October 25, 2024 | Volume 32, Issue 1
This Report summarizes cases granted review on October 4, 2024 (Part I).
CASES GRANTED REVIEW
Nuclear Regulatory Comm’n v. Texas, 23-1300; Interim Storage Partners, LLC v. Texas, 23-1312.
These consolidated cases raise two questions: (1) “Whether the Hobbs Act, which authorizes a ‘party aggrieved’ by an agency’s ‘final order’ to petition for review in a court of appeals, allows nonparties to obtain review of claims asserting that an agency order exceeds the agency’s statutory authority.” (2) “Whether the Atomic Energy Act of 1954 and the Nuclear Waste Policy Act of 1982 permit the Nuclear Regulatory Commission [NRC] to license private entities to temporarily store spent nuclear fuel away from the nuclear-reactor sites where the spent fuel was generated.”
Several statutes form the backdrop for these cases. Among other provisions, the Atomic Energy Act (AEA) authorizes the NRC to issue licenses to possess three types of nuclear material, known as “source material,” “special nuclear material,” and “byproduct material.” 42 U.S.C. §§2073(a), 2092, 2111(a). Spent fuel from nuclear reactors contains these three types of material, and a license is required to possess any of them. In 1980, the NRC issued regulations establishing licensing requirements for “interim storage” (as opposed to permanent disposal) of spent fuel. In 1982, Congress passed the Nuclear Waste Policy Act (NWPA). That act provided for the establishment of an underground permanent disposal facility for spent fuel and directed the Department of Energy (DOE) to also provide limited interim storage under certain conditions. Among other provisions, the NWPA stated that “[n]otwithstanding any other provision of law, nothing in” the NWPA “shall be construed to encourage, authorize, or require the private or Federal use, purchase, lease, or other acquisition of any storage facility located away from the site of any civilian nuclear power reactor and not owned by the Federal Government on January 7, 1983.” 42 U.S.C. §10155(h). Since the NWPA’s enactment, the DOE has not made sufficient disposal arrangements for all spent nuclear fuel. Accordingly, the NRC has from time to time issued licenses under the AEA for interim storage at both onsite and offsite locations. Finally, the Hobbs Act gives the federal courts of appeals jurisdiction over final orders and rules of many agencies. Relevant here, the act gives the courts of appeals jurisdiction to review “final order[s]” of the NRC “granting, suspending, revoking, or amending” a “license.” 42 U.S.C. §2239(a)(1)(A), (b)(1). A person or entity may seek review if it is a “party aggrieved by the final order.” 28 U.S.C. §§2343, 2344.
Interim Storage Partners (ISP) (petitioner in 23-1312) is a private company. In 2018, the NRC (petitioner in 23-1300) gave notice that ISP had applied for a license to store spent nuclear fuel at a site in Texas located away from a nuclear reactor (i.e., an offsite location). NRC’s notice invited requests for hearing and for leave to intervene. Several groups, including two respondents in 23-1300 (Fasken and Permian), sought and were denied leave to intervene. The other respondents in 23-1300 (Texas, the state’s Governor Greg Abbott, and the Texas Commission on Environmental Quality) did not seek leave to intervene or become formally involved in the application process. Instead, they submitted comments on the draft Environmental Impact Statement (EIS) for ISP’s application, and Governor Abbott later sent a letter to the NRC objecting to the application because Texas had enacted a law prohibiting spent fuel storage within its borders.
The NRC issued ISP a license in September 2021. Several litigation matters arose from the licensing process. Relevant here, some of the groups that had sought to intervene petitioned for review of the denial in the D.C. Circuit. The court held that the NRC had properly denied intervention and, therefore, the putative intervenors were not “part[ies] aggrieved” who could obtain substantive review of the license. Separately, the Texas respondents, Fasken, and Permian (together, respondents) sought review of ISP’s license in the Fifth Circuit. Disagreeing with the D.C. Circuit, the Fifth Circuit held that respondents could seek review even though they were not parties to the agency proceeding that led to issuance of the license. 78 F.4th 827. The Fifth Circuit reached that conclusion by applying an “ultra vires” exception to the Hobbs Act’s “party aggrieved” requirement. Under that exception, which only the Fifth Circuit recognizes, a non-party to an agency proceeding may appeal the agency’s action if the non-party alleges that the action exceeded the agency’s authority. Because respondents claimed that the NRC lacked authority to license offsite interim storage, the ultra vires exception applied. The Fifth Circuit also stated that respondents might qualify as “parties” under the Hobbs Act because they had “participated in the agency proceeding” by “comment[ing]” on the NRC’s draft EIS, and because Fasken had “attempted to intervene” in the adjudication.
The Fifth Circuit also agreed with respondents’ claim on the merits. It held that the NRC lacked authority to issue ISP’s license because the AEA provisions relied on by the NRC authorize licenses only for a limited set of enumerated purposes that do not include storing or disposing of spent fuel. Additionally, the court held that the NWPA does not allow offsite storage by a non-government entity. The court explained that, given the “Congressional policy expressed in” the NWPA and the “historical context surrounding” it, the Act “plainly contemplates that, until there’s a permanent repository, spent nuclear fuel is to be stored onsite at-the-reactor or in a federal facility.” The court found the statutory scheme “unambiguous,” and added that the NRC’s interpretation would not be entitled to deference in any event because “[w]hat to do with the nation’s ever-growing accumulation of nuclear waste is a major question that . . . has been hotly politically contested for over half a century,”
The NRC and ISP (together, petitioners) both challenge the Fifth Circuit’s decision. They argue that the “ultra vires” exception is an atextual anomaly that subverts the Hobbs Act’s jurisdictional limitations. According to petitioners, “party aggrieved” should be read to refer only to parties who formally participated in the underlying agency process. Allowing non-parties to get into court by alleging the agency acted outside its authority would “impose no practical limit on the availability of judicial review” because non-parties could reframe simple disagreements with agency action as arguments about the scope of the agency’s authority. On the merits, petitioners argue that the Fifth Circuit misinterpreted the AEA and NWPA. In addition to the enumerated purposes mentioned by the Fifth Circuit, the AEA allows licenses to be issued for other purposes, including “for such other uses” the NRC finds “appropriate to carry out” the statute’s purposes, such as promoting “widespread participation in the development and utilization of atomic energy for peaceful purposes.” 42 U.S.C. §§2073(a)(4), 2013(d). Offsite interim storage is such an allowed “other use[]” under petitioners’ reading, and they argue that the Fifth Circuit’s interpretation is wrong because it renders this and other clauses nullities. Petitioners also argue that their reading finds support in the NRC’s “longstanding regulatory practice” of issuing offsite interim storage licenses and in other circuits’ approval of the practice. And the NWPA, while not authorizing offsite interim storage, did not rescind the AEA’s allowance of such storage.
Ames v. Ohio Department of Youth Services, 23-1039.
In this Title VII reverse discrimination case, the question presented is “[w]hether, in addition to pleading the other elements of Title VII, a majority-group plaintiff must show ‘background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.’” Petitioner Marlean Ames is a heterosexual woman who alleged (among other things) that the Ohio Department of Youth Services committed sexual orientation discrimination when it failed to promote her and then hired a replacement for her position in favor of two less qualified gay individuals. The district court granted summary judgment to the Department, holding that because Ames is a “member of a majority group”—i.e., a heterosexual woman—she had to “show that ‘background circumstances support the suspicion that the defendant is that unusual employer who discriminates against the majority’ to establish the first prong of the prima facie case.” The court ruled that Ames failed to make that showing. Relying on circuit precedent, the Sixth Circuit affirmed. 87 F.4th 822. In so holding, the court noted that but for the necessary showing of background circumstances, Ames had established her prima facie case.
Title VII of the Civil Rights Act of 1964 bars employers from “discriminat[ing] against any individual . . . because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. §2000e-2(a)(1). In McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), the Court outlined a burden-shifting framework for Title VII plaintiffs whereby once a prima facie case of discrimination is established, the burden “shift[s] to the employer to articulate some legitimate, nondiscriminatory reason for the employee’s rejection,” which the plaintiff can then rebuff by showing that the employer’s stated reason was pretextual. The “background circumstances” rule applicable to majority-group plaintiffs was first adopted by the D.C. Circuit in 1981 and has since been adopted by four more circuits, including the Sixth Circuit. Two other circuits have rejected the rule. In the original D.C. Circuit court case, Parker v. Baltimore & Ohio Railroad Co., 652 F.2d 1012 (D.C. Cir. 1981), the court explained: “The original McDonnell Douglas standard required the plaintiff to show ‘that he belongs to a racial minority’” and “[m]embership in a socially disfavored group was the assumption on which the entire McDonnell Douglas analysis was predicated.” With this backdrop, the court reasoned that an adjustment to the McDonnell Douglas framework requiring a majority-group plaintiff to show background circumstances was necessary.
Ames argues that a majority-group plaintiff should not shoulder the extra burden of showing background circumstances that support the suspicion that the defendant is that unusual employer who discriminates against the majority. This would require such plaintiffs to prove that a “member of the relevant minority group (here, gay people) made the employment decision at issue” or by marshaling “statistical evidence showing a pattern of discrimination by the employer against members of the majority group.” Ames contends that Title VII’s plain language does not distinguish between plaintiffs of different demographic groups and cannot justify the imposition of additional requirements on certain groups. Further, according to Ames, the background circumstances requirement is “irremediably vague and ill-defined” and threatens to be administratively unwieldy.
Perttu v. Richards, 23-1324.
The Court will resolve whether, in a suit under the Prison Litigation Reform Act (PLRA), a prisoner has a Seventh Amendment right to a jury trial concerning the exhaustion of administrative remedies if disputed facts regarding exhaustion are intertwined with the underlying merits of the prisoner’s claim. Respondent Kyle Richards is a parolee who was in custody of the Michigan Department of Corrections (MDOC) during the relevant time periods. While in custody, Richards alleges that he suffered sexual harassment and other torts at the hands of petitioner Thomas Perttu, a Resident Unit Manager for MDOC. Richards and two co-plaintiffs sued Perttu for First, Fifth, and Eighth Amendment violations, including First Amendment retaliation. “In his retaliation claim, Richards alleges that Perttu prevented him from filing grievances related to Perttu’s alleged sexual abuse by ripping up the grievances or otherwise destroying them.” Perttu moved for summary judgment on the basis that the plaintiffs had failed to exhaust their administrative remedies, as required by the PLRA as a prerequisite to filing suit. After a bench trial during which the parties presented evidence relevant to the exhaustion issue, a magistrate judge recommended the district court grant Perttu’s summary judgment motion because “administrative remedies were generally available” to Richards and his co-plaintiffs, and they failed to exhaust those remedies. The district court adopted the magistrate judge’s recommendation and granted summary judgment to Perttu. Only Richards appealed. He argued (among other issues) that he should have received a jury trial—instead of a bench trial—on the exhaustion issue. The Sixth Circuit agreed with Richards. 96 F.4th 911.
The Sixth Circuit acknowledged that PLRA exhaustion is generally an issue for the judge, not a jury. But the court found that Richards’ allegations about Perttu’s destruction of grievances were “intertwined with the merits of Richards’ retaliation claim.” And that, ruled the Sixth Circuit, made all the difference and entitled Richards to a jury trial on exhaustion. Rejecting a Seventh Circuit decision that reached the opposite conclusion, the Sixth Circuit reasoned that “Richards was stripped of his right to a jury’s resolution of the ultimate dispute” when he was denied a jury trial on the exhaustion issue.
Perttu makes two overarching arguments against the Sixth Circuit’s decision. First, Perttu argues that requiring a jury trial on exhaustion defeats the PLRA’s purpose of decreasing the quantity and increasing the quality of prisoner lawsuits. Pointing to historical data, Perttu urges that the volume of prisoner lawsuits has decreased significantly in the nearly three decades since the PLRA’s enactment, and he predicts that decrease will be reversed if prisoners may circumvent the exhaustion requirement simply by alleging that a prison official interfered with grievance filings. Perttu also argues that giving prisons a chance to “correct their own errors” through the exhaustion process is critical because states have a strong interest in the administration of their prisons. Second, Perttu argues that the Seventh Amendment does not require a jury trial on exhaustion-related facts. He points to other contexts in which courts decide fact-heavy issues: summary judgment, jurisdictional determinations, directed verdicts, and so on. He argues that these other contexts show that “threshold issues, which determine whether a case should get to a jury, are procedural matters that do not require a jury.” So too with the exhaustion requirement.
Smith & Wesson Brands v. Estados Unidos Mexicanos, 23-1141.
The Court will review a First Circuit decision allowing Mexico’s lawsuit against seven American firearms manufacturers and one firearms distributor (petitioners) to proceed, notwithstanding the Protection of Lawful Commerce in Arms Act (PLCAA). Mexico alleged claims for negligence, public nuisance, and unjust enrichment, among several others, based on its allegations that petitioners aided and abetted unlawful firearms sales to traffickers for cartels in Mexico, causing Mexico harm from the ensuing violence. Petitioners moved to dismiss Mexico’s claims on multiple grounds. The district court dismissed the complaint under the PLCAA, which generally precludes civil suits seeking to hold firearms companies liable for harms stemming from the downstream criminal misuse of their products. The First Circuit reversed, applying an exception to the PLCAA which allows suits alleging knowing violations of firearms laws that proximately cause a plaintiff’s injuries. 91 F.4th 511.
At the motion to dismiss stage, the First Circuit held that Mexico’s complaint plausibly alleged both that petitioners deliberately aided and abetted the unlawful sale of firearms to purchasers supplying cartels in Mexico and that Mexico’s injuries were proximately caused by petitioners’ actions. The court concluded that Mexico’s allegations could show that “defendants engage in conduct—design decisions, marketing tactics, and repeated supplying of dealers known to sell guns that cross the border—with the intent of growing and maintaining an illegal market in Mexico from which they receive substantial revenues.” Further, under traditional understandings of proximate cause, the court concluded: “Mexico’s claim of proximate cause is straightforward: defendants aid and abet the trafficking of guns to the Mexican drug cartels, and this trafficking has foreseeably required the Mexican government to incur significant costs in response to the increased threats and violence accompanying drug cartels armed with an arsenal of military-grade weapons.”
In their petition, petitioners argue that under traditional proximate-cause principles, Mexico’s chain of causation is too attenuated and remote to establish the “direct relation” required for proximate cause. According to petitioners, this is especially evident where “PLCAA’s predicate exception includes an express proximate-cause requirement, and its statutory history and design make clear that Congress wanted to foreclose exactly this type of attenuated claim against the gun industry in particular.” Petitioners criticize the First Circuit’s reliance on foreseeability, stating that the Court has taught that “’foreseeability alone does not ensure the close connection that proximate cause requires.’” As to the First Circuit’s aiding-and-abetting holding, petitioners contend that it runs counter to Twitter, Inc. v. Taamneh, 598 U.S. 471 (2023), which involved allegations that social media platforms were liable for the misuse of their platforms by terrorists. There, because the allegations rested on passive nonfeasance rather than knowingly providing substantial assistance in the commission of the actionable wrong, the Court held such conduct was insufficient to state a claim of aiding and abetting. Petitioners argue that under Taamneh, “the essence of aiding and abetting is affirmative culpable conduct,” which Mexico’s complaint fails to allege.
Barnes v. Felix, 23-1239.
The question presented is “[w]hether courts should apply the moment of the threat doctrine when evaluating an excessive force claim under the Fourth Amendment.” Petitioner’s son, Ashtian Barnes, was shot and killed by defendant, Officer Roberto Felix, during a traffic stop. When the stop occurred, Barnes was driving a rental car that his girlfriend had leased on a toll road in Texas. Felix, who was driving his patrol car in the area, received an alert that the rental car had unpaid tolls. He signaled to Barnes to pull over. Barnes did so, stopping on the left side of the road. Felix approached the driver’s side window and asked to see Barnes’ identification and insurance documentation. Barnes initially said he did not have documentation, and started rummaging in his car. After Felix told Barnes to stop searching around and said that he smelled marijuana, Barnes said that his documentation might be in the trunk. While still in the driver’s seat, Barnes then opened the trunk and shut off the ignition. Felix asked Barnes to get out of the car. Barnes opened the driver’s-side door but did not exit. Instead, a moment later, he restarted the car. Felix drew his gun and stepped onto the sill of the open driver’s-side door. As Barnes started to accelerate, Felix repeatedly yelled at him not to move. Barnes kept accelerating, and Felix shot Barnes twice. The car then stopped, and Barnes bled to death in the car. Petitioner sued Felix and Harris County (respondents) in state court under §1983, alleging that Felix used excessive force in violation of the Fourth Amendment. Respondents removed to federal court. At summary judgment, the district court held that Felix’s use of deadly force was reasonable under the Fifth Circuit’s “moment-of-the-threat doctrine.” The Fifth Circuit affirmed. 91 F.4th 393.
Following circuit precedent, the Fifth Circuit applied the “moment-of-the-threat” rule, which requires evaluating the reasonableness of an officer’s use of force by reference to the moment at which the officer perceived a threat to himself or others and chose to use force, rather than the circumstances leading up to that moment. The moment-of-the-threat approach precludes consideration of reckless decisions or previous Fourth Amendment violations by the officer that may have contributed to the situation in which the officer felt that his or another’s life was in danger. In this case, that meant the court would not consider Felix’s decision to jump onto the vehicle when it appeared already to be moving.
Petitioner argues that the Court should adopt the totality-of-circumstances approach and reject the “moment-of-the-threat” rule. She argues that the choice of approach was outcome-determinative here. And she argues that the totality-of-circumstances approach is dictated by Graham v. Connor, 490 U.S. 386 (1989), which said courts evaluating excessive-force claims should consider the “totality of the circumstances,” including but not limited to “the severity of the crime at issue, whether the suspect poses an immediate threat to the safety of the officers or others, and whether he is actively resisting arrest or attempting to evade arrest by flight.” (Citation omitted.) Petitioner contends that under the totality-of-circumstances approach, Felix’s use of deadly force was plainly unreasonable, especially given the minor traffic offense at issue and Felix’s decision to jump onto the car as it began moving.
Gutierrez v. Saenz, 23-7809.
In Reed v. Goertz, 598 U.S. 230 (2023), the Court held that a prisoner had standing to raise a due process challenge to Texas’ postconviction DNA testing procedures because a holding in the prisoner’s favor “would eliminate the state prosecutor’s justification for denying DNA testing” and “[i]t is ‘substantially likely’ that the state prosecutor would abide by such a court order.” The Fifth Circuit here distinguished Reed and held that petitioner Ruben Gutierrez lacked standing to raise a due process challenge to Texas’ postconviction DNA testing procedures. Gutierrez presents the question whether “Article III standing require[s] a particularized determination of whether a specific state official will redress the plaintiff’s injury by following a favorable declaratory judgment.”
Gutierrez was convicted of the 1998 murder of Escolastica Harrison and sentenced to death under Texas’s capital murder statute, which permits imposition of the death penalty if the defendant was a “party” to the murder who acted with accomplices to intentionally kill the victim, even if he did not physically cause the death. Gutierrez, who acted with two accomplices to rob Harrison on the day of the murder, gave inconsistent statements about whether he entered her home that day but consistently denied stabbing her. In addition to other state and federal postconviction petitions, Gutierrez sought relief under Texas Code of Criminal Procedure Chapter 64. In that motion, he sought DNA testing of various evidence found at the crime scene. Gutierrez argued that DNA from these items would show that he never entered Harrison’s home on the day of the murder and therefore would not have been convicted of capital murder or sentenced to death had the jury seen the DNA evidence. The trial court denied Gutierrez’s motion. The Texas Court of Criminal Appeals affirmed, holding that Chapter 64 “does not authorize testing when exculpatory testing results might affect only the punishment or sentence that [the defendant] received.” Alternatively, the court held that even if Chapter 64 authorized such testing, Gutierrez would not be entitled to it because he would “have been death-eligible” under Texas law regardless. The court reached that conclusion because, it held, the evidence showed Gutierrez “played a major role in the underlying robbery” and had a mental state of reckless indifference with respect to the murder.
After more state and federal proceedings, Gutierrez brought the §1983 lawsuit that gave rise to his petition. As relevant here, Gutierrez argued that Texas’ postconviction DNA testing procedures violated his due process rights. The federal district court agreed, holding that denying Gutierrez access to evidence that could show he is innocent of the death penalty conflicts with a separate Texas statute that grants prisoners the right to a successive habeas petition to show such innocence. The Fifth Circuit reversed. 93 F.4th 267. It held that Gutierrez lacked standing to challenge Texas’ DNA testing scheme because the third element of constitutional standing, redressability, was absent. Specifically, because the Texas Court of Criminal Appeals had held that Gutierrez would not have been entitled to the DNA testing even if Chapter 64 permitted testing relevant only to punishment—because he was “death eligible” regardless—a favorable ruling on his due process claim would not likely result in the prosecutor’s ordering the testing. Judgment for Gutierrez on his constitutional claim would not, therefore, result in the relief he sought. The Fifth Circuit said that Reed requires a petitioner to show that a prosecutor would “be likely to grant access to the requested evidence should a favorable federal court ruling be obtained.” That would not be true here, the panel reasoned, because of the state court’s alternative holding.
Gutierrez argues that the Fifth Circuit improperly read Reed as requiring a particularized inquiry into whether the state prosecutor was likely to order DNA testing after a favorable federal court order. He contends that the court’s distinguishing of Reed fails because in that case, too, the Texas Court of Criminal Appeals had reached an alternative holding that precluded relief for the prisoner even assuming he could show that DNA testing would be exculpatory. Gutierrez also argues that the Eighth and Ninth Circuits have both applied Reed in a manner inconsistent with the Fifth Circuit’s decision.
Thompson v. United States, 23-1095.
The question presented is “[w]hether 18 U.S.C. §1014, which prohibits making a ‘false statement’ for the purpose of influencing certain financial institutions and federal agencies, also prohibits making a statement that is misleading but not false.” To contribute equity to a law firm he had joined, petitioner Patrick Thompson borrowed $110,000 from the Washington Federal Bank for Savings. Later, Washington Federal made two other loans to Thompson: one of $20,000 and one of $89,000. After the FDIC took over Washington Federal in 2017, it hired a collection agency, Planet Home Lending, to collect Thompson’s loans. Planet sent Thompson an invoice stating his debt as $269,120.58 in combined principal and interest. Thompson called Planet to dispute the debt amount. On the call, he stated in part: “I borrowed $100,000.” Thompson then continued: “I mean, I borrowed the money, I owe the money—but I borrowed $100 thou—$110—I think it was $110,000 . . . I want to quickly resolve all this, and—and—you know, what I owe.” Thompson then said, referring to Planet’s invoice, “I dispute that.” In a call with two FDIC contractors the following week, Thompson again stated that he had borrowed $110,000—for “home improvement”—and “disput[ed]” his balance. Thompson later settled with the FDIC for $219,000 and paid that amount.
The government later charged Thompson with (among other things) two violations of 18 U.S.C. §1014. In relevant part, the statute prohibits “knowingly mak[ing] any false statement or report . . . for the purpose of influencing in any way the action of . . . the Federal Deposit Insurance Corporation.” The first count was for stating to Planet that Thompson “only owed $100,000 or $110,000.” The second count was for making the same statement to the FDIC and for stating that his first loan was for “home improvements.” A jury convicted Thompson on both counts. In a motion for acquittal, Thompson argued that §1014 criminalizes only false, not misleading, statements, and that the statements for which he was convicted were only misleading. The district court rejected that argument and entered judgment against Thompson. The Seventh Circuit affirmed, applying circuit precedent holding that “misleading” statements are covered by §1014. 89 F.4th 1010. Because of that holding, the court did not decide whether Thompson’s statements were also literally false.
Thompson argues in his petition that the Court should hold that §1014 criminalizes only literally false statements. He notes that the statute uses only the word “false”—not “misleading,” “omission,” “concealment,” or any similar word. In other federal criminal statutes, Congress used words other than “false” to cover other dishonest statements. If Congress wanted to cover such statements in §1014, Thompson argues, it would have done so explicitly. He also relies on Williams v. United States, 458 U.S. 279 (1982), in which the Court held that depositing bad checks was not prohibited by §1014. It was the dissenters in Williams, not the majority, who would have held the implicit message that the check was good was a “false statement.” Finally, Thompson argues that the rule of lenity supports reading the statute to encompass only literally false statements.
The government responds that §”1014 criminalizes misleading representations and is not limited to ‘literally false’ statements.” The government insists that “[i]n ordinary usage, the word ‘false’ has never been limited by notions of ‘technical’ or ‘literal’ veracity.” The government explains that “[t]his understanding of falsity accords with common sense. On petitioner’s view, a child’s statement that she ‘ate one cookie,’ after having cleaned out the whole cookie jar, would not be a ‘false’ statement because it could be viewed as technically true: she ate one, and then all the rest.” The government adds that “[i]t would be anomalous to read a law designed to protect lenders from being ‘influenc[ed] in any way’ as excluding misleading statements.”
FDA v. R.J. Reynolds Vapor Co., 23-1187.
Under the Family Smoking Prevention and Tobacco Control Act, manufacturers may introduce new tobacco products only after obtaining authorization from the Secretary of Health and Human Services. If authorization is denied, “any person adversely affected” by the “denial of the application” can “file a petition for judicial review” in “the United States Court of Appeals for the District of Columbia or for the circuit in which such person resides or has their principal place of business.” 21 U.S.C. §387l(a)(1). The question presented is “[w]hether a manufacturer may file a petition for review in a circuit (other than the D.C. Circuit) where it neither resides nor has its principal place of business, if the petition is joined by a seller of the manufacturer’s products that is located within that circuit.”
Petitioner FDA exercises regulatory authority over electronic nicotine products known as “e-cigarettes” or “vapes.” Respondent R.J. Reynolds (Reynolds), a manufacturer of e-cigarettes, is incorporated and has its principal place of business in North Carolina. Reynolds applied for authorization to market three of its flavored Vuse e-cigarettes. The FDA denied the applications. It found Reynolds had failed to show that marketing the e-cigarettes was “appropriate for the protection of the public health,” for reasons that are separately under review in FDA v. Wages & White Lion Investments, LLC, 23-1038. Although it neither resides nor has its principal place of business in the Fifth Circuit, Reynolds filed its petitions for review of the FDA’s denials in that circuit. Reynolds’ petitions were joined by a Texas retailer that sells Reynolds products (Avail Vapor Texas) and a Mississippi association of retailers that includes sellers of Reynolds products. Because those two entities have residency in the Fifth Circuit, Reynolds argued that its petitions were properly filed there. The Fifth Circuit agreed. 65 F.4th 182.
The Fifth Circuit reasoned (in a trio of cases) that “a petitioner ha[d] its ‘principal place of business’” in the circuit. The court explained that, because the Tobacco Control Act allows “any person adversely affected” to challenge the denial of an application for marketing authorization, e-cigarette sellers may “challenge FDA decisions that affect them” in the circuit of their principal place of business. In its brief in opposition supporting that ruling, Reynolds emphasizes that reasoning: The Tobacco Control Act “expressly and unambiguously allows retailers like Respondent Avail and members of Respondent Mississippi Association to challenge FDA marketing denial orders. The Act says, ‘any person adversely affected by’ a denial order.” And, says Reynolds, “[r]etailers (including Respondent Avail and members of Respondent Mississippi Association) who sell the product subject to a denial order are plainly ‘adversely affected’ by an order that will cause them to lose substantial revenue and, in the case of Respondent Avail, shutter its operations if it is not allowed to sell Vuse products.”
The FDA argues that venue does not lie in the Fifth Circuit under §387l(a)(1). First, it argues that the statute’s reference to “any person adversely affected” by the denial of authorization includes only the entity whose application is denied. Thus, the two Fifth Circuit-based entities that joined Reynolds’s petitions were not entitled to do so. The FDA relies on other parts of the statutory scheme and administrative law decisions in other contexts to support its reading of “adversely affected.” The FDA also argues that even if the other entities could file in the Fifth Circuit, that would not make venue proper as to Reynolds because venue is “party-specific.” In addition, the FDA argues that the Fifth Circuit’s broader interpretation of the venue statute cannot be correct because it would practically eliminate the statute’s limitations on venue and would encourage forum-shopping.
McLaughlin Chiropractic Associates, Inc. v. McKesson Corp., 23-1226.
The Court will resolve whether the Hobbs Act required the district court to accept the Federal Communications Commission’s legal interpretation of what constitutes a “telephone facsimile machine” under the Telephone Consumer Protection Act (TCPA). The TCPA, which Congress passed in response to the public’s “outrage[] over the proliferation of intrusive, nuisance calls,” prohibits the sending of unsolicited advertisements via fax. McLaughlin brought a class action against McKesson alleging that McKesson sent multiple unsolicited advertisements via fax in violation of the TCPA. In 2019, six years into the litigation, the FCC issued its so-called Amerifactors order, construing the TCPA to exclude an “online fax service” from the definition of “telephone facsimile machine.” The district court found the FCC’s order binding under Ninth Circuit precedent and thus decertified the class and entered summary judgment in favor of McKesson for the impacted claims. The Ninth Circuit affirmed in an unpublished decision. 2023 WL 7015279.
The Hobbs Act provides in relevant part that the “[t]he court of appeals . . . has exclusive jurisdiction to enjoin, set aside, suspend (in whole or in part), or to determine the validity of . . . all final orders of the Federal Communication Commission made reviewable by section 402(a) of title 47.” The Ninth Circuit concluded that the Amerifactors order is a “final order” under the Hobbs Act because it was issued by the FCC through its general rulemaking authority to carry out the TCPA, and thus subject to judicial review as provided by the Hobbs Act. The district court was bound by the Amerifactors order to grant summary judgment to McKesson. “That was so, in the Ninth Circuit’s view, because the Hobbs Act’s exclusive-jurisdiction provision—which encompasses ‘any proceeding to enjoin, set aside, annul, or suspend any order’ of the FCC—forecloses a district court in any enforcement action from even considering whether the agency’s interpretation of the TCPA is wrong.”
The question presented here closely tracks the issue before the Court five years ago in PDR Network, LLC v. Carlton & Harris Chiropractic, Inc. 139 S. Ct. 2051, 2055 (2019), in which the Court deferred a decision on the merits and remanded to the lower court to consider two preliminary issues that could direct whether adjudication of the question presented was necessary. In the petition for certiorari in the present case, McLaughlin argued that because those issues are not present here, this case affords the Court the opportunity to reach the question it did not reach in PDR Network regarding whether a district court must accept the FCC’s legal interpretation of the TCPA.
McLaughlin urges the Court to adopt the position set forth by Justice Kavanaugh’s concurring opinion in PDR Network, that the Hobbs Act does not require district courts to give FCC orders “absolute deference” in garden-variety enforcement actions. McLaughlin argues that the Ninth Circuit’s Hobbs Act interpretation transforms deference into an abdication of the judicial power to determine what law governs a case. Moreover, according to McLaughlin, even if the Ninth Circuit is correct that the Hobbs Act’s “exclusive jurisdiction” language precludes judicial review of an agency’s legislative rules in an enforcement proceeding, the same should not be true for an agency’s interpretive guidance.
BLOM Bank SAL v. Honickman, 23-1259.
The question presented is “whether Rule 60(b)(6)’s stringent standard applies to a post-judgment request to vacate for the purpose of filing an amended complaint.” Respondents are victims and the families of victims of a series of terrorist attacks carried out by Hamas between 2001 and 2003. Respondents filed suit in 2019 under the Anti-Terrorism Act as amended by the Justice Against Sponsors of Terrorism Act (JASTA), accusing BLOM Bank of aiding and abetting those attacks by providing financial services to three customers associated with Hamas. BLOM Bank moved to dismiss the complaint on the grounds that it did not state a claim under JASTA because it did not plausibly allege that “the defendant must be generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance.”
Respondents did not request leave to amend their complaint and specifically declined the district court’s offer to do so. The district court then granted BLOM Bank’s motion. Respondents appealed and the Second Circuit affirmed. 6 F.4th 487. Respondents then moved to vacate the district court’s judgment so they could amend their complaint. The district court held that “plaintiffs have not demonstrated any extraordinary circumstances warranting relief under Rule 60(b)(6)” or that they would suffer an “extreme and undue hardship” from letting the judgment stand because they “have had ample opportunity to pursue all legal avenues available to them for relief.” The Second Circuit vacated the district court’s judgment and remanded. 2024 WL 852265.
The Second Circuit ruled that “the district court exceeded its discretion by basing its ruling on an erroneous view of the law because it failed to balance Rule 60(b)’s finality principles and Rule 15(a)’s liberal pleading principles.” Rule 60(b)(6) provides that “the court may relieve a party or its legal representative from a final judgment, order, or proceeding for . . . any other reason that justifies relief.” Rule 15(a)(2)’s liberal amendment policy provides that “[t]he court should freely give leave when justice so requires.” In determining the relation between these two rules, the Second Circuit relied on its decision in Mandala v. NTT Data, Inc., 88 F.4th 353 (2d Cir. 2023) (issued after oral argument in this case), which held that when a party seeks post-judgment relief under Rule 60(b)(6) to amend its complaint, the district court must balance Rule 60(b)(6)’s finality principles with Rule 15(a)(2)’s liberal amendment policy. Applying Mandala, the court concluded that the district court failed to engage in this balancing test.
BLOM Bank argues that the Second Circuit’s “newly crafted” balancing test eviscerates the finality principles embodied in Rule 60(b), and contravenes established precedents. Specifically, according to BLOM Bank, the relevant precedent is Gonzalez v. Crosby, 545 U.S. 524, 536 (2005), which held that a Rule 60(b)(6) motion requires a showing of “extraordinary circumstances.” Only after meeting this requirement, BLOM Bank asserts, can a party invoke Rule 15(a)’s liberal amendment policy. BLOM Bank further contends that under Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 393 (1993), the “extraordinary circumstances” must “suggest[] that the party is faultless in the delay.” According to BLOM Bank, this strict interpretation of Rule 60(b) is essential if the finality of judgments is to be preserved.
Waetzig v. Halliburton Energy Servies, Inc., 23-971.
The issue presented is “whether Federal Rule of Civil Procedure 60(b) permits courts to reopen cases that are voluntarily dismissed under Federal Rule of Civil Procedure 41(a)(1).” Petitioner Gary Waetzig sued his former employer Halliburton in federal district court alleging he was wrongfully terminated in violation of the Age Discrimination in Employment Act. After Halliburton asserted that the claims were subject to arbitration, Waetzig initiated an arbitration and voluntarily dismissed the lawsuit without prejudice by filing a notice under Rule 41(a)(1)(A). Later, in light of the arbitrator’s failure to comply with certain requirements imposed by the arbitration agreement, Waetzig moved the district court to reopen his case under Rule 60(b) and to vacate the arbitration award that had been issued in Halliburton’s favor. Rule 60(b) provides in relevant part that “the court may relieve a party or its legal representative from a final judgment, order, or proceeding” for certain enumerated reasons. The district court concluded it would reopen Waetzig’s case, reasoning that “a voluntary dismissal of a case without prejudice is a final proceeding within the meaning of Rule 60(b).” The district court relied upon Tenth Circuit case law permitting district courts invoking Rule 60(b) to vacate voluntary dismissals with prejudice, reasoning that the same rationale applied to voluntary dismissals without prejudice. The district court also agreed with the Fifth Circuit and other circuit courts that the term “proceeding” does not require judicial action to take effect and could thus include a voluntary dismissal. The Tenth Circuit reversed. 82 F.4th 918.
The Tenth Circuit concluded that “a voluntary dismissal without prejudice under Rule 41(a) divests the district court of subject-matter jurisdiction to consider a Rule 60(b) motion to reopen.” The Tenth Circuit explained that a voluntary dismissal without prejudice is not a “final judgment” or a “final order” and is therefore ineligible for relief under Rule 60(b). The court further held that “a final proceeding must involve, at a minimum, a judicial determination with finality,” thereby distinguishing a voluntary dismissal with prejudice—which it concluded was a “final judgment”—from a voluntary dismissal without prejudice.
In his petition, Waetzig highlights that the Tenth Circuit’s decision creates a conflict with the Fifth Circuit’s decision in Yesh Music v. Lakewood Church, 727 F.3d 356 (5th Cir. 2013), which held that a “dismissal without prejudice can be considered a final proceeding” within the meaning of Rule 60, and decisions of the Third, Seventh, Eighth, and Ninth Circuits. On the merits, Waetzig argues that the Tenth Circuit’s decision ignores well-settled principles of statutory interpretation in its understanding of “final proceeding.” Under its plain meaning, says Waetzig, a Rule 41 dismissal is “final” as it terminates a proceeding. Waetzig also argues that the clear interpretation of “final proceeding” that gives effect to every word in Rule 60 encompasses an action or lawsuit that comes to a close, even if without a judicial determination.
Cunningham v. Cornell University, 23-1007.
This case involves the standards for pleading a prohibited-transaction claim under §1106(a)(1) of the Employee Retirement Income Security Act (ERISA). To protect the interests of employees in their benefit plans, ERISA imposes duties of loyalty and prudence on the fiduciaries who manage these plans. Section 406(a)(1) of ERISA “supplements the fiduciary’s general duty of loyalty . . . by categorically barring certain transactions.” The list of barred transactions includes at §1106(a)(1)(C) those constituting “a direct or indirect furnishing of goods, services, or facilities between the plan and a party in interest.” A separate provision, 29 U.S.C. §1108, enumerates more than 20 exemptions to §1106(a)(1)’s list of prohibited transactions.
Petitioners comprise a class of current and former employees who participated in Cornell University’s two retirement plans. In February 2017, petitioners filed suit in federal district court, asserting that the plans’ fiduciaries (hereafter Cornell) had engaged in transactions prohibited under §1106(a). In September 2017, the district court granted Cornell’s motion to dismiss those prohibited transaction claims, holding that to plead a §1106 violation, plaintiffs must allege “some evidence of self-dealing or other disloyal conduct” rather than only conclusory allegations. The Second Circuit affirmed. 86 F.4th 961.
The Second Circuit evaluated the various approaches taken by the federal courts of appeal, which are generally divided over the pleading requirements for a prohibited-transaction claim. Some circuits apply the text as written, requiring only plausible allegations of an “arrangement” under which plan payments fell into a barred category. Other circuits have held that plaintiffs must additionally plead facts suggestive of more traditional fraud or breach of fiduciary duty. The Second Circuit effectively joined with this latter group, holding that it is insufficient to plead the statutory elements of §1106. Specifically, the Second Circuit explained that the §1108 exemptions should not be understood as affirmative defenses, but instead, “at least some of those exemptions—particularly, the exemption for reasonable and necessary transactions codified by §1108(b)(2)(A)—are incorporated into §1106(a)’s prohibitions.” Thus, the Second Circuit held that to plead a violation of §1106(a)(1)(C), a “complaint must plausibly allege that a fiduciary has caused the plan to engage in a transaction that constitutes the ‘furnishing of . . . services . . . between the plan and a party in interest’ where that transaction was unnecessary or involved unreasonable compensation” so as to fall outside the §1108(b)(2)(A) exemption. The Second Circuit reasoned that its interpretation flows directly from the text and structure of the statute, which incorporates the §1108 exceptions with the following caveat in its introduction: “Except as provided in section 1108 of this title . . . .”
Petitioners contend that the Second Circuit’s decision is wrong, and that fiduciaries should be held to a literal reading of §1106(a)(1)(C)’s text as written, which clearly sets forth the elements of the plaintiff’s prima facie case. According to petitioners, the Second Circuit “charted a unique course” in “placing the onus on plaintiffs to negate, rather than on defendants to prove, exemptions to liability,” which further deepened the circuit split on the issue. Petitioners argue that §1108’s exemptions are distinct from §1106’s list of prohibited transactions, and thus the party relying upon the exception bears the burden of establishing that the exception applies.
CC/Devas (Mauritius) Limited v. Antrix Corp., 23-1201; Devas Multimedia Private Limited v. Antrix Corp., 24-17.
The question presented is “whether plaintiffs must prove minimum contacts before federal courts may assert personal jurisdiction over foreign states sued under the Foreign Sovereign Immunities Act [FSIA].” Historically, foreign nations were generally immune from suit in U.S. courts. In the FSIA, Congress legislated certain exceptions to that baseline sovereign immunity and gave the federal district courts subject-matter jurisdiction over certain suits against (among other entities) foreign countries and companies majority-owned by them. 28 U.S.C. §1330(a). The statute provides in relevant part that “[p]ersonal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title.” 28 U.S.C. §1330(b). In addition to these statutory requirements, the Ninth Circuit years ago interpreted the FSIA to require plaintiffs to show that foreign countries have “minimum contacts” with the United States—consistent with the due-process rights of “persons” in personal-jurisdiction analysis—before a district court can exercise jurisdiction.
Respondent Antrix is a corporation wholly owned by India. Petitioner Devas Multimedia Private Limited (Devas) is an Indian telecommunications corporation funded by American executives and investors. Nearly 20 years ago, Antrix and Devas entered an agreement under which Antrix would lease “S-band spectrum and transponders on Indian governmental satellites to Devas” to use in providing telecommunications services in India. Later, however, India’s government instructed Antrix “to terminate the agreement,” and Antrix did so. Devas commenced arbitration proceedings against Antrix in the International Chamber of Commerce under an arbitration clause in the parties’ agreement. That proceeding resulted in a $562.5 million damage award, plus interest, against Antrix. When Devas sought to confirm the award in federal district court in Washington under the FSIA’s “arbitration exception,” Antrix moved to dismiss, arguing that the district court did not have personal jurisdiction over it without a showing of “minimum contacts” with the United States. The district court denied the motion and entered judgment against Antrix. Antrix appealed to the Ninth Circuit. Meanwhile, Antrix pursued separate proceedings against Devas in an Indian court that resulted in Devas’ seizure by a government liquidator and the purported invalidation of Devas’ arbitration award based on Antrix’s allegations of fraud. Because Devas was now controlled by agents of the Indian government, three of its shareholders and one subsidiary (petitioners in 23-1201) intervened in the U.S. litigation to defend and enforce the judgment against Antrix. The district court allowed petitioners to conduct post-judgment discovery into Antrix’s assets in the United States. Once petitioners had determined that Antrix had a claim in a bankruptcy proceeding in the Eastern District of Virginia, they registered their judgment there and garnished the claim. Antrix and Devas both appealed the district court’s order allowing petitioners to register their judgment.
The Ninth Circuit reversed both the district court’s judgment confirming the award and its order allowing petitioners to register their judgment. 2023 WL 4884882. It held that the district court could not exercise personal jurisdiction over Antrix without a showing that Antrix had “minimum contacts” with the United States. The court cited its precedent, which grounded this result partly in the “legislative history” of the FSIA, which (the court reasoned) did not extend the FSIA’s “long-arm” jurisdictional provision “beyond the limits set by the International Shoe [Co. v. Washington, 326 U.S. 310 (1945)] line of cases.” In addition, the Ninth Circuit found a textual hook for its interpretation in the FSIA’s “commercial activity” exception, which contains a “direct effect” requirement that the court held incorporated the “minimum contacts” test. Thus, a FSIA plaintiff must show that the exercise of personal jurisdiction satisfies due process in addition to §1330(b). Because that showing had not been made, the exercise of personal jurisdiction over Antrix was improper.
Devas and the other petitioners ask the Court to reverse the Ninth Circuit. They note that the Ninth Circuit is the only federal court of appeals in the last several decades to require minimum contacts in FSIA cases. The only other appellate courts that did so reached that conclusion before the Court “strongly hinted” that foreign nations should not be considered “persons” entitled to due process protections in Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992). In that case, the Court assumed without deciding that a foreign country is a “person” under the Due Process Clause, but cited an earlier decision holding that U.S. states are not “persons”—a citation that petitioners read as discrediting the assumption. See South Carolina v. Katzenbach, 383 U.S. 301 (1966). Every court of appeals to consider the issue after Weltover has held that countries are not “persons.” Petitioners also challenge the textual and legislative-history justifications for the Ninth Circuit’s decision. They argue that the text of §1330(b) clearly imposes only two requirements for personal jurisdiction, and minimum contacts is not one of them. They also argue that the Ninth Circuit’s inference of a “minimum contacts” requirement from the term “direct effect” was faulty because it comes from the “commercial activity” exception, which is not at issue in this case and relates only to subject-matter jurisdiction, not personal jurisdiction. And they argue that the legislative history relied on by the Ninth Circuit also does not relate to the personal-jurisdiction standards in §1330(b). Based on Katzenbach and Weltover, petitioners add that if U.S. states are not “persons” for due-process purposes, then it makes no sense to consider foreign countries “persons.” They argue that historical scholarship and practice also do not support considering countries “persons.”
NAAG Center for Supreme Court Advocacy Staff
- Dan Schweitzer, Director and Chief Counsel
- Mana Barari, Supreme Court Fellow
- Elizabeth Hedges, Supreme Court Fellow
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