After filing for chapter 11 bankruptcy, Wallace's Bookstores, Inc., formerly a national, private supplier of college books, filed complaints against four public higher education institutions in Virginia. As Wallace's court appointed a liquidator , Mr. Katz sought to recover money owed by the Virginia Institutions. The Virginia Institutions argue that as a private party, Mr. Katz cannot sue the state or "arms of the state" without abrogating the states' sovereign immunity guaranteed under the Eleventh Amendment. They maintain that without consent, states cannot be sued by private parties. Mr. Katz denies being classified as a private party and argues that Article I's provisions and purpose of uniform bankruptcy laws across states are an exception. This case raises numerous public policy issues relating to funding of public, higher education institutions and debtor/creditor relationships.
Questions as Framed for the Court by the Parties
May Congress use the Article I Bankruptcy Clause, U.S. Const. art. I, ? 8, cl. 4, to abrogate the States' sovereign immunity?
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Free Exercise Clause refers to the section of the First Amendment italicized here:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof...
The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
The District constituting the seat of government of the United States shall appoint in such manner as the Congress may direct:
The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any state by reason of failure to pay any poll tax or other tax.
The Congress shall have power to enforce this article by appropriate legislation.
In case of the removal of the President from office or of his death or resignation, the Vice President shall become President.
Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress.
No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once.
The eighteenth article of amendment to the Constitution of the United States is hereby repealed.
The transportation or importation into any state, territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.