November 30
Trump v. New York
No. 20-366, S.D.N.Y.
Preview by Emma Eisendrath, Member
Members of the U.S. House of Representatives are apportioned based on population counts conducted every ten years. This case is about whether apportionment calculations may exclude undocumented immigrants. On July 21, 2020, President Trump issued a memorandum ordering the Secretary of Commerce to exclude undocumented immigrants counted in the 2020 U.S. Census from the final reported population count. See Excluding Illegal Aliens From the Apportionment Base Following the 2020 Census, 85 Fed. Reg. 44,679, 44,680 (July 23, 2020). Two sets of plaintiffs, NGOs and government entities, sued for declaratory and injunctive relief.
On September 10, 2020, the U.S. District Court for the Southern District of New York found that plaintiffs in the consolidated case had standing to sue and that President Trump’s order exceeded his authority. New York v. Trump, 20-CV-5770 (RCW) (PWH) (JMF), 2020 WL 5422959, at *2 (S.D.N.Y. Sept. 10, 2020). The court granted the plaintiffs’ motion for declaratory judgment and held that the memorandum was a “violation of Congress’s delegation of its constitutional responsibility to count the whole number of persons in each State and to apportion members of the House of Representatives among the States according to their respective numbers.” Id. at *36.
The Supreme Court will address two issues: first, whether the plaintiffs have standing to bring this suit, and second, whether President Trump’s memorandum violates the census provision of the Constitution. See U.S. Const. amend. XIV, § 2. The appellants argue that the appellees lack standing because any remedy provided by the Court would come after completion of the census, and thus not redress any current alleged harms. See Reply Brief for the Appellants at 1–4, Trump v. New York, No. 20-366 (U.S. filed Oct. 13, 2020). They also argue that any “apportionment-based” injuries are “too speculative” because without a final census count, “it is . . . unknown whether the size of the illegal-alien population excluded in any given State will have a relative impact sufficient to decrease the appellees’ congressional representation.” Brief for the Appellants at 18–19, Trump v. New York, No. 20-366 (U.S. filed Oct. 30, 2020).
The appellees argue that the alleged injuries are twofold: that undocumented immigrants will not be counted towards apportionment and that the policy will discourage immigrant participation in the census. See Motion to Affirm for Government Appellees at 12–20, Trump v. New York, No. 20-366 (U.S. filed Oct. 7, 2020). They argue that injunctive and declaratory relief would remedy future harms by preventing the federal government from unconstitutionally discounting undocumented immigrants in the apportionment count. See id. at 12–14. They also argue that even though the Court will hear this case after the Census, the issue fits the mootness exception of “disputes capable of repetition, yet evading review” because if this case is dismissed on mootness grounds, undocumented immigrants may be unconstitutionally excluded from the next census. Id. at 15–16 (quoting FEC v. Wisconsin Right to Life, Inc., 551 U.S. 449, 462 (2007))..
On the constitutionality of the new apportionment scheme, the appellees argue that the plain language of the Fourteenth Amendment requires counting all individuals residing in a state, regardless of their immigration status, for apportionment purposes. See Motion to Dismiss or Affirm at 13–15, Trump v. New York, No. 20-366 (U.S. filed Oct. 7, 2020). They argue that the drafters of the Amendment meant for the language “whole number of persons” to cover anyone residing in a state. Id. at 17–18 (quoting U.S. Const. amend. XIV, § 2).
The appellants provide an alternative Constitutional argument, stating that the Secretary of Commerce has broad delegated authority over the Census. Brief for the Appellants at 22. They state that the Court has previously found that Article I, § 2 gives Congress broad delegation authority and that Congress appropriately uses that authority when it delegates control to the Secretary. Id. The appellants rely on a previous case, Franklin v. Massachusetts, which held that the president has authority to direct the Secretary’s census-taking and reporting procedures. 505 U.S. 788, 797–99 (1992); see Brief for the Appellants at 23–24. They argue that the President appropriately used his memorandum to oversee census procedures.
Van Buren v. United States
No. 19-783, 11th Cir.
Preview by Kevin Coleman, Articles Editor
In Van Buren v. United States, the Supreme Court will determine whether someone who is authorized to access information on a computer for one purpose “exceeds authorized access” in violation of the Computer Fraud and Abuse Act (“CFAA”) when that person accesses the same information for a different, unauthorized purpose. 18 U.S.C. 1030 (2018).
Nathan Van Buren was a Georgia police officer who developed a problematic relationship with Andrew Albo, a “volatile” individual who was a “frequent subject of police action.” Brief for the United States, at 7, Van Buren v. United States, No. 19-783 (U.S. filed Aug. 27, 2020). The two first met when Van Buren arrested Albo for providing alcohol to a minor. Thereafter, Van Buren would often handle disputes between Albo and “women whom he paid to spend time with him.” Id. at 7–8. Experiencing financial difficulties, Van Buren lied to Albo that Van Buren’s son had $15,000 in medical expenses, and he asked Albo for a loan. Albo—who surreptitiously recorded the conversation—told his priest about Van Buren’s request. Albo’s priest connected him with the local sheriff, who brought in the FBI. Then, at the FBI’s request, Albo approached Van Buren, told him that he had met a woman at a strip club and wanted to know if she was an undercover police officer. In exchange for several thousand dollars in cash, Van Buren agreed to search the woman’s license plate number in a police database that Van Buren was permitted to access “only for law-enforcement purposes.” Id. at 7–9. Van Buren conducted the search, and he ultimately was convicted on one count of honest services wire fraud (bribery) and one count of exceeding authorized access in violation of the CFAA. The Eleventh Circuit vacated Van Buren’s honest services fraud conviction and affirmed his CFAA conviction. The Supreme Court granted certiorari on the CFAA issue.
Under the CFAA, a person who “accesses a computer without authorization or exceeds authorized access, and thereby obtains information” from the computer is subject to criminal prosecution. § 1030(a)(2)(C). A person “exceeds authorized access” when he or she “access[es] a computer with authorization and . . . use[s] such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. § 1030(e)(6). Van Buren urges the Court to adopt the position of the Ninth, Fourth, and Second Circuits by holding that this language only prohibits obtaining information from a computer that a person is not entitled to access for any purpose. Brief for Petitioner at 8–9, 17–19, Van Buren v. United States, No. 19-783 (U.S. filed Jul. 1, 2020) (citing United States v. Nosal, 676 F.3d 854, 856–57 (9th Cir. 2012); WEC Carolina Energy Sols. LLC v. Miller, 687 F.3d 199, 202, 207 (4th Cir. 2012); United States v. Valle, 807 F.3d 508, 528 (2d Cir. 2015)). Van Buren contends that a person is “entitled so to obtain” information when he or she has a right to acquire it via computer; the word “so” dictates the method of, instead of the purpose for, obtaining the information. See id. at 17–19. Thus, according to Van Buren, mere misuse or misappropriation of information that one is legally entitled to obtain via computer for any reason does not, without more, violate the CFAA. Id. at 18–19. Van Buren warns of the consequences of a broad interpretation; namely, that the statute would criminalize any action that violated a website’s terms of service or an employer’s computer use policy. Id. at 26–29. Van Buren explains that under the Government’s interpretation of the CFAA, if your employer prohibits the use of company computers for personal purposes and you create a March Madness bracket on your work computer, then you have committed a federal crime. Id. at 28. Van Buren implores the Court to avoid this broad construction, emphasizing that “[t]he CFAA is not an all-purpose statute covering any misdeed that occurs on a computer.” Id. at 23.
The Government asks the Court to conclude that accessing information to which one is entitled for one purpose with another, unauthorized purpose, violates the CFAA. See Brief for United States at 20; United States v. Rodriguez, 628 F.3d 1258 (11th Cir. 2010); United States v. John, 597 F.3d 263 (5th Cir. 2010); Int’l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir. 2006); EF Cultural Travel BV v. Explorica, Inc., 274 F.3d 577 (1st Cir. 2001). Also invoking § 1030(e)(6), the Government contends that someone is “entitled so” to do something “only when he has been granted a right to do it in a particular manner or circumstance.” Brief for United States at 13, 18. Therefore, the operative question is whether Van Buren was entitled to access the police database “in the [particular] circumstances in which he did.” Id. at 13. Of course, the Government argues that he was not. See id. Finally, the Government rejects the “parade of horribles” invoked by Van Buren as hypothetical scenarios unlikely to be subject to federal prosecution. See id. at 40–42.
While the parties’ arguments—and those of most amici—focus on the “not entitled to so obtain” language of § 1030(e)(6) and the interpretive consequences thereof, UC Berkley law professor and computer crime expert Orin Kerr, in an amicus brief, asks the court to focus on the more fundamental question of what constitutes “authorization” in the first place. See Brief of Professor Orin S. Kerr as Amicus Curiae in Support of Petitioner, at 2–3, Van Buren v, United States, No. 19-783 (U.S. filed Jul. 8, 2020). Specifically, Professor Kerr asserts that “verbal limits” on computer use—where “computer owners often allow others to use their computers subject to verbal restrictions on how that use can proceed”—should never be the basis for CFAA liability, regardless of whether those limits are “purpose-based,” as in Van Buren. Id. at 3, 5–6. According to Professor Kerr, to do otherwise would criminalize terms of service agreements and “mak[e] most Americans criminals for entirely innocuous conduct.” Id. at 26. Whatever the Supreme Court ultimately decides, Van Buren makes clear that the CFAA’s “exceeds authorized access” provision is a deeply imperfect solution to the “insider problem” of non-hacking malfeasance committed by persons entitled to sensitive electronic data, and a legislative revision to the CFAA may be required. See id. at 23–27.
December 1
Nestlé USA, Inc. v. Doe I
No. 19-416 & 19-453, 9th Cir.
Preview by Emma Liggett, Online Editor
The Alien Tort Statute (“ATS”) gives federal courts jurisdiction over torts committed “in violation of the law of nations.” 28 U.S.C. § 1350 (2018). The First Congress passed the ATS in 1789, originally as a provision of the Judiciary Act, to provide a forum for noncitizens harmed by universal crimes, such as piracy. See Jesner v. Arab Bank, PLC, 138 S. Ct. 1386, 1396–97 (2018). Litigators have since used the ATS for human rights violations. However, the Court has limited its reach in three key cases.
In Sosa v. Alvarez-Machain, the Court held that an ATS claim must meet two criteria to succeed: (1) the violation addressed must be “specific, universal, and obligatory,” and (2) it must be practical, in the court’s judgment, to make the cause accessible to litigants in federal courts. 542 U.S. 692, 732–33 (2004). In Kiobel v. Royal Dutch Petroleum Co., the Court limited the ATS’s grant of jurisdiction for foreign citizens injured by foreign corporations’ misconduct abroad. 569 U.S. 108 (2013). It held that claims under the ATS must “touch and concern” U.S. territory “with sufficient force to displace the presumption against extraterritorial application.” Id. 124–25. Mere corporate presence in the U.S. is not enough. Id. at 125. Most recently, the Court placed a blanket limitation on the ATS in holding that foreign corporations may not be liable absent further action from Congress. Jesner v. Arab Bank, PLC, 138 S. Ct. 1386, 1407 (2018). This begs the question of domestic corporate liability under the ATS.
In Nestlé USA v. Doe (consolidated with Cargill v. Doe), the respondents are six former child slaves trafficked from Mali who, from the ages of twelve to fourteen, were subjected to forced labor and abuse on Ivorian cocoa farms. Brief of Respondents in 19-416 at 3, Nestlé USA, Inc. v. Doe, Nos. 19-416 & 19-453 (U.S. filed Oct. 14, 2020). They worked twelve to fourteen hours for six days a week, ate only scraps of food, and were beaten and whipped as punishment. Id. While the actual perpetrators remain unnamed, claimants allege that Nestlé and Cargill (Petitioners), U.S. corporations in the cocoa bean business, aided and abetted this abuse and thus their claims come under the purview of the ATS. Id. at 4; Brief of Respondents in 19-453 at 4, Nestlé USA v. Doe, Nos. 19-416 & 19-453 (U.S. filed Oct. 14, 2020). The Court will determine (1) whether an aiding and abetting claim against domestic corporations, based on general corporate activity in the U.S., can overcome the extraterritoriality bar, and (2) whether the ATS gives courts authority to impose liability on domestic corporations.
The parties are in agreement that aiding and abetting forced labor and child slavery satisfy the Sosa standard that the violation be of a universal, international norm. See Brief of Respondents in 19-416 at 12–13. However, they disagree about the ATS’s reach and claims that can overcome the extraterritoriality bar. Respondents argue that their claims satisfy Kiobel’s “touch and concern” test, and are not barred, because Petitioners’ conduct took place in the U.S. and constituted the kind of violation the founders intended to address. See id. at 11–12. The petitioners carried out all approved decisions regarding their cocoa supply chains and supervision by executives in the U.S., despite knowing of the use of child slaves. See id. at 4–5. Allowing ATS claims regarding international human rights “violations by U.S. citizens from U.S. territory” is consistent with the history and purpose of the ATS, which was to provide “foreign plaintiffs a remedy for international-law violations when the absence of [one] might provoke foreign nations to hold” the U.S. liable. Id. at 15–16 (quoting Jesner, 138 S. Ct. at 1396).
The petitioners, Nestlé and Cargill, argue that Respondents are impermissibly attempting to apply the ATS extraterritorially. Brief for Petitioner Nestlé USA, Inc. at 14, Nestlé USA v. Doe, Nos. 19-416 & 19-453 (U.S. filed Aug. 31, 2020). The proper inquiry to determine whether a rebuttal to the presumption against extraterritoriality is successful is not Kiobel’s “touch and concern” test, but a “focus” test established in RJR Nabisco, Inc. v. European Community. 136 S. Ct. 2090 (2016); see Brief for Petitioner Nestlé USA, Inc. at 14. This test asks “whether the case involves a domestic application of the statute . . . by looking to the statute’s ‘focus.’” RJR Nabisco, 136 S. Ct. at 2101. Because the conduct relevant to the ATS’s focus—“injury resulting from a tort in violation of the law of nations”—occurred overseas, Respondents’ claims are impermissibly extraterritorial. Brief for Petitioner Nestlé USA, Inc. at 15 (emphasis in original). This is the case even when taking a broader focus, the petitioners argue, because directing and supervising overseas activities from the U.S. are not sufficient to make the ATS’s application domestic. Id. 23–24.
Exempting domestic corporations from ATS liability would undercut the ability of human rights plaintiffs to gain redress for international-law violations perpetuated by profit-driven corporations. Child slavery and forced labor on the Ivory Coast has continued and even increased in recent years despite Nestle’s pledge to stop using it. Brief of Respondents in 19-416 at 6–7. Providing individuals with redress for these crimes seems appropriate, while creating loopholes for domestic corporations signals that they can continue to commit violations so long as they keep an arm’s length from the perpetrators they facilitate.
CIC Services, LLC v. IRS
No. 19-930, 6th Cir.
Preview by Amy Orlov, Online Editor
This case concerns principles of administrative law and tax law. Although the Internal Revenue Service has the power to collect taxes, Congress has the legislative power to write tax law. In 2004, Congress delegated authority to the IRS to collect information about tax shelters—methods that individuals or organizations may use for reducing taxable income, resulting in a decrease of payments to tax collecting entities. In order to track tax shelter information, the IRS requires taxpayers and their advisors to submit records pertaining to reportable transactions or be subject to substantial penalties. In November 2016, the IRS published Notice 2016-66 identifying certain “micro-captive transactions” as a subset of reportable transactions. Thus, any taxpayer or advisor who engages in these transactions is required to report them.
In March of 2017, CIC Services, a company that advises taxpayers on complex transactions, including micro-captive transactions, sued the IRS and the Treasury Department for promulgating the micro-captive transactions Notice without abiding by the Administrative Procedure Act (“APA”). 5 U.S.C. § 551 et seq. (2018); see § 702. CIC Services challenged the validity of the regulation through pre-enforcement review—a process that allows an individual or entity to challenge an agency action without having to first violate the regulation and risk the often severe consequences that follow. CIC Services asked the lower court to stop the IRS Notice from taking effect.
In response to CIC’s challenge, the IRS invoked the Tax Anti-Injunction Act to block the challenge and prevent CIC’s legal arguments from being heard. 26 U.S.C. § 7421(a) (2018). The Anti-Injunction Act strips federal district courts of jurisdiction over any lawsuit designed to restrain the assessment or collection of taxes. In most instances, under the Anti-Injunction Act, a person challenging a tax assessment must first pay the tax and then ask for a refund. However, CIC’s challenge is not to any specific tax, but rather to a regulatory scheme requiring the disclosure of methods for reducing taxable income.
The question that the Supreme Court must consider is whether the Anti-Injunction Act’s bar on lawsuits for the purpose of restraining the assessment or collection of taxes extends to lawsuits designed to challenge regulations that concern taxes, but are not actually taxes themselves. There is currently a circuit split on this question, with the Sixth Circuit most recently ruling in favor of the IRS in this case, holding that the penalty triggered by failing to report a case was itself a tax, thus falling under the Anti-Injunction Act.
CIC Services is arguing that their lawsuit does not fit within text of the Anti-Injunction Act and that barring CIC’s suit would undermine the goals and requirements of the APA. See Brief for Petitioner at 16, 31, CIC Services, LLC v. IRS, No. 19-930 (U.S. filed July 15, 2020). The IRS is arguing that the CIC’s challenge represents a misreading of the statutory text and the Supreme Court’s precedent. See Brief for Respondent at 24, CIC Services, LLC v. IRS, No. 19-930 (U.S. filed Sept. 8, 2020). Multiple interested parties have filed amicus briefs in connection with the case, including the United States Chamber of Commerce, various taxpayer organizations, administrative law professors, and tax law practitioners.
December 2
Edwards v. Vannoy
No. 19-5807, 5th Cir.
Preview by Nick Contarino, Online Editor
In 2006, Edwards was arrested and charged with five counts of armed robbery, one count of aggravated rape, and two counts of aggravated kidnapping. Brief for the United States as Amicus Curiae Supporting Respondent at 2–3, Edwards v. Vannoy, No. 19-5807 (U.S. filed Oct. 5, 2020). At the time of his trial, Louisiana law “permitted conviction based on a guilty verdict returned by at least 10 of 12 jurors.” Id. at 3. Ten jurors found him guilty on the armed robbery counts and eleven found him guilty on the other charges. Id. at 3. The trial court imposed consecutive sentences of life imprisonment for each of the kidnapping and rape counts and consecutive sentences of 30 years imprisonment for each of the armed robbery counts. Id.
In 2019 Edwards filed a petition for a writ of certiorari, stating that the legality of nonunanimous criminal juries, upheld in Adopdaca v. Oregon, had been called into question by recent legal developments and urged the court to reverse Adopdaca. 406 U.S. 404 (1972); id. at 3–4. As his petition was pending, the Court ruled six to three in Ramos v. Louisiana, that “the Sixth Amendment requires a unanimous verdict to convict a defendant of a serious crime and that the unanimity requirement applies to the States.” 140 S. Ct. 1390, 1397 (2020); Id. at 4 (citing Ramos, 140 S. Ct. at 1397). The question in Edwards v. Vannoy is whether Ramos applies retroactively to cases on federal collateral review, or whether the Apodaca rule allowing nonunanimous juries still applies.
This question is especially difficult because it is unclear whether Ramos actually overruled Apodaca. Three of the Justices stated that Adopaca should be overruled or distinguished. See id. (citing Ramos, 140 S. Ct. at 1409 (Sotomayor, J., concurring); id. at 1410, 1417 n.6 (Kavanaugh, J., concurring in part); id. at 1424–25 (Thomas, J., concurring in the judgment)). Three Justices submitted that Adopaca should not be considered “‘a controlling precedent’ on the Sixth Amendment question.” Id. (quoting Ramos, 140 S. Ct. at 1404 (opinion of Gorsuch, J.)). The three dissenting Justices stated that they would “not overrule Adopdaca.” Id. at 5 (quoting Ramos, 140 S. Ct. at 1425 (Alito, J., dissenting)).
Darrel Vannoy, warden of the Louisiana State Penitentiary, notes that “‘new rules’ of criminal procedure do not apply to cases on collateral review unless they constitute ‘watershed’ rules.” Brief of Respondent at 9, Edwards v. Vannoy, No. 19-5807 (U.S. filed Sept. 28, 2020) (citing Teague v. Lane, 489 U.S. 288, 311 (1989)). Rather than primarily argue that Ramos announced a new rule, Edwards argues that Ramos “reaffirmed an ‘old rule’ that was logically ‘dictated by precedent [when the] defendant’s conviction became final.” Brief for Petitioner at 12, Edwards v. Vannoy, No. 19-5807 (U.S. filed Jul. 15, 2020) (quoting Teague, 489 U.S. at 301). And because an old rule applies on both direct and collateral review, Ramos consequently applies retroactively to cases on federal collateral review. Id. (quoting Whorton v. Bockting, 549 U.S. 406, 416 (2007)). If the Court finds that Ramos does announce a new rule, however, Edwards asserts it is a “watershed” rule. See id. at 22.
Vannoy disagrees that Ramos is a “watershed rule,” arguing that the Ramos court, in discarding the nearly 50-year old precedent in Adopdaca, laid down a decision that is “the very definition of a new rule.” Brief for Respondent at 9. According to Vannoy, the Ramos decision is a new rule because it “impose[d] a new obligation on the government.” Id. (quoting Chaidez v. United States, 568 U.S. 342, 347 (2013)). To demonstrate that the Ramos decision was not a new rule, Edwards would need to show that it would “have been ‘apparent to all reasonable jurists’ that the later-announced rule was dictated by then-existing precedent,” and Vannoy argues that Edwards cannot establish this. Id. at 10 (Lambrix v. Singletary, 520 U.S. 518, 527–528 (1997)). However, while Ramos is a new rule, according to Vannoy, he argues that Edwards fails to show that Ramos created a “watershed” rule. Vannoy notes that the only procedural right that was ever found to apply retroactively was the right to counsel. Id. at 10–11 (citing Gideon v. Wainwright, 372 U.S. 335 (1963)). Vannoy further asserts that the Ramos rule has no compelling reason to be applied retroactively. Id. at 11–13. Finally, Vannoy states that the relitigation bar in 28 U.S.C. § 2254(d)(1) forecloses the application of Ramos to this case. Id. at 13.
Edwards argues that the Ramos decision is a new rule only if “(1) Apodaca was controlling precedent that Ramos expressly overruled; (2) Apodaca is the only decision relevant to the Teague analysis; and (3) Apodaca’s binding effect on lower courts means that the rule in Ramos was neither ‘dictated by precedent’ nor apparent to ‘all reasonable jurists’ for Teague’s purposes.” Reply Brief for Petitioner at 2, Edwards v. Vannoy, No. 19-5807 (U.S. filed Oct. 28, 2020). Edwards contends that all three propositions are incorrect, and hence Ramos did not announce a new rule. Id. Even if it did, Edwards argues that Ramos qualifies as a “watershed” rule because Ramos “altered our understanding of the unanimous-jury guarantee in the same way” that Gideon v. Wainwright altered our understanding of the right to counsel. Id. at 8–9. Edwards further states that the pressing need for Jury unanimity to prevent “impermissibly large risk of legally inaccurate convictions” outweighs Louisiana’s minimal finality interests, suggesting that Ramos must be a watershed rule. Id. at 10–15. Finally, Edwards states that, at this stage, the Court need not address the issue of whether 28 U.S.C. § 2254(d)(1) precludes applying Ramos retroactively to cases on federal collateral review, and insists that “[i]f the Court is inclined to reach [the § 2254(d)(1) issue], it should permit supplemental briefing.” Id. at 20.
December 7
Republic of Hungary v. Simon
No. 18-1447, D.C. Cir.
Preview by Nick Contarino, Online Editor
The respondents, Simon, et al. (“Simon”), are 14 Jewish survivors of the Hungarian Holocaust who filed suit against petitioners, the Republic of Hungary, et al. (“Hungary”) for Hungary’s alleged collaboration with the Nazis during WWII. Brief for the United States as Amicus Curiae at 3, Republic of Hungary v. Simon, No. 18-1447 (U.S. filed Sept. 11, 2020). Simon alleges that Hungary transported Hungarian Jews to death camps and stripped them of their property as part of the Nazi’s genocidal campaign. Seeking compensation, Simon brought common-law property torts and other claims against Hungary in the United States District Court for the District of Columbia. The Foreign Sovereign Immunities Act of 1976 (“FSIA”) supplies the sole basis for claiming jurisdiction against a foreign state in federal or state court. 28 U.S.C. §§ 1330, 1441(d), 1602 et seq. (2018). FSIA grants foreign states immunity from the jurisdiction of a U.S. court unless a claim falls under one of the exceptions to immunity. 28 U.S.C. §§ 1604–1607. The district court found that Hungary’s acts, as plead within the complaint, were adequately within the expropriation exception, and hence jurisdiction was proper.
Hungary moved to dismiss, contending that “the district court should abstain from exercising jurisdiction as a matter of international comity until [Simon] exhausted their remedies in Hungary.” Brief for the United States at 5. Comity-based abstention is the ability for a U.S. court to “abstain from exercising its jurisdiction over a controversy that implicates substantial interest of another nation, so that the controversy can instead be addressed in an alternative forum provided by that nation.” Id. at 8. The court found that the “[e]xhaustion of domestic remedies is preferred in international law as a matter of comity.” Id. at 5 (quoting Simon v. Republic of Hungary, 277 F. Supp. 3d 42, 54 (D.D.C. 2017)). Finding that Simon did not exhaust Hungary’s own domestic remedies, or prove that doing so would be futile, the district court dismissed the case. After a series of appeals and remands, the Supreme Court is now considering whether comity-based abstention warrants dismissal.
Hungary and the United States, appearing as amicus curiae, argue that comity-based abstention is essential to ensure that litigation within the United States does not damage foreign relations or hinder the United States’ ability to receive reciprocal treatment in the courts of other nations. See id. at 8–9; Brief for the Petitioners at 1, Republic of Hungary v. Simon, No. 18-1447 (U.S. filed Sept. 4, 2020). Hungary argues that FSIA should be interpreted against the background of the common law, particularly the comity principles courts have used in the past. Brief for the Petitioners at 15. Although comity-based abstention is not found within the text of FSIA, Hungary states that FSIA does not foreclose its validity because it is not an “immunity defense.” Id. at 16. Furthermore, Hungary states that FSIA’s text confirms the “continued vitality of comity-based abstention” because § 1606 states that a sovereign’s liability under FSIA is the same as a private individual, and courts have held that a private individual could obtain comity-based dismissal. Id. at 16–17 (citing Can. Malting Co. v. Paterson S.S., Ltd., 285 U.S. 413, 423 (1932). Finally, Hungary argues that the United States’ interest in “imposing damages on Hungary for historic injustices within Hungary’s territory, affecting its own nationals,” is small, whereas Hungary’s interests in the controversy are enormous given that Simon seeks to recover tens of billions of dollars. Id. at 17, 38.
Simon contends that Hungary’s reliance on the common-law international-comity doctrine is flawed, as the enactment of FSIA displaced the doctrine. Brief for Respondents at 9, Republic of Hungary v. Simon, No. 18-1447 (U.S. filed Oct. 22, 2020). They argue that accepting the governments’ position would permit discretionary and standardless determinations of comity to supersede FSIA’s “clear and comprehensive regime,” returning “foreign-sovereign-immunity determinations to the pre-FSIA bedlam that Congress and the Executive sought to end” through FSIA’s enactment. Id. Simon states that Hungary’s reliance on § 1606 is flawed, as it only governs liability and the allocation of damages, not jurisdiction. Id. at 10. Additionally, Simon states that if the Court does find that courts may abstain from exercising FSIA jurisdiction based on international comity, it should hold that such abstention is only available “when the Executive expressly requests that a case be dismissed based on specific foreign-policy concerns.” Id. at 11. No express request exists in this case. Finally, Simon states that Hungary’s interests are “vastly outweighed by [Simon’s] interest[] in obtaining real relief and in not being forced to return to the scene of Hungary’s atrocious crimes,” and argues that the United States’ interests are high because “Hungary has failed to establish a mechanism for resolving Holocaust-era claims.” Id. at 39.
Federal Republic of Germany v. Philipp
No. 19-351, D.C. Cir.
Preview by Josh Keyser, Member
In Federal Republic of Germany v. Philipp, the Supreme Court will address whether a foreign state can claim an exception to foreign sovereign immunity under the Foreign Sovereign Immunities Act (“FSIA”) for issues of “property taken in violation of international law” where the property was expropriated from that state’s own nationals. 28 U.S.C. § 1605(a)(3) (2018). The case also requires the Court to resolve a circuit split on whether courts can abstain from adjudicating cases against foreign sovereigns under the doctrine of international comity.
In 1935, agents of the German state of Prussia bought a collection of medieval art from a consortium of Jewish art dealers, allegedly at a fraction of its value. After a German government commission declined to recommend restitution be made the consortium’s heirs in 2008, they filed suit in the District of D.C. Germany brought a motion to dismiss on the grounds of foreign sovereign immunity and a common law, comity-based defense that Philipp failed to exhaust domestic remedies, under which judges may abstain from ruling on the merits out of concerns against passing judgment on matters not yet resolved by the courts of foreign states.
The District Court denied the motion, and the D.C. Circuit affirmed, reasoning that a “genocidal taking” violates international law, thus falling under the FSIA expropriation exception. See Philipp v. Fed. Republic of Germany, 894 F.3d 406, 412 (D.C. Cir. 2018), cert. granted, No. 19-351, 2020 WL 3578677 (U.S. July 2, 2020). The D.C. Circuit also held that the FSIA was intended to provide a comprehensive standard for foreign sovereign immunity which “leaves no room for a common-law exhaustion doctrine based on . . . considerations of comity.” Id. at 416. The D.C. Circuit acknowledged that its reasoning splits from the Seventh Circuit’s, which allowed a similar comity-based abstention in Fischer v. Magyar Allamvasutak Zrt., 777 F.3d 847 (7th Cir. 2015).
On the first issue, Germany reiterates that there was no violation of international law because an instrument of the German government purchased the property of German nationals, therefore any wrongdoing is purely a matter of German domestic law. Brief for Petitioners at 16–18, Fed. Republic of Germany v. Philipp, No. 19-351 (U.S. filed Sept. 4, 2020). Germany also claims that the art collection was bought at fair market value in light of the Great Depression and conditions in the art market, not compelled as a part of the larger scheme of Nazi property seizures from Jewish Germans, and therefore was not an expropriation connected with genocide. See id. at 6.
Philipp responds that the sale was a taking in connection with genocide that inherently violated international law, arguing that forced selling of art at an extremely low price was inextricably linked with Nazi designs for the Holocaust. Brief for Respondents at 8–10, Fed. Republic of Germany v. Philipp, No. 19-351 (U.S. filed Oct. 22, 2020). Philipp further asserts that the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act explicitly “preserved” jurisdiction over claims arising from Nazi expropriations, suggesting that Congress intended there to be jurisdiction in the first place. Id. at 14–16.
On the second issue, Germany argues that comity-based defenses were not eliminated by passage of the FSIA, which concerns itself solely with jurisdictional defenses, because comity is not jurisdictional but a doctrine of judicial abstention. Brief for Petitioners at 36–37. Germany further suggests that its interest in atonement “in response to its Nazi past” weighs in favor of such an abstention. Id. at 51.
In response, Philipp urges the Supreme Court to accept the D.C. Circuit’s holding that the FSIA articulated comprehensive legal standards for immunity, and that their proposed model for a comity standard is actually just an unsustained argument for forum non conveniens by another name. See Brief for Respondents at 39, 43. Moreover, Philipp argues that there would be no reason for U.S. courts to abstain; German courts are “categorically unavailable” for Holocaust restitution claims, as the enabling legislation for them to hear them is expired. Id. at 54.
Numerous advocacy groups submitted amicus briefs in favor of Philipp’s position. But in a brief supporting Germany’s arguments, Solicitor General Noel J. Francisco cautioned that allowing for jurisdiction in this case would risk “embroiling courts in sensitive foreign policy issues that are better left for the political branches.” Brief for the United States as Amicus Curiae Supporting Petitioners at 14, Fed. Republic of Germany v. Philipp, No. 19-351 (U.S. filed Sept. 11, 2020).
December 8
Facebook, Inc. v. Duguid
No. 19-511, 9th Cir.
Preview by Jacob Reiskin, Online Editor
Consumer privacy meets Facebook goliath as the Court decides the definition of an “automatic telephone dialing system” in the Telephone Consumer Protection Act of 1991 (“TCPA”). 47 U.S.C. § 227 (2018). The new super-majority-conservative Supreme Court will have the opportunity to signal its position on statutory interpretation when it considers grammar and congressional intent to determine the breadth of the law against robocalls. The respondent, Duguid, sued Facebook after repeatedly receiving security-related text messages from Facebook that he did not ask for or consent to. The Ninth Circuit found for Duguid.
The TCPA bans “automatic telephone dialing systems” (“ATDSs”) that it defines as systems that have the capacity “(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” 47 U.S.C. § 227(a)(1). The core of the debate is whether “using a random or sequential number generator” modifies the words “store” and “produce” (Facebook’s view) or just “produce” (Duguid’s view). Facebook’s interpretation of the law modifying both words would mean that the law is virtually obsolete since sequential dialing systems are hardly used anymore. Duguid’s variation results in a broader ban against robocalling because ATDS systems that merely store numbers (i.e., Facebook’s curated database) would be banned in addition to older obsolete systems that produce and call numbers randomly.
The outgoing Trump administration, an intervenor, argues for Facebook’s interpretation. The Government contends that the Ninth Circuit’s prior opinion in Marks v. Crunch San Diego, LLC—which the Ninth Circuit relied on here—misinterpreted the statute by misreading the Congressional record. 904 F.3d 1041, 1052 (9th Cir. 2018), cert. dismissed, 139 S. Ct. 1289 (2019); see Brief for the United States as Respondent Supporting Petitioner at 10–13, Facebook, Inc. v. Duguid, No. 19-511 (U.S. filed Sept. 4, 2020). The Acting Solicitor General argues that many states had broad bans in 1991, and had Congress wanted a broad prohibition, it would have adopted language used in state statutes. The Government also made various grammatical arguments and explained that Congress could amend the law if it wants to broaden it.
Duguid tells the Court that narrowing the statute now would limit Congress’s intent by circumventing a desire to protect against invasions of privacy by reigning in robocalling through a ban on two types of technology—systems that call stored numbers and systems that call generated numbers. He argues that Congress used different language from state laws because it wanted to create clarity, and Duguid says that if “using a random or sequential number generator” modifies both “store” and “produce,” then the words “store or” become superfluous. See Brief of Respondent Noah Duguid at 8–10, Facebook, Inc. v. Duguid, No. 19-511 (U.S. filed Oct. 16, 2020).
Facebook builds much of its case on the notion that cellphones could be considered ATDS under Duguid’s argument and that individuals could incur $1,500 per unwanted-call liability—something it says may rise to a First Amendment violation. See Brief for Petitioner at 21, Facebook, Inc. v. Duguid, No. 19-511 (U.S. filed Sept. 4, 2020). Duguid says the floodgates are not open, because while a smartphone could be programmed to act as an ATDS, a cell phone with stored contacts is not automatic by definition of the statute. He also argues that the FCC agreed with his interpretation in 2015 when the agency found individual cell phone users not liable under the TCPA. See FCC, In re Rules & Regulations Implementing the Telephone Consumer Protection Act of 1991, 30 FCC Rcd. 7961, 7998–99 (2015). The Government, in contrast, argues that regulation is irrelevant since the D.C. Circuit vacated it.
In Duguid, a textual debate over a comma provides cover for the Supreme Court to signal its position on the role of the judiciary, statutory interpretation, and consumer privacy.
Henry Schein, Inc. v. Archer & White Sales, Inc.
No. 18-1447, 5th Cir.
Preview by Kevin Adams, Member
This case is before the Court for the second time in as many years. In 2012, Archer & White Sales, Inc. filed suit against Henry Schein, Inc. alleging violations of the Sherman Antitrust Act and the Texas Free Enterprise and Antitrust Act and sought injunctive relief along with monetary damages. 15 U.S.C. § 1; Tex. Bus. & Com. Code Ann. § 15.01 (West 2019). Schein moved to compel arbitration pursuant to the arbitration clause in the contract between Archer & White and Schein’s predecessor in interest. The relevant language of that clause is:
“Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes relating to trademarks, trade secrets or other intellectual property . . .) shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association.”
Brief for Respondent at 3, Henry Schein, Inc. v. Archer & White Sales, Inc., No. 19-963 (U.S. filed Jan. 31, 2020). Archer & White argued that the carve-out clause of “except for actions seeking injunctive relief” excepted its action from arbitration, and therefore Schein’s motion to compel was wholly groundless. The district court agreed, dismissed the motion, and the Fifth Circuit later affirmed. Archer & White Sales, Inc. v. Henry Schein, Inc., 878 F.3d 488 (5th Cir. 2017). The Supreme Court, in a unanimous decision, vacated and remanded the case. See Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 531 (2019). The Court held that the Federal Arbitration Act did not permit a court to ignore the parties’ contractual agreement to delegate questions of arbitrability to an arbitrator. Id. at 529. The Court remanded the case to the Fifth Circuit to determine if there was “clear and unmistakable evidence” that Schein and Archer-White delegated the question of arbitrability. Id. at 531. On remand, the Fifth Circuit held that because the arbitration agreement included a carve-out exempting certain claims from arbitration, the agreement did not “clearly and unmistakably” delegate the question of arbitrability to an arbitrator. Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274, 277 (5th Cir. 2019).
In the present case, the Supreme Court granted cert to resolve a circuit split over whether a carve-out clause that exempts certain claims from arbitration negates an otherwise clear & unmistakable delegation of questions of arbitrability to an arbitrator.
Schein argues that the “clear and unmistakable” rule only applies to the initial question of whether the parties agreed to a delegation of questions of arbitrability. Brief for Petitioner at 19, Henry Schein, Inc. v. Archer & White Sales, Inc., No. 19-963 (U.S. filed Aug. 21, 2020). As such, Schein argues that an arbitrator would decide procedural questions that grow out of the dispute and bear on its final disposition, as exist in this case. See id. at 23–24. Additionally, Schein argues that the Court’s decisions interpreting the Federal Arbitration Act create a strong presumption of arbitrability, and once it is evident that the parties intended to arbitrate some questions of arbitrability, the Court should apply the presumption and conclude that the parties intended to arbitrate all questions of arbitrability absent clear evidence to the contrary. See id. at 25. Anticipating argument regarding the applicability of the American Arbitration Association (“AAA”) rules as a delegation of arbitrability, Schein notes that all eleven circuits are in agreement that adoption of AAA rules is an implicit agreement to delegate questions of arbitrability to the arbitrator. See id. at 38–39.
Archer & White contends that the clause’s reference to the AAA rules is not a “clear and unmistakable” delegation of the questions of arbitrability. Brief for Respondent at 14, Henry Schein, Inc. v. Archer & White Sales, Inc., No. 19-963 (U.S. filed Oct. 13, 2020). In its view, the agreement would need to include an explicit delegation along the lines of, “The arbitrator shall decide arbitrability,” in order to meet the “clear and unmistakable” standard. Id. at 16. The mere reference to the AAA rules would be insufficient. Archer & White argues in the alternative that even if reference to the AAA rules is a delegation of the question of arbitrability, the carve-out clause exempts the claim at issue from the scope of delegation to the arbitrator. Id. at 26. In Archer & White’s view, the Court may decide the arbitrability of the claim.
While seemingly a dispute of an esoteric nature, the policy implications of the case are wide-reaching. Over the last two decades the Court has enabled the expansion of arbitration agreements, particularly between consumers and commercial entities. The Court’s decision in this case will affect how such agreements must be drafted in order to be effective and avoid costly disputes over their applicability.
December 9
Collins v. Mnuchin
Nos. 19-422 & 19-563, 5th Cir.
Preview by Nick Mastria, Member
The Fair Housing Finance Agency (“FHFA”) was established in 2008 by the Housing and Economic Recovery Act (“HERA”) to regulate Fannie Mae and Freddie Mac (“the Companies”). 12 U.S.C. § 4617(a) (2018). The Companies are government-sponsored entities created in the mid-1900s to back the American housing market by purchasing mortgages from lenders, bundling them into mortgage-backed securities, and selling them to investors. Collins brings this suit against the FHFA and the Treasury Department to enjoin the Treasury from enforcing an agreement known as the Net Worth Sweep. Collins and the other petitioners are private stockholders of the Companies who allege FHFA violated its statutory authority and the Constitution.
In 2008, Congress created FHFA to replace the Companies’ previous governmental regulators. HERA confers on FHFA the power to appoint itself the conservator or receiver of the Companies to ensure the Companies’ solvency and to promote the public good.
In September 2008, FHFA assumed purported conservatorship of the Companies. After several deficient agreements where the Companies paid the Treasury quarterly dividends for a credit line, the FHFA agreed to the Net Worth Sweep. This agreement requires the Companies to pay their net worth’s minus a capital buffer to the Treasury each quarter for a credit line. In quarters where they perform poorly, the Companies pay the Treasury nothing. Collins argues that the Net Worth Sweep injures his economic interest in the Companies because the Companies could no longer retain capital. Brief of Patrick J. Collins, et al. at 6–8, Collins v. Mnuchin, Nos. 19-422 & 19-563 (U.S. filed Sept. 16, 2020).
The first issue is whether HERA’s succession clause bars all derivative suits. As conservator, FHFA assumes “all rights, titles, powers, and privileges” of the Companies and of “any stockholder, officer, or director.” § 4617(b)(2)(A)(i). The government argues that FHFA thus assumes the power to litigate this claim because the harm is to the Companies and not to the shareholders. Brief for Federal Parties at 20, Mnuchin v. Collins, No. 19-563 (U.S. filed Aug. 17, 2020). This would bar Collins’ suit. Collins responds that he was also harmed by the Net Worth Sweep because FHFA favored the Treasury over Collins as a shareholder. Brief of Patrick J. Collins at 13. According to Collins, this warrants classifying the action as a direct suit.
Second, the parties disagree if FHFA’s actions violate its statutory authority as conservator. § 4617(f). As conservator, HERA authorizes FHFA to take any action “necessary to put [the Companies] in a sound and solvent condition” and “conserve [its] assets.” § 4617(b)(2)(D). If FHFA acted as a conservator, HERA bars any suit under the anti-injunction clause. If FHFA acted outside its statutory authority, the Net Worth Sweep cannot be enforced. Collins argues that the Net Worth Sweep was not within the role of conservator because it surrenders most of its profits to the Treasury every quarter. It is not preserving assets; it is liquidating them to benefit the Treasury. Brief of Patrick J. Collins at 46–49. According to Collins, the agreement puts the Companies in unsound condition, not a solvent one. The government argues that the Net Worth Sweep is necessary for future solvency and therefore FHFA was acting as a conservator. Brief for Federal Parties at 40–41. This appears to be the main issue on appeal.
Third, the Court will decide whether the Net Worth Sweep is severable from FHFA’s unconstitutional structure. Like its sister agency, the Consumer Finance Protection Bureau (“CFPB”), FHFA is headed by a single Director who can only be removed by the President for good cause. Last term, in Seila Law L.L.C. v. Consumer Finance Protection Bureau, the Court found that this structure violates separation of powers. 140 S. Ct. 2183, 2197 (2020). However, the Court found that “for-cause” removal was severable from the Bureau’s action. See id. at 2211. The government concedes that FHFA’s sole-directorship structure is unconstitutional but argues that the for-cause removal provision here is also severable and does not warrant invalidating the entire Net Worth Sweep program. Reply and Response Brief for Federal Parties at 28, 37, Collins v. Mnuchin, Nos. 19-422 & 19-563 (U.S. filed Oct. 23, 2020). Collins argues that there is no sufficient legal remedy other than total invalidation.
This case is about the authority of Congress and agencies to intervene in markets for stabilization and regulation purposes. If the Net Worth Sweep is affirmed, agencies would have wider latitude in structuring enterprises like Fannie Mae and Freddie Mac, which may deter investment in those entities. It would also greatly limit stockholder rights in these enterprises, such as their power to litigate to hold governmental agencies accountable. Finally, severability has been a major issue for the Court in the recent terms, so further evolution of this doctrine will be informative for future cases.
