                 FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

In re LORBER INDUSTRIES   OF             
CALIFORNIA,                                    No. 07-56227
                               Debtor,          BAP Nos.
                                              CC-06-01374-
                                                  BPaMK
CALIFORNIA SELF-INSURERS’
                                              CC-06-01395-
SECURITY FUND,
                        Appellant,               BPaMK
                                             Central District of
                v.                              California,
LORBER INDUSTRIES OF CALIFORNIA;             Los Angeles, 06-
OFFICIAL COMMITTEE OF UNSECURED                 10399-TD
CREDITORS,
                        Appellees.
                                         

In re LORBER INDUSTRIES   OF             
CALIFORNIA,
                               Debtor,
                                               No. 07-56309
                                                 BAP No.
LORBER INDUSTRIES OF CALIFORNIA,
                        Appellant,            CC-06-01374-
                                                 BPaMK
                v.
                                                OPINION
CALIFORNIA SELF-INSURERS’
SECURITY FUND,
                         Appellee.
                                         
             Appeal from the Ninth Circuit
               Bankruptcy Appellate Panel
Pappas, Brandt, and Markell, Bankruptcy Judges, Presiding

                               5157
5158          IN RE LORBER INDUSTRIES   OF   CALIFORNIA
                  Argued and Submitted
          December 11, 2008—Pasadena, California

                        Filed May 4, 2009

 Before: Jerome Farris and Kim McLane Wardlaw, Circuit
   Judges, and William W Schwarzer, District Judge.*

                  Opinion by Judge Schwarzer




  *The Honorable William W Schwarzer, Senior United States District
Judge for the Northern District of California, sitting by designation.
            IN RE LORBER INDUSTRIES   OF   CALIFORNIA   5159




                        COUNSEL

Daniel R. Sovocool, Louis J. Cisz, III and Marcus O. Colabi-
anchi, Thelen Reid Brown Raysman & Steiner, LLP, San
Francisco, California, the for appellant and cross-appellee.

Joseph A. Eisenberg P.C. and David M. Poitras P.C., Jeffer,
Mangels, Butler & Marmaro LLP, Los Angeles, California,
for the appellees and cross-appellants.
5160            IN RE LORBER INDUSTRIES     OF   CALIFORNIA
                                 OPINION

SCHWARZER, District Judge:

   The United States Bankruptcy Code establishes priority for
certain nondischargeable obligations owed by a debtor to a
state that qualify as an excise tax. 11 U.S.C. § 507(a)(8)(E)(ii).1
This case concerns a statutorily imposed obligation of the
debtor, Lorber Industries (“Lorber”), to the California Self-
Insurers’ Security Fund (“Fund”) for reimbursement of work-
ers’ compensation benefits that the Fund paid on Lorber’s
behalf. The issues on appeal are (1) whether the reimburse-
ment amounts owed to the Fund qualify as an excise tax; and,
if so (2) whether the transaction giving rise to the excise tax
occurred in the three years preceding Lorber’s bankruptcy
petition. We hold that the Fund’s reimbursement claim does
not qualify as an excise tax, and therefore do not address
when the transaction giving rise to the tax occurred. Although
our reasoning differs from the Bankruptcy Appellate Panel’s
(“BAP”), we affirm its holding denying priority to the Fund’s
claim.

                            I.   Background

   Lorber is a California based textile manufacturer. In com-
pliance with California law, Lorber obtained permission to
  1
   11 U.S.C. § 507 (a)(8)(E)(ii) provides in relevant part:
§ 507. Priorities
      (a) The following expenses and claims have priority in the fol-
      lowing order:
          (8) Eighth, allowed unsecured claims of governmental units,
          only to the extent that such claims are for —
            (E) an excise tax on —
               (ii) if a return is not required, a transaction occurring
               during the three years immediately preceding the date
               of the filing of the petition.
             IN RE LORBER INDUSTRIES   OF   CALIFORNIA      5161
satisfy its workers’ compensation obligations by self-insuring.
It posted a letter of credit as a security deposit with the state
to cover its obligations in the event of a default. See Cal.
Labor Code § 3700.

   Lorber filed a Chapter Eleven bankruptcy petition on Feb-
ruary 10, 2006. It later defaulted on its workers’ compensa-
tion obligations, and on April 28, 2006 the Fund assumed
Lorber’s liabilities and took over payments pursuant to Cali-
fornia Labor Code sections 3701.5 and 3743. The Fund drew
down Lorber’s letter of credit to pay the claims of injured
workers. When the line of credit was exhausted, the Fund
made additional payments to the workers, for which it was
entitled to reimbursement. See Cal. Labor Code § 3744.

   The Fund filed an objection to Lorber’s proposed Chapter
Eleven Plan, which treated the reimbursement amounts owed
to the Fund as a general unsecured claim. The Fund asserted
that its reimbursement claim is entitled to priority status under
§ 507(a)(8)(E)(ii) of the Bankruptcy Code, as an excise tax on
a transaction that occurred in the three years preceding the
bankruptcy petition.

   The bankruptcy court held that the Fund’s claim qualified
as an excise tax, but that the transaction giving rise to the tax
was Lorber’s application for self-insurance in 1992. Because
the transaction occurred more than three years prior to the
bankruptcy petition, the court denied the Fund’s claim prior-
ity.

   Both Lorber and the Fund appealed the bankruptcy court’s
decision to the BAP. Lorber argued that the reimbursement
claim did not qualify as an excise tax, and the Fund argued
that the bankruptcy court erred in determining the transaction
date. The BAP held that the claim was an excise tax and
affirmed the denial of priority, but disagreed with the bank-
ruptcy court about the date of the transaction giving rise to the
tax. The BAP held that the relevant transaction was Lorber’s
5162         IN RE LORBER INDUSTRIES   OF   CALIFORNIA
default on its self-insurance obligations. The BAP reasoned
that since Lorber defaulted post-petition, the transaction did
not occur in the three years prior to filing for bankruptcy, and
therefore the Fund’s claim was not entitled to priority status.

  The Fund timely appealed and Lorber timely cross-
appealed the BAP’s ruling. We have jurisdiction under 28
U.S.C. § 158(d).

                  II.   Standard of Review

   “[W]e independently review a bankruptcy court’s ruling on
appeal from the BAP.” Cool Fuel, Inc. v. Bd. of Equalization,
(In re Cool Fuel, Inc.) 210 F.3d 999, 1001-02 (9th Cir. 2000).
No questions of fact are at issue in this appeal; the parties dis-
agree only about whether the bankruptcy court and the BAP
correctly interpreted § 507(a)(8)(E)(ii). Thus, our review is de
novo. See Carrillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th
Cir. 2002).

                        III.   Analysis

   In deciding the issues presented by this case, we are mind-
ful of the Supreme Court’s observation that “the Bankruptcy
Code aims, in the main, to secure equal distribution among
creditors.” Howard Delivery Serv. Inc. v. Zurich Am. Ins. Co.,
547 U.S. 651, 655 (2006). The Court noted that “preferential
treatment of a class of creditors is in order only when clearly
authorized by Congress,” and that “[a]ny doubt concerning
the appropriate characterization [of a debt obligation] . . . is
best resolved in accord with the Bankruptcy’s Code equal dis-
tribution aim.” Id. at 655, 668.

A.     Excise Tax Criteria

  [1] The Bankruptcy Code does not define “excise tax,” and
federal courts do not rely on state law labels to determine
which obligations qualify. Instead, courts engage in a func-
               IN RE LORBER INDUSTRIES       OF   CALIFORNIA            5163
tional examination to determine if a government exaction is
an excise tax. See Indus. Comm’n of Ariz. v. Camilli (In re
Camilli), 94 F.3d 1330, 1331 (9th Cir. 1996); see additionally
City of New York v. Feiring, 313 U.S. 283, 285 (1941).

   [2] In County Sanitation District Number 2 v. Lorber
Industries (In re Lorber Industries of California) 675 F.2d
1062, 1066 (9th Cir. 1982), the Ninth Circuit examined which
government exactions are considered taxes under the Bank-
ruptcy Code.2 The court held that sewer district fees for the
discharge of industrial waste did not qualify. Id. at 1067. The
court expressed concern that a growing number of govern-
mental obligations and accelerating rates of taxation were
absorbing an increasingly large portion of a bankrupt’s estate,
undermining the Code’s goal of equitable distribution among
creditors. Id. at 1068. In order to effectuate the purposes of
the Bankruptcy Code and limit the number of governmental
obligations entitled to priority, the court established a four-
part test to determine if a claim qualified as an excise tax. Id.
at 1066. The court held that an excise tax is: (a) an involun-
tary pecuniary burden, regardless of name, laid upon individ-
ual or property; (b) imposed by or under the authority of the
legislature; (c) for public purposes, including the purposes of
defraying expenses of government or undertakings authorized
by it; and (d) under the police or taxing power of the state. Id.

   The Sixth Circuit considered which claims are entitled to
priority as excise taxes in the context of a state workers’ com-
pensation system in Yoder v. Ohio Bureau of Workers’ Comp.
(In re Suburban Motor Freight, Inc.), 998 F.2d 338 (6th Cir.
1993) (Suburban I), and Ohio Bureau of Workers’ Comp. v.
Yoder (In re Suburban Motor Freight, Inc.), 36 F.3d 484 (6th
Cir. 1994) (Suburban II). It concluded that Lorber’s public
purpose criterion was overly broad and “would result in too
many priorities of debts to the government over like claims of
private creditors.” In re Camilli, 94 F.3d at 1333 (analyzing
  2
   The debtor in this case is a predecessor in interest to the current debtor.
5164         IN RE LORBER INDUSTRIES   OF   CALIFORNIA
Suburban I and Suburban II). Therefore, the court refined the
Lorber test to require (1) that the pecuniary obligation be uni-
versally applicable to similarly situated entities; and (2) that
according priority treatment to a government claim not disad-
vantage private creditors with like claims. Suburban II, 36
F.3d at 488.

   Using this refined test, the Sixth Circuit held that the state’s
claim for reimbursement for payments made to claimants are
not entitled to priority as excise taxes when the debtor is self-
insured. Suburban II, 36 F.3d at 489. The court found that
other private creditors, including those who acted as sureties
for the debtor so that it could self-insure, had similar reim-
bursement claims against the debtor. Id. Therefore, the court
held, the claim was not an excise tax for bankruptcy purposes
because granting priority treatment to the government would
disadvantage private creditors with like claims. Id.

   [3] In re Camilli favorably cited the Sixth Circuit’s analy-
sis in Suburban I and II. 94 F.3d at 1334. A subsequent Ninth
Circuit case drew on the Sixth Circuit’s reasoning, and added
a fifth element to the Lorber test. George v. Uninsured
Employers Fund (In re George), 361 F.3d 1157, 1162-63 (9th
Cir. 2004). In re George held that if a private creditor simi-
larly situated to the government can be hypothesized under
the relevant statute, the claim cannot be considered an excise
tax. Id. at 1162.

   In In re George, the court found that the reimbursement
claim of the California Uninsured Employers’ Fund
(“Uninsured Fund”) was not an excise tax. 361 F.3d at 1162-
63. The court noted that under the statutes governing the
Uninsured Fund, if a worker suffers a cumulative injury, both
the subsequent employer and the Uninsured Fund potentially
have a claim against the uninsured employer for a portion of
the injury. Id. (citing Cal. Labor Code § 5500.5). Because a
private creditor, the subsequent employer, can assert a claim
against the debtor similar to that of the Uninsured Fund, the
             IN RE LORBER INDUSTRIES   OF   CALIFORNIA       5165
court held that the Fund’s claim did not qualify as an excise
tax. Id.

B.   The Fund’s claim is not an excise tax

   [4] The parties agree that the first four Lorber elements are
met. Lorber contends that because there could be private cred-
itors that are similarly situated to the government, the Fund’s
claim fails to meet the fifth element under In re George. We
agree. As with the Uninsured Fund, it is possible to hypothe-
size a similarly situated private creditor under the statutes
governing the Self-Insurer’s Fund. See In re George, 361 F.3d
at 1162. California Labor Code § 3744(a) provides that the
Fund has a right to obtain reimbursement from a defaulting
self-insurer for payments made to claimants on its behalf.
Other private creditors, however, may also have similar reim-
bursement claims against Lorber. For example, the entity that
extended the letter of credit drawn down pursuant to Califor-
nia Labor Code section 3701.5 has a claim against Lorber
related to its default on its self-insurance obligations. Addi-
tionally, Cal. Labor Code section 3744 recognizes that claim-
ants retain a cause of action against the defaulting self-insurer,
and provides that the Fund can recover as a subrogee in any
action to collect. Therefore, the Fund’s claim is “in the nature
of any public or private subrogated party’s right to recovery,”
and is not an excise tax. See In re George, 361 F.3d at 1163.

   The California Self-Insurance framework is different than
the Arizona workers’ compensation laws examined by the
court in In re Camilli, 94 F.3d at 1334, and DeRoche v. Ari-
zona Industrial Commission (In re DeRoche), 287 F.3d 751,
757 (9th Cir. 2002). In those cases, the court found that the
workers’ compensation obligations qualified as excise taxes.
As the court noted in In re George, however, the earlier hold-
ings were based on several unique, non-universal characteris-
tics of the Arizona workers’ compensation system. 361 F.2d
at 1162.
5166           IN RE LORBER INDUSTRIES     OF   CALIFORNIA
   Under the Arizona workers’ compensation framework,
there are no private creditors similarly situated to the govern-
ment. The court noted that “[the Arizona fund] carries its
statutorily-imposed burden alone. No private entity competes
with the [Arizona fund] to pay ‘insurance’ claims for which
no insurance has been bought.” In re Camilli, 94 F.3d at 1334.
Moreover, the nature of the Arizona fund’s recovery right
ensures that there is no competing private creditor. Arizona’s
statutes provide that payments made to injured employees are
“judgment[s] against the employer” that “have the same prior-
ity against the assets of the employer as claims for taxes.”
Ariz.Rev.Stat. §§ 23-907(E),-933. In contrast, the California
statutes provide that the Self-Insurers’ Fund has a claim for
reimbursement, and the Uninsured Fund has a claim for liqui-
dated damages. Cal. Labor Code §§ 3744, 3717(a). Because
a private creditor could have a claim for reimbursement or liq-
uidated damages, but only the government can have a claim
for taxes, there was no similarly situated private creditor in
DeRoche and In re Camilli that could be disadvantaged by
granting the government’s claim priority.3 See In re George,
361 F.3d at 1162.

   [5] Because we hold that the Fund’s claim does not qualify
as an excise tax, we do not reach the question of when the
transaction giving rise to the tax occurred. The BAP’s order
is AFFIRMED.




   3
     As noted in In re George, under the California statutes, a subsequent
employer could compete with the government as a creditor against an
uninsured employer. 361 F.3d at 1162-63. Additionally, as outlined above,
the sureties that extended the letter of credit and the injured worker have
similar claims to the government against a defaulting self-insured
employer.
