As the Supreme Court enters the second month of its 2016 Term, the Senate’s refusal to consider a replacement to fill the vacancy left by Justice Scalia’s passing continues to loom prominently in the background. Perhaps fearing the possibility of tie-votes, the eight-member Court has filled its calendar with procedural disputes that may belie normal ideological divisions while conspicuously leaving some of the more hotly controversial cases in which it has granted certiorari off the argument schedule. The petition in Trinity Lutheran Church of Columbia, Inc. v. Pauley, for instance, was granted way back in January during the last conference in which Justice Scalia participated. Yet the contentious religious discrimination case remains unscheduled, languishing in legal limbo despite ample unfilled space in the Court’s calendar.
Instead, the Court’s November docket is largely filled with arguments about the technical functioning of laws that are unlikely to catch the attention of those outside the relevant legal communities. Whether it is the validity of an administrative exhaustion requirement for a disability discrimination suit in Fry v. Napoleon Community Schools, the consequence of breaking a court sealing order in a False Claims suit in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby, or the contours of common law defenses to patent infringement in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, the Court’s November arguments are thoroughly couched in legal minutia.
This is not to say that these are low-stake disputes; on the contrary, many of the cases will have vast implications. Star Athletica, LLC v. Varsity Brands, Inc. may very well revolutionize intellectual property within the fashion industry, for example. Nor are the cases universally dry in terms of subject matter. Venezuela v. Helmerich & Payne International centers on the nationalization of an American oil company’s assets by the government of Venezuala, and Lynch v. Morales-Santana involves both immigration and gender discrimination—topics central to a contemporaneous presidential election that has seen one of the most contentious campaign seasons in recent memory.
If observers are correct regarding the substantial impact of the unfilled seat upon the Court’s calendar, however, the Court may soon have its chance to respond. On November 7, it will hear arguments in National Labor Relations Board v. SW General, Inc., a case that tests the President’s ability to make temporary appointments to important executive offices while he waits for Congress to confirm a nominee. While the case won’t directly affect vacancies within the judiciary, one is hard pressed to imagine a more suitable vehicle if the Court wishes to convey a message to the other branches of government about the high cost of partisan gridlock.
What follows is On the Docket’s preview of the Supreme Court’s November calendar. As always, don’t forget to check back when opinions are handed down for scholarly commentary from many of the greatest minds in the relevant legal fields!
October 31
Fry v. Napoleon Community Schools
No. 15-497; 6th Cir.
Imagine that your five-year-old daughter has cerebral palsy. She was born with this disease, and struggles with things about which most five-year-olds don’t have to think twice, like playing during recess and opening the door to the bathroom. That was the case for Stacy and Brent Fry, parents of now twelve-year-old Ehlena. In order to help their daughter feel more comfortable in school, the Frys procured for Ehlena a service dog named Wonder to help her open doors and retrieve items. Wonder is a goldendoodle—a breed named for its heritage, which is a mix of golden retrievers and poodles.
However, Ehlena’s school did not allow Wonder to accompany Elena. Citing the fact that Ehlena’s disability plan in school included a human aide who could do everything that Wonder could, the school claimed that the dog was superfluous. Stacy and Brent Fry did not take the refusal of all available support for Ehlena lightly; they filed a complaint in district court, suing for damages based on discrimination. They claimed that the school violated the Americans with Disabilities Act, which prohibits governmental discrimination based on disabilities, and the Rehabilitation Act, which forbids the same discrimination from any entities that receive federal funding. The Frys sought damages for the emotional harm Ehlena suffered for not being allowed to use Wonder, as well as attorney’s fees.
Both the district court and the Court of Appeals for the Sixth Circuit denied the Frys’s claims. The courts relied on the Handicapped Children’s Protection Act of 1986, which makes clear that if education-related claims are also available under the Individuals with Disabilities Education Act (“IDEA”), parents must exhaust all administrative remedies contained therein before filing a civil lawsuit.
The Frys did not give up after the Sixth Circuit’s decision, however, bringing the case now before the eight Justices of the Supreme Court. They maintain that they are not asking for relief that can be granted under IDEA– they are primarily seeking damages, which is not allowed under the administrative hearing function of the law. Furthermore, they say that they are not claiming the school violated IDEA, just the ADA and the Rehabilitation Act.
The school district counters that the Frys are in fact seeking something that can be granted under IDEA. The school district frames the Frys’ search for damages could be granted through IDEA, which allows for “retroactive reimbursement” of the costs incurred by the family when the school was not permitting Wonder to attend class with Ehlena. The school district further says that an administrative hearing could calculate the costs of therapy and tutoring for Ehlena, and that should be sufficient. Because there are equivalent damages that can be gained under IDEA, the school district maintains that the administrative remedies must be sought first before filing suit in a district court.
Each side claims that their interpretation is more in line with Congressional intent. However, it is the Frys who have an amicus curiae brief on their side from a Senator who helped draft the Handicapped Children’s Protection Act. Will that help sway the Justices? This case will be watched by both educators and attorneys for children’s rights everywhere to see if the Court imposes another administrative hurdle families must face before getting the relief they seek.
Star Athletica, LLC v. Varsity Brands, Inc.
No. 15-866; 6th Cir.
Two-four-six-eight, which test does the Court appreciate? That is the question in Star Athletica, LLC v. Varsity Brands, Inc., in which the Court will hear a dispute over the copyrightability of cheerleading uniform designs. Varsity Brands and Star Athletica are in the business of designing cheerleading uniforms. After Star appeared to have copied five of Varsity’s uniform designs, Varsity sued Star for copyright infringement. Star argues that cheerleading uniform designs cannot be copyrighted and thus Star is not liable for infringement.
Under § 101 of the Copyright Act, 17 U.S.C. § 101 (2012), the design of a useful article can be copyrighted, but only if it is separate from the useful aspect of the article—if the design is part of the article’s utility, the design cannot be copyrighted. If the design and the useful article can exist apart from one another, the design can be copyrighted. In short, a design of a useful article can only be copyrighted if its purpose and effect is to enhance the looks or style of an article, but it cannot enhance the utility of the article and remain copyrightable.
At the district court, Star argued that Varsity’s cheerleading uniform designs were not separable from the uniforms themselves—useful articles—and thus could not be copyrighted. Varsity argued that the designs could be separated from the uniforms, so they could be copyrighted. The district court held that the designs could not be separated from the uniforms and thus could not be copyrighted. On appeal, the Sixth Circuit reversed the district court, holding that the design of a cheerleading uniform could be separated from the utilitarian aspect of the uniform, and thus could be copyrighted. At the Supreme Court, both Star and Varsity present the question for the Court in their briefs as: “[w]hat is the appropriate test to determine when a feature of the design of a useful article is protectable under § 101 of the Copyright Act?”
Star proposes a four-element test: 1) a court should determine if the design at issue is a design of a useful article; 2) a court should “identify all of the article’s inherent, essential, or natural functions”; 3) a court should determine if the design is “purely artistic” and could be “recognized as a unit” independently; and 4) the court should determine if the design and the useful article necessarily must be together or could exist on their own. Star also proposes a presumption against copyrightability in cases in which the separability is a close call.
Varsity proposes a similar test: it argues that a design should be copyrightable if it is either physically separable from the useful article (i.e., if the design can actually be removed from the article and both the design and the article could still exist and remain functional) or conceptually separable from the useful article (i.e., if the design in theory could be removed from the article and both articles could still exist and remain functional, even if the design could not physically be removed). Varsity criticizes Star’s proposed presumption against copyrightability in close cases and claims that Star’s test is too strict in calling for rejection of copyrightability when a design has any enhancing effect on an article’s utility.
The Court’s answer to this question could have impactful effects on the commercial world, especially the fashion industry, and it could also affect the consumer. If the Court chooses a test that gives broad protection to designs of useful articles, companies like Varsity will benefit because they could copyright designs on their articles and be the only company in an industry to offer those specific designs. This protection against competition would benefit the copyright holding-companies, but it would likely hurt consumers because a consumer who wanted an article with a specific design may only have one company from which to purchase that article, and that company would not have market competition as an incentive to offer the articles at a low cost. If the Court chooses a test that limits protection given to designs on useful articles, the market may have more options, but it also could be a disincentive for companies to have active design departments because they could instead devote their resources to manufacturing and copy other companies’ popular designs. Indeed, if they devoted resources to their own designs, they would risk having other companies copy their designs. With those stakes riding on the outcome, attorneys for each side will go to bat for their clients hoping to carry their team to victory.
November 1
State Farm Fire & Casualty Co. v. United States ex rel. Rigsby
No. 15-513; 5th Cir.
Insurance companies: a topic that none of us really want to deal with, let alone discuss. Everyone has a horror story about trying to have a claim filed, getting reimbursed for something paid out of pocket, or even just finding a doctor to go to in the first place. Unfortunately, insurance companies are necessary and, in some cases, can be genuinely helpful. However, that fact doesn’t often help the public’s perception of them, and neither will this case.
Following the destruction of Hurricane Katrina, insurance companies were everywhere in New Orleans, helping homeowners procure funds to fix homes and neighborhoods that were devastated during the storm. Two sisters, Kerri and Cori Rigsby, served as claims adjusters for the giant company State Farm. However, they allege that they noticed State Farm trying to write off damage caused by high winds as instead being the result of flooding. The way many insurance policies work is homeowners have two separate insurance policies: flooding and wind damage. Even though the policies are frequently given by the same private insurance carrier, the private insurance company would have to pay for damage resulting from wind while the government would foot the bill for any damage caused by flooding. So if State Farm said that damage came as a result of flooding instead of wind, State Farm could avoid paying all of what it owed.
The Rigsby sisters filed a lawsuit in federal court under the False Claims Act, which incentivizes whistleblowers to report fraud. A private citizen can sue on behalf of the government and receive some of the money the government recovers from the exposed fraud. The False Claims Act requires that any private citizen who wants to proceed must file their suit under seal so that the government can decide whether or not to take up the case before a contractor learns of the suit. While the suit was under seal, the sisters’ attorney sent evidence to news outlets. There is no dispute that this violated the seal requirement.
What is disputed is whether that violation warrants immediate dismissal. The circuit courts are divided on this determination; there is a three-way circuit split. The Fifth Circuit affirmed the district court’s declination to dismiss and adopted the approach of the Ninth Circuit: dismissal is only appropriate if the violation of the seal requirement harms the government in some way. The Second and Fourth Circuits have instead determined that dismissal is appropriate if a seal violation “incurably frustrates” the underlying goals of the seal requirement, such as the government’s ability to fully evaluate the merits of a suit. Finally, the Sixth Circuit has adopted a bright-line rule that any violation of a seal requirement compels dismissal.
State Farm has predictably argued the Supreme Court should adopt the Sixth Circuit’s bright line rule. The Rigsby sisters, however, have the support of the United States, whose brief says that the failure of Congress to specify any remedy for violations of the seal requirement implies that district courts have discretion. Whichever way the Court decides will make False Claim suits harder for a group of litigants: either the defendants to such a suit or plaintiffs hoping to use the court of public opinion to induce settlement and avoid a lengthy court battle. Should the Court come out with a four-four split, the Circuits would remain deeply divided.
SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC
No. 15-927; Fed. Cir.
SCA Hygiene and First Quality both manufacture adult incontinence products. In 2003, SCA sent a letter to First Quality accusing it of infringing upon one of SCA’s patents. First Quality responded by claiming that the patent at issue was invalid because another company had already disclosed the patented technology in an earlier patent, meaning that First Quality could not be liable for infringement. After this, SCA asked the Patent and Trademark Office (PTO) to reexamine the patent at issue to determine if it was valid. Following a three-year reexamination process, the PTO concluded that the patent was valid. After another three years and several months, SCA sued First Quality for infringing the patent—the same accusation it had made over six years earlier in the letter to First Quality. The district court held that “laches” barred SCA’s claims to any damages from before the suit had been filed. (Under traditional common law, laches occurs when a plaintiff unreasonably delays bringing a suit, thus prejudicing a defendant’s ability to defend itself.) SCA appealed, and the Federal Circuit affirmed the district court’s decision as to the laches defense, first by panel and then en banc after a rehearing.
The question before the Supreme Court is whether the defense of laches can be used to bar patent infringement claims in light of the six-year limitation on recovery of damages set out in § 286 of the Patent Act.
SCA argues that the text of § 286 of the Patent Act, which precludes recovery of damages for infringement occurring more than six years before the filing of an infringement suit, precludes laches from being used as a defense to infringement that occurred within the six-year period of § 286. They also argue that the use of laches conflicts with the separate accrual rule, which starts the six-year period for each act of infringement. Laches treats all acts of infringement as one, they contend, even if some of the acts of infringement occurred within the six-year period of § 286. Further, SCA claims that the analysis of Petrella v. Metro-Goldwyn-Mayer, Inc., which held that laches could not be used to bar claims for damages under the Copyright Act, should apply here because the two situations are materially indistinguishable. SCA claims that Supreme Court precedent supports the idea that laches cannot be used as a defense for acts that occur within a legislatively enacted statute of limitations period. Moreover, SCA contends that the use of laches in this context is contrary to the purposes of the Patent Act. Finally, SCA argues that even if laches can apply in this context, there should not be a presumption of unreasonable delay and prejudice, at least as to acts of infringement occurring within the six-year statutory period.
First Quality argues that laches was traditionally accepted as a defense to patent infringement claims, and that Congress intended to codify existing law with the Patent Act of 1952. First Quality also contends that Petrella supports the argument that laches should be available because that decision was based on Congressional intent determined through the text and history of the statute, and the Patent Act’s text and history support the idea that laches is an available defense. Further, First Quality claims that § 286 is not a statute of limitations, because statutes of limitations bar the filing of a suit after a specified length of time following the cause of action, while § 286 bars recovery of damages for acts of infringement occurring six years before filing of a suit—not the filing of the suit itself. Finally, First Quality argues in support of a presumption of unreasonability for a delay of at least six years.
The effect of the Court’s decision here would be a somewhat limited one because it is likely to affect only patent infringement claims. However, for patent owners, potential infringers, and patent attorneys, the decision could have a significant impact. A decision barring the use of laches as a defense to acts of infringement occurring within the six-year period of § 286 would set a clear rule allowing successful patent infringement plaintiffs to recover damages for acts of infringement that occurred up to six years before a suit for infringement was filed. If the Court affirms the Federal Circuit’s decision, it would help those defending against infringement claims by leaving the defense of laches available to them. Any specific effects such a decision may have are hard to pin down, however, because rather than laying out a specific rule, such a ruling would give trial courts the authority to allow laches defenses in certain cases based on the trial court’s discretion.
November 2
Venezuela v. Helmerich & Payne International
No. 15-423; D.C. Cir.
Hugo Chavez is perhaps one of the world’s most infamous leaders. Four terms as president, countless propaganda and nationalization campaigns, and skyrocketing poverty and murder rates are part of his so-called legacy. This case finds its nascent stage in such a nationalization of private industry, although that foundation may be questionable under accepted principles of international law.
Oklahoma-based Helmerich & Payne International Drilling Company and its subsidiary, Helmerich & Payne de Venezuela, began drilling for oil for Venezuelan state-owned oil companies in the 1970s. Though the contract was lucrative for many years, the unpaid debts to Helmerich & Payne started to add up in the early 2000s. By 2008, the unpaid debt totaled $63 million; by 2009, $100 million. That year, Helmerich & Payne declined to renew its contract and informed the state-owned oil company that it would be packing up its drills. The Venezuelan company did not take too kindly to Helmerich & Payne’s announcement, however, and with the help of the Venezuelan National Guard, blockaded the yards in which the equipment was kept. Hugo Chavez then issued a Decree of Expropriation, claiming the equipment for the country of Venezuela. Helmerich & Payne, both the U.S. corporation and its Venezuelan subsidiary, filed suit against the country of Venezuela and its state-owned company in federal district court.
With few exceptions, foreign sovereign nations cannot be sued in the federal court system. The Foreign Sovereign Immunities Act (“FSIA”) prevents foreign countries from being hailed into court and made subject to the local laws of the United States, just as the United States enjoys similar protections worldwide. But there are exceptions when foreign nations violate accepted principles of international law. The FSIA provides for one such exception when foreign countries illegally expropriate property of a U.S. national in violation of international law and there is a commercial connection to the United States. It is under this exception that Helmerich & Payne filed suit.
The question at issue is a relatively simple one: what standard must a company plead to survive a motion to dismiss? The Court of Appeals allowed the claims from both the U.S. corporation and its Venezuelan subsidiary to move forward, explaining that dismissal was only appropriate if the claims were “wholly insubstantial or frivolous.” The Circuit Court for the District of Columbia Circuit concluded Helmerich & Payne’s claims were not.
On appeal, Venezuela contends that this bar is far too low. The country posits that the allegations must also satisfy the substantive requirements of the FSIA, not just be non-frivolous. Helmerich & Payne contests Venezuela’s position that a government’s nationalization of its own national’s property does not violate international law, and instead contends that it is at issue whether or not the taking violates international law. To find otherwise, the respondents proffer, would raise the question of whether the allegations violate international law before the court has even been able to hear the case.
It was inevitable that this case would be heard before an eight Justice Supreme Court. The decision by the U.S. Court of Appeals for the D.C. Circuit was joined by Chief Judge Merrick Garland–President Obama’s nominee to fill the current vacancy on the Supreme Court bench. Regardless of the 228 days of congressional inaction that have passed between President Obama’s nomination and today, Chief Judge Garland would have been required to recuse himself from this case, leaving the eight current justices to decide what the appropriate standard is for pleading an exception to the FSIA.
November 7
National Labor Relations Board v. SW General, Inc.
No. 15-1251; D.C. Cir.
The National Labor Relations Board (NLRB or “the Board”) is the independent agency tasked with administering the National Labor Relations Act, the New-Deal-era legislation that forms the foundation of union-employer relations in America’s private sector. Given the present degree of partisan grid-lock and the fundamental divide in two parties’ attitudes toward organized labor, it comes as little surprise that the Board has become a flash-point in the battle over the President’s power to circumvent a recalcitrant Congress to fill vacancies in the federal government. In 2014, the Supreme Court struck down President Obama’s appointment to the Board in NLRB v. Noel Canning, Inc., holding that the President may not Constitutionally exercise his recess appointment power so long as Congress is in session, even if that session encompasses no actual business and is held only to prevent a recess appointment. Now, with the Supreme Court itself facing a vacancy that Congress is unwilling to fill, the Court will again weigh in on the extent of the President’s power to act independently—this time, to appoint officials to serve in a temporary capacity pending confirmation.
Since America’s founding, Congress has ensured the smooth continued functioning of the federal government by allowing the President to appoint “acting” officials to serve temporarily in offices that ultimately require Senate confirmation to permanently fill. The power became the subject of public controversy when, in 1998, President Clinton used it to appoint a private civil rights attorney named Bill Lann Lee to head the Department of Justice’s Civil Rights Division. When Congress twice declined to confirm Lee to the position permanently, President Clinton simply renewed Lee’s temporary assignment and resubmitted his nomination to Congress.
In response to the perceived abuse of the temporary appointment power, Congress passed the Federal Vacancies Reform Act of 1998 (“FVRA”). Among other things, the legislation contained provisions narrowing the field of candidates for temporary appointments. Now codified at 5 U.S.C § 3345(a), the law specifies that the first assistant to the office to be filled shall assume the office unless the President specifies a different senior official from the same agency or another official who has already been confirmed by the Senate to fill the role. In order to prevent the President from simply appointing a candidate of his choice to the first assistant position after the vacancy occurs—as President Clinton did with Lee— U.S.C § 3345(b) contains a requirement that, if the President has nominated a person to fill the position permanently, that person may not serve as the acting official unless she served as first-assistant to the office for at least ninety days during the year preceding the vacancy.
The present case arises from President Obama’s appointment of Lafe Solomon, an NLRB-career attorney who was serving as the Director of the Board’s Office of Representation Appeals, to fill the role of Acting General Counsel in 2010. In January 2011, President Obama submitted Solomon’s name to the Senate to fill the position permanently. (President Obama would eventually withdraw the nomination and instead nominate Richard Griffin, one of the Board members whose appointment was invalidated in Noel Canning. Griffin was subsequently confirmed to the post.) During Solomon’s tenure as Acting General Counsel, one of the NLRB’s regional offices issued an unfair labor practice complaint against SW General, Inc. (“SW”). An administrative law judge and the Board as whole both ruled against SW in the ensuing proceedings, and the company appealed the decision to the United States Court for the District of Columbia Circuit. SW argued before the court that, because Solomon had been nominated for a permanent position and had not served as first-assistant to the General Counsel prior to the vacancy, he was precluded from serving as Acting General Counsel by the FVRA, and thus all actions taken under his direction were invalid. The Board countered that the requirement had been universally understood to apply only to first-assistants since the FVRA’s enactment, and not to senior officers within the agency or other senate-confirmed officials that the President designates to fill the role. A three-judge panel of the D.C. Circuit held unanimously in SW’s favor, stating that the plain language of the law precluded the Board’s interpretation.
The Government now argues that SW and the D.C. Circuit’s interpretation are inconsistent with the history and purpose of the FVRA. The ninety-day service requirement was designed to prevent the President from appointing circumvent Congress by naming an outsider to the first-assistant position while Congress considers their confirmation. The same concern doesn’t arise, they contend, when the President designates a senior official other than the first-assistant from within the agency to fill the role—indeed, Solomon had served far more than ninety days as Director of Representation Appeals, having assumed the position more than a decade prior.
The argument will carry a special poignancy with Republicans in Congress currently blocking President Obama’s Supreme Court nomination of Merrick Garland—himself the chief judge of the D.C. Circuit. The case for the government will be also be argued by Ian Gershengorn, whom President Obama named Acting Solicitor General in June following former-Solicitor General Donald Verrilli’s resignation. The FVRA applies only to executive branch appointments, and Gershengorn has not yet been nominated to fill the position permanently (and would meet the first-assistant requirements in any event), meaning neither vacancy is directly implicated. Still, with reminders of Congressional inaction so readily at hand, it is difficult to imagine current circumstances will not color the Justice’s consideration of a matter that may hit a little too close to home for some on the Court.
November 8
Bank of America Corp. v. City of Miami
consolidated with Wells Fargo & Co. v. City of Miami
Nos. 15-1111 and 15-1112; 11th Cir.
Eight years after the beginning of the Great Recession, the Supreme Court is weighing in on who may sue the big banks often blamed for the housing market collapse. Is it just individuals who were harmed, or can entities such as cities sue the banks because of the damage they caused? This is the question at issue in two cases that have been consolidated: Bank of America Corp. v. City of Miami and Wells Fargo & Co. v. City of Miami.
As the names suggest, the dispute arose when the City of Miami decided to sue Bank of America, Wells Fargo, and Citigroup. The city sued the banks under the Fair Housing Act (“FHA”), claiming they had engaged in a pattern of mortgage discrimination in Miami. Because the banks steered minorities toward high-risk mortgages, the city contends, the city lost property-tax revenue and was left paying the costs of repairing and maintaining foreclosed properties. Furthermore, Miami argues, the conduct harmed residents of Miami and damaged the community. The City of Miami asserts that for all of these reasons, the city is considered an “aggrieved person” within the meaning of the statute. Any such person has the ability to bring suit under the FHA.
The district court initially dismissed this case, claiming that the City of Miami was not one of the people the statute was meant to protect. Further, the district court held, the city had not shown that the banks’ conduct was the proximate cause of the harm the city claims to have suffered. The Court of Appeals for the Eleventh Circuit reversed both district court determinations, finding that if a plaintiff would have standing to sue under Article III of the U.S. Constitution, said plaintiff has standing to sue under the FHA. The Eleventh Circuit also made a determination that Miami had demonstrated that the banks’ actions were the proximate cause of the injury it alleged. Both issues are before the Supreme Court, although Citigroup declined to join Bank of America and Wells Fargo in the application for certiorari.
The Court’s decision in this case will be the first decision addressing this particular issue since a case dating back to the 1970s: Traffficante v. Metropolitan Life Insurance Co., which expanded the definition of constitutional standing. This case will certainly impact other cities and governmental jurisdictions seeking both to recover their own lost revenues from the crisis, as well as to look out for its individual residents.
Lightfoot v. Cendant Mortgage Corporation
No. 14-1055; 9th Cir.
In 2001, two of the petitioners sued Fannie Mae, Respondents, and another party in federal court alleging that Fannie Mae and Respondents had violated the Racketeering Influenced and Corrupt Organizations Act (“RICO”) by conspiring to offer mortgages to borrowers who were not qualified so that Respondents could foreclose on and acquire the property. The district court dismissed the claim and the court of appeals affirmed. Petitioners then filed suit in state court on the same grounds. Fannie Mae, a semi-public government-sponsored entity, removed the case to federal court, arguing that the “sue and be sued” clause in its charter conferred subject matter jurisdiction on federal courts over all suits in which Fannie Mae is a party. After removal, the district court granted a motion to dismiss the case based on res judicata, considering the issue settled by the previous litigation of the case in federal court. After several other procedural actions, the Ninth Circuit held that, based on Fannie Mae’s charter, federal courts had jurisdiction over cases in which Fannie Mae is a party.
The questions before the Supreme Court are 1) whether a charter that says that a federally chartered corporation can “sue and be sued” in courts “of competent jurisdiction” gives federal courts independent subject matter jurisdiction over cases in which the corporation is a party; and 2) whether American National Red Cross v. S.G., 505 U.S. 247 (1992), which held that a “sue and be sued” clause can grant federal courts jurisdiction if the clause explicitly mentions federal courts, should be overruled.
Petitioners argue that the “of competent jurisdiction” phrase in Fannie Mae’s charter means that a federal court only has jurisdiction over a case involving Fannie Mae if the court has subject matter jurisdiction on independent grounds. Essentially, they argue that a court is only “of competent jurisdiction” if it has subject matter jurisdiction apart from the “sue or be sued” clause. Petitioners contend that the text compels this interpretation and the history of Fannie Mae and its charter support their arguments. Petitioners also argue that Red Cross does not control because Fannie Mae’s charter can be distinguished from Red Cross’s charter. Moreover, Petitioners propose that if Red Cross is mandatory and controlling, then it should be overturned, because it is inconsistent with other Supreme Court precedent and with the Court’s traditional methods of statutory interpretation. Finally, Petitioners argue that their interpretation of the charter avoids the potential constitutional problem of granting federal question jurisdiction over cases that involve a federal corporation but not a substantive federal question.
Respondents contend that Red Cross should not be overruled because it is “consistent with recognized principles of statutory construction,” and because it is based on a line of precedent that holds that Congress confers jurisdiction to federal courts through “sue and be sued” clauses. They also claim that Petitioners misinterpret Red Cross and that this results in Petitioners incorrectly predicting a bizarre potential outcome of the Red Cross rule. Respondents argue that, because this potential outcome is not realistic, precedent discussing how “sue and be sued” clauses should be interpreted control under stare decisis, and those decisions, including Red Cross, should not be overturned. Respondents also argue that the “sue and be sued” clause here grants subject matter jurisdiction over cases in which Fannie Mae is a party, claiming that the text of the clause and precedent support that argument. Respondents claim that even after the 1954 amendment of the “sue or be sued” clause, the clause still conferred jurisdiction on federal courts. Further, they argue that the phrase “of competent jurisdiction” does not mean a court with an independent source of subject matter jurisdiction, and that the phrase is not superfluous because it has other purposes. Additionally, Respondents argue that Petitioners’ interpretation of Fannie Mae’s charter is inconsistent with the corporation’s purpose and that it would give Fannie Mae less access to federal courts than the similarly situated Freddie Mac.
The Court’s decision in this case has the potential to expand federal court jurisdiction, making it a case to follow for lower federal courts and for federal corporations whose charters contain “sue or be sued” clauses. This case may also be a case to watch for another group: law professors that teach Federal Courts. This case could give professors several classes worth of material on topics such as Congress’s power to confer jurisdiction on courts and statutory interpretation of jurisdiction-conferring clauses.
November 9
Lynch v. Morales-Santana
No. 15-1191; 2nd Cir.
Under 8 U.S.C. §§ 1401 and 1409, unmarried parents are able to transmit U.S. citizenship to their children born outside of the United States if they have lived in the U.S. for a statutorily-required period. The statutory period required for unmarried fathers of foreign-born children is longer than the statutory period for unmarried mothers of foreign-born children.
In 1962, Morales-Santana was born in the Dominican Republic to unmarried parents—his father was a U.S. citizen and his mother was not. Eventually, his parents married and moved to the United States, where Morales-Santana has been living since he was thirteen. In 1995, Morales-Santana was convicted of several criminal charges and was ordered to be removed from the United States based on his status as an alien and the nature of his criminal convictions. Although Morales-Santana claimed U.S. citizenship on the grounds that his father was a U.S. citizen, the board of Immigration Appeals rejected this claim because Morales-Santana’s father had not satisfied the physical presence requirements to transmit his citizenship to Morales-Santana. Morales-Santana appealed, and the Second Circuit held that, although his father had not satisfied the physical presence requirements, the different requirements for fathers and mothers violated the Equal Protection Clause of the Fifth Amendment.
Now before the Supreme Court, the questions are 1) whether having a greater physical presence requirement for fathers than for mothers violates the Fourteenth Amendment’s Equal Protection Clause, as reverse-incorporated by the Fifth Amendment; and 2) if so, whether the Second Circuit’s grant of citizenship to Morales-Santana was an appropriate remedy.
The United States first argues that the requirements should be subject to rational-basis review. However, they contend that even if the requirements are subject to heightened scrutiny, they are still constitutional. The United States argues that the different requirements satisfy two government interests. First, the United States claims that it is important that a person born abroad to at least one non-citizen parent have strong demonstrable connection to the United States, and it argues that § 1401 satisfies this interest by requiring longer presence in the United States by a citizen parent when a non-citizen parent may bring a connection to another country into the child’s life. It also states that because § 1401 does not give different rules for fathers and mothers, it is gender neutral and does not violate the Equal Protection Clause.
The United States also argues that the gender distinction in § 1409 was based not on gender stereotypes, but on the legal standards of the day, which typically recognized that an unwed mother was a child’s only legal parent unless the unwed father established paternity. Further, the United States argues that § 1409 satisfies the government’s interest in preventing statelessness. Because the mother of a child born out of wedlock was commonly considered the child’s only legal parent and because some nations determine citizenship based only on the nationality of a legal parent, there is a risk that a child born in such a nation to an unwed citizen mother who cannot transmit her citizenship may be left without any citizenship at all. By allowing an unwed citizen mother to transmit her citizenship to her foreign-born child if she had been present in the United States for the lesser period of one continuous year at the time her child was born, the United States made it easier for unwed citizen mothers to transmit their citizenship to their children, thus reducing the risk of statelessness for the child.
Finally, the United States argues that even if the different requirements for unwed mothers and fathers violates the Equal Protection Clause, the proper remedy was not to grant Morales-Santana citizenship by applying the shorter physical presence requirement to his father. The United States contends that the appropriate way to equalize the physical presence requirements is to apply the longer requirement to unwed mothers, because 1) the courts do not have the authority to grant citizenship to someone without authorization from Congress; and 2) this would allow Congress, rather than a court, to decide if foreign born children of unwed parents should get citizenship even though their mothers and/or fathers do not meet the longer physical presence requirement.
Morales-Santana argues that the different requirements for unmarried fathers and mothers facially discriminate on the basis of gender and should be subject to heightened scrutiny. He contends that under this heightened scrutiny, §§ 1401 and 1409 fail because the rationales by which the United States attempts to justify the law do not justify the discrimination. He argues that the different requirements for unwed mothers and fathers do not increase the connection a foreign born child will have to the United States. Morales-Santana also contends that the lower physical presence requirement for mothers does not reduce the risk of statelessness, arguing that evidence does not support the idea that Congress was concerned with the risk of statelessness when it enacted this law, that the law is both under- and over-inclusive, and that the law itself creates a risk of statelessness.
If the Court holds that having different requirements for unwed mothers and fathers violates the Equal Protection Clause and that the proper remedy is to apply the shorter physical presence requirement for all foreign-born children of unwed parents, it could result in many children born under such circumstances to be eligible for citizenship. This, of course, would have significant consequences for those individuals and for the United States as a whole because the nation could add a number of previously unaccounted-for people to its population. If the Court holds that the requirements are discriminatory but that the proper remedy is to apply the longer requirement to both mothers and fathers, this would make it more difficult for foreign-born children born out of wedlock to become citizens, and would mean Morales-Santana would face removal based on his criminal convictions. Finally, if the Court decides that the different requirements do not violate the Equal Protection Clause, Morales-Santana’s fate will be the same, and the status quo as to the physical presence requirements will remain. As the Court hears arguments and begins to decide this case, Morales-Santana will certainly be keeping a watchful eye, as may unwed parents of foreign-born children or unwed parents of future children who may be born in other countries. The fate of their children’s potential citizenship rests in the Court’s hands.
This post was authored by The George Washington Law Review Online Editorial Team.
