; "[o]nce it's clear that [Congress] has agreed to be sued, I think we just interpret the language reasonabl[y]."). Despite this Court's decisions, the government still asserts the strict construction canon in construing separate, substantive provisions. And in the lower courts at least, the government frequently gets away with it, giving the government an unintended advantage on the merits.

This case presents an ideal vehicle for the Court to review the proper application of the canon. The Sixth Circuit's decision holding that Ford is not entitled to the overpayment interest from the date that Ford remitted funds to the U.S. treasury is grounded on the court's belief that the strict construction canon applies.

The court had the canon "foremost in mind" (App. 7a), and, after finding that § 6611 was ambiguous, decided the case on the ground that "Congress has 'unequivocally expressed' its waiver of sovereign immunity for claims to overpayment interest accruing between the date a deposit in the nature of a cash bond was remitted and the date that deposit was converted to an advance tax payment" (id. at 12a-13a). At every key step -- in framing the issue, in interpreting the statute, in interpreting the Revenue Procedure, and in announcing its holding -- the Sixth Circuit made clear that its decision was controlled by the canon.

On a level playing field, it is clear that Ford is entitled to judgment on its overpayment-interest claim. The Sixth Circuit itself recognized that Ford made a "strong case" for interpreting the provisions governing overpayment interest (§ 6611) and underpayment interest (§ 6601) symmetrically -- explaining that the provisions are "functionally parallel," effectuate the use-of-money principle, and use "very similar language." App. 4a, 11a, 14a. The government maintains that the "date of the overpayment" in § 6611(b)(1) should be interpreted differently than "the date paid" in § 6601, so that the same remittance has a different date of payment depending on whether the payment eventually triggers underpayment or overpayment interest.⁵ That position is illogical and flouts the rule that the same or similar language in a statute is presumed to have the same meaning.⁶

The government's position is also contradicted by the IRS's own revenue procedure. As explained, the operative provisions of Revenue Procedure 84-58 -- like the statutory provisions it implements -- create a symmetrical scheme in which remittances operate in the same fashion for both underpayment interest and overpayment interest, except in one narrow situation carved out in subsection 5.05. Supra at 4-5. As the Sixth Circuit recognized, the fact that overpayment interest accrues from the date that a remittance is designated an advance payment under the exception, leads to the common-sense conclusion that the general rule is that overpayment interest accrues from the date of the remittance. Cf. TRW Inc. v. Andrews, 534 U.S. 19, 28-29 (2001) (explaining that "converting the exception into the rule" would "distort" a statute's text); see App. 17a-18a; id. at 31a-32a & n.3. The government's contrary interpretation is, as the Sixth Circuit itself gingerly put it, "strained." Id. at 17a. In short, the government has yet to come up with a plausible response to its own revenue procedure.⁷

The IRS invited taxpayers to remit funds under the terms of Revenue Procedure 84-58. Here, Ford remitted more than $800 million to the IRS with specific reference to, and reliance on, the Revenue Procedure, not to mention the statutory provisions discussed above. Under the bedrock time-value-of money principle interest should accrue from the date that the IRS had the use of Ford's money-indisputably, the date the remittances were made. And as discussed, ordinary principles of statutory interpretation compel the same conclusion under § 6611. If there were any doubt, the tiebreaker would be the longstanding canon that -- in construing the tax laws -- "the doubt must be resolved against the Government and in favor of the taxpayer." United States v. Merriam, 263 U.S. 179, 188 (1923). Only by subjecting § 6611 to the exacting strict construction canon reserved for waivers of immunity -- in direct conflict with this Court's precedent -- did the Sixth Circuit reach the opposite conclusion, depriving Ford of over $470 million in overpayment interest.

Unfortunately, that decision is not an outlier. As discussed, lower courts frequently misconceive, and misapply, the strict construction canon for waivers of sovereign immunity. This Court's intervention is needed to address this important threshold issue.

² By contrast, in Northern States Power Co. v. United States, the Eighth Circuit construed 26 U.S.C. § 6601(f), which -- like the Special Rule -- provides for interest netting, without mentioning sovereign immunity or the strict construction canon. 73 F.3d 764, 766 (8th Cir.), cert. denied, 519 U.S. 862 (1996).

³See Carvajal v. United States, 521 F.3d 1242, 1245, 1248-49 (9th Cir. 2008); United States v. 1461 W. 42nd St., 251 F.3d 1329, 1338 (11th Cir. 2001); United States v. $515,060.42 in U.S. Currency, 152 F.3d 491,504 (6th Cir. 1998).

⁴See Craig, 694 F.3d at 512; Larson v. United States, 274 F.3d 643, 647-48 (1st Cir. 2001); United States v. $30,006.25 in U.S. Currency, 236 F.3d 610, 613-14 (10th Cir. 2000); United States v. $7,990.00 in U.S. Currency, 170 F.3d 843, 845 (8th Cir. 1999); Ikelionwu v. United States, 150 F.3d 233, 239 (2d Cir. 1998).

⁵ In fact, when the IRS eventually assessed the taxes, it treated Ford's deposit remittances as payments as of their remittance dates to calculate underpayment interest. Later, after Ford succeeded on refund claims, the IRS treated the very same remittances as payments only as of the later conversion date to calculate overpayment interest.

⁶ Relying on Busser v. United States, 130 F.2d 537, 539 (3d Cir. 1942), the Sixth Circuit stated that the ordinary meaning of "payment" supported the government's position, reasoning that there can be no overpayment until there is a payment of a tax obligation. App. 10a-11a. But as the Solicitor General has twice recognized, Congress overruled Busser by enacting 26 U.S.C. § 6401(c), which provides that "[a]n amount paid as tax shall not be considered not to constitute an overpayment solely by reason of the fact that there was no tax liability in respect of which such amount was paid." See U.S. Br. 21-22, Baral v. United States, 528 U.S. 431 (1999), available at 1999 WL 1146867; U.S. Br. 31-34, Rosenman v. United States, 323 U.S. 658 (1944), available at 1944 WL 42253.

⁷ As the Sixth Circuit recognized, the government's interpretation is also "contradicted" by prior IRS statements on the meaning of § 6611. See App. 18a n.6; see also Ford Pet. for Reh'g 14-15.