July 22, 2024 | Volume 31, Issue 19
This Report summarizes opinions issued on June 26 and 27, 2024 (Part I).
OPINIONS
Moyle v. United States, 23-726; Idaho v. United States, 23-727.
The Court dismissed the writ of certiorari before judgment as improvidently granted, and vacated the stays issued earlier by the Court of the preliminary injunction issued by the district court. The Court had agreed to resolve whether the Emergency Medical Treatment and Labor Act (EMTALA) preempts in part Idaho’s Defense of Life Act. In 2022, the Department of Health and Human Services issued guidance that told physicians that if they believe “abortion is the stabilizing treatment medically necessary to resolve” a pregnant woman’s “emergency medical treatment,” they “must” under EMTALA “provide that treatment.” The guidance said that a state law to the contrary is “preempted.” Idaho’s Defense of Life Act makes it a crime to perform most abortions. “As originally enacted, the Act allowed accused physicians to raise an affirmative defense that ‘the abortion was necessary to prevent the death of a pregnant woman.’” The United States sued Idaho, seeking to enjoin the Act to the extent it conflicts with EMTALA. “EMTALA, the United States argued, requires physicians to perform abortions under certain circumstances that Idaho’s Act would forbid.” The district court granted a preliminary injunction. After that ruling, the Idaho Supreme Court construed the Act as “‘not requir[ing] objective certainty, or a particular level of immediacy, before the abortion can be ‘necessary’ to save the woman’s life.’” Further, held that court, “treating an ectopic pregnancy, by removing the fetus,” does not count as an “abortion” under the Act. The district court denied Idaho’s motion for reconsideration without holding a hearing. The Idaho Legislature thereafter amended the Act’s definition of “abortion” to exclude ectopic pregnancies and “[t]he removal of a dead unborn child.” It also changed the “life of the mother” affirmative defense into an exception from the Act’s prohibition. A Ninth Circuit panel stayed the district court’s injunction, but the en banc Ninth Circuit vacated the panel’s stay and scheduled oral argument on the merits. At that point, the Supreme Court granted Idaho and its Legislature’s applications to stay the district court injunction pending appeal, treated the applications as petitions for writs of certiorari before judgment, and granted the petitions. It is those writs of certiorari that the Court dismissed as improvidently granted.
Justice Kagan filed a concurring opinion that Justice Sotomayor joined in full and Justice Jackson joined in part. She concurred “because Idaho’s arguments about EMTALA do not justify, and have never justified, either emergency relief or our early consideration of this dispute.” In her view, “[f]ederal law and Idaho law are in conflict about the treatment of pregnant women facing health emergencies. EMTALA requires a Medicare-funded hospital to offer an abortion when needed to stabilize a medical condition that seriously threatens a pregnant woman’s life or health. Idaho allows abortions only when ‘necessary to prevent’ a pregnant woman’s ‘death.’ By their terms, the two laws differ. What falls in the gap between them are cases in which continuing a pregnancy does not put a woman’s life in danger, but still places her at risk of grave health consequences, including loss of fertility. In that situation, federal law requires a hospital to offer an abortion, whereas Idaho law prohibits that emergency care. And the record shows that, as a matter of medical reality, such cases exist.” (Citations omitted.)
In the second half of her concurring opinion (in the part Justice Jackson joined), Justice Kagan responded briefly to Justice Alito’s dissenting opinion. She reiterated her view that “EMTALA unambiguously requires that a Medicare-funded hospital provide whatever medical treatment is necessary to stabilize a health emergency—and an abortion, in rare situations, is such a treatment.” Justice Kagan disagreed with Justice Alito that EMTALA’s four references to protecting an “unborn child” require a different result. Three of the references, she said, “concern the treatment of women in labor” and simply “ensure that a hospital, in considering the transfer of a woman to another facility, takes account of risks to not only the woman but also her ‘unborn child.’” The fourth reference “ensures that a woman with no health risks of her own can demand emergency-room treatment if her fetus is in peril. It does not displace the hospital’s duty to a woman whose life or health is in jeopardy, and who needs an abortion to stabilize her condition. Then, the statute requires offering that treatment to the woman.”
Justice Barrett filed a concurring opinion, which Chief Justice Roberts and Justice Kavanaugh joined. She maintained that “[b]ecause the shape of these cases has substantially shifted since we granted certiorari,” dismissal of the writ is appropriate. She noted that “[s]ince this suit began in the District Court, Idaho law has significantly changed—twice. And since we granted certiorari, the parties’ litigating positions have rendered the scope of the dispute unclear, at best.” On the latter point, Justice Barrett pointed out that Idaho’s stay application argued that EMTALA would apply to protect a pregnant woman’s mental health and that the Government’s reading of EMTALA would force religious health care providers to perform abortions against their consciences. But the United States has now “disclaimed those interpretations of EMTALA,” “disavow[ing] the notion that an abortion is ever required as stabilizing treatment for mental health conditions” and “clarif[ying] that federal conscience protections, for both hospitals and individual physicians, apply in the EMTALA context.” Further, said Justice Barrett, Idaho has narrowed its position. After listing some of the conditions the United States identified as requiring emergency abortions under EMTALA, Justice Barrett noted that Idaho and its Legislature “represent that the Act permits physicians to treat each of these conditions with emergency abortions, even if the threat to the woman’s life is not imminent.” Justice Barrett added that “petitioners have raised a difficult and consequential argument, which they did not discuss in their stay applications, about whether Congress, in reliance on the Spending Clause, can obligate recipients of federal funds to violate state criminal law.” None of the courts below addressed that argument. Finally, Justice Barrett stated that the Court should not only dismiss the writ but should also vacate the stay of the preliminary injunction. That’s because, “based on the parties’ representations, it appears that the injunction will not stop Idaho from enforcing its law in the vast majority of circumstances.”
Justice Jackson filed an opinion concurring in part and dissenting in part. She agreed with the Court’s lifting of the stay, but dissented from its dismissal of the cases as improvidently granted. Justice Jackson would have ruled for the United States based on her view that Idaho “law must give way” when it conflicts with EMTALA, as she says it does. “The textual conflict,” she asserted, “is plain. . . . Put simply, under federal law, a hospital must provide an emergency abortion that is reasonably necessary to preserve a patient’s health within the meaning of EMTALA. But, under Idaho law, a doctor cannot provide this care (required by federal law) without committing a criminal act.” Justice Jackson disagreed that Idaho’s litigating position “actually mitigates the conflict.” And she believed “the necessary legal reasoning is straightforward.” She closed by saying that “[t]oday’s decision is not a victory for pregnant patients in Idaho. It is delay.”
Justice Alito filed a lengthy dissenting opinion, which Justice Thomas joined in full and Justice Gorsuch joined in part. He maintained that “[t]he Government’s preemption theory is plainly unsound. Far from requiring hospitals to perform abortions, EMTALA’s text unambiguously demands that Medicare-funded hospitals protect the health of both a pregnant woman and her ‘unborn child.’ And even if there were some ambiguity in the statutory text, we would be obligated to resolve that ambiguity in favor of the State because EMTALA was enacted under the Spending Clause, and as we have held time and again, conditions attached to the receipt of federal funds must be unambiguous. Here, no one who has any respect for statutory language can plausibly say that the Government’s interpretation is unambiguously correct. And in any event, Idaho never consented to any conditions imposed by EMTALA and certainly did not surrender control of the practice of medicine and the regulation of abortions within its territory.” (Citations omitted.)
Justice Alito noted that “[a]t no point in its elaboration of the screening, stabilization, and transfer requirements does EMTALA mention abortion. Just the opposite is true: EMTALA requires the hospital at every stage to protect an ‘unborn child’ from harm.” And he disputed the Government’s arguments for getting around those references to an “unborn child.” Turning to the fact that EMTALA is an exercise of Congress’s spending power, Justice Alito noted that “[t]he need for clear statutory language is especially important in this suit because the Government’s interpretation would intrude on an area traditionally left to state control, namely, the practice of medicine.” He also maintained that “[t]he potential implications of permitting preemption here are far-reaching. Under the Government’s view, Congress could apparently pay doctors to perform not only emergency abortions but also third-trimester elective abortions or eugenic abortions. It could condition Medicare funds on hospitals’ offering assisted suicide even in the vast majority of States that ban the practice.” Yet, he noted, “[t]he Medicare Act, in which EMTALA is situated, disclaims any construction that would ‘authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided’ in a particular State.” And Justice Alito observed that “[t]he Government has not identified any decision holding that a federal law enacted under the Spending Clause preempts a state criminal law or public health regulation.” The final section of Justice Alito’s opinion (which Justice Gorsuch did not join) criticized the Court for vacating the stays of the preliminary injunction.
Harrington v. Purdue Pharma, L.P., 23-124.
By a 5-4 vote, the Court held that “the bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants.” This case arose out of the opioid crisis. In the mid-1990s, Purdue Pharma―a “family company” owned and controlled by the Sacklers―began marketing the opioid OxyContin. Using an aggressive marketing campaign that claimed OxyContin “had a novel ‘time-release’ formula that greatly diminished the threat of addiction, the drug became most prescribed brand-name narcotic medication” in the country. Between 1996 and 2019, “Purdue generated approximately $34 billion in revenue . . . , most of which came from OxyContin sales”―and the Sacklers became worth $14 billion. Purdue eventually came under scrutiny. “In 2007, a Purdue affiliate pleaded guilty to a federal felony for misbranding OxyContin as ‘less addictive’ and ‘less subject to abuse . . . than other pain medications.’ Thousands of civil lawsuits followed as individuals, families, and governments within and outside the United States sought damages from Purdue and the Sacklers for injuries allegedly caused by their deceptive marketing practices.” (Citation omitted.) At this point, “the Sacklers began taking as much as 70% of the company’s revenue each year,” to the tune of about $11 billion, “draining Purdue’s total assets” while “[t]he Sacklers diverted much of that money to overseas trusts and family-owned companies.”
In 2019, Purdue filed for Chapter 11 bankruptcy. Its reorganization plan included terms proposed by the Sacklers: that in exchange for the Sacklers’ returning $4.325 billion to the company (spread out over a decade), they would obtain a release and an injunction that would “void not just current opioid-related claims against the family, but future ones as well, all without the consent of the opioid victims.” Most Purdue creditors who returned ballots supported the plan. Over the objections of the U.S. Trustee, eight states, D.C., and some municipalities and tribes, the bankruptcy court entered an order confirming the plan. The district court vacated that decision, holding that bankruptcy law did not “authorize[] the bankruptcy court to extinguish claims against the Sacklers without the consent of the opioid victims who brought them.” Plan proponents appealed. While the appeal was pending, the Sacklers agreed to contribute an additional $1.175 to $1.675 billion if the eight objecting states and D.C. would withdraw their objections, which they did. A divided Second Circuit panel then reversed the district court and revived the reorganization plan. In an opinion by Justice Gorsuch, the Court reversed and remanded.
The Court began by observing that, generally, a bankruptcy “discharge operates only for the benefit of the debtor against its creditors and ‘does not affect the liability of any other entity.’ [11 U.S.C.] §524(e).” Yet the Sacklers, who have not filed for bankruptcy, “seek what essentially amounts to a discharge.” The Court found no support in the Bankruptcy Code for that result. The Court focused on §1123, which addresses the terms of a reorganization plan. The provision contains six paragraphs, and all agreed that the legal authority for the Sackler discharge could only possibly be paragraph (6), which says a plan “may” “include any other appropriate provision not inconsistent with the applicable provisions of this title.” The Court, however, found that the ejusdem generis canon forecloses its use for the Sackler release. It noted that the first five paragraphs of §1123 all “concern the debtor―its right and responsibilities, and its relationship with its creditors.” The Court concluded that “the catchall [paragraph (6)] cannot be fairly read to endow a bankruptcy court with the ‘radically different’ power to discharge the debts of a nondebtor without the consent of affected nondebtor claimants.” The Court found support from this in paragraph (6)’s use of the term “appropriate,” a term that “often draws its meaning from surrounding provisions.” The Court then disagreed with the dissent’s assertion that paragraph (3) doesn’t relate to the debtor. And it disagreed with the dissent that the proposed plan is consistent with “the overall ‘purpose of bankruptcy law’ in solving ‘collective-action problem[s].’” The Court insisted that “‘[n]o statute pursues a single policy at all costs.’” In short, “a bankruptcy court’s powers are not limitless and do not endow it with the power to extinguish without their consent claims held by nondebtors (here, the opioid victims) against other nondebtors (here, the Sacklers).”
The Court then looked at related provisions and concluded that they provide “at least three further reasons” for its conclusion. First, the Bankruptcy Code reserves to “debtors” the right to obtain the benefits of a discharge, yet the plan proponents “would defy these rules by effectively affording a nondebtor a discharge.” Second, to obtain that discharge, “the code generally requires the debtor to come forward with virtually all its assets.” Yet “[t]he Sacklers have not agreed to place anything approaching their full assets on the table for opioid victims.” And third, Congress adopted an exception for asbestos-related bankruptcies―but “only for such bankruptcies.” The Court also found that history supported its holding: “No one has directed us to a statute or case suggesting American courts in the past enjoyed the power in bankruptcy to discharge claims brought by nondebtors against other nondebtors, all without the consent of those affected.” The Court closed by saying that it is not questioning consensual third-party release; it is not “express[ing] a view on what qualifies as a consensual release”; and it is not “address[ing] whether our reading of the bankruptcy code would justify unwinding reorganization plans that have already become effective and been substantially consummated.”
Justice Kavanaugh filed a 54-page dissent, which Chief Justice Roberts and Justices Sotomayor and Kagan joined. He wrote that, “[d]espite the broad term ‘appropriate’ in the statutory text, despite the longstanding precedents approving mass-tort bankruptcy plans with non-debtor releases like these, despite 50 state Attorneys General signing on, and despite the pleas of the opioid victims, today’s decision creates a new atextual restriction on the authority of bankruptcy courts to approve appropriate plan provisions. The opioid victims and their families are deprived of their hard-won relief. And the communities devastated by the opioid crisis are deprived of the funding needed to help prevent and treat opioid addiction.” He stated that, “[f]or many decades now, bankruptcy law has stepped in as a coordinating tribunal in significant mass-tort cases.” Justice Kavanaugh emphasized that in these cases―such as those involving the Dalkon Shield, silicone breast implants, the Boy Scouts, and the Catholic Church―nondebtor release provisions were essential and solve the collective-action problem by enabling the nondebtor’s “assets to be distributed fairly and equitably among victims, rather than swallowed up by the first victim to successfully sue the non-debtor.”
In Justice Kavanaugh’s view, §1123(b)(6) gives bankruptcy courts that authority. It authorizes plans to include “any other appropriate provision,” and “appropriate” “is a ‘broad and all-encompassing term that naturally and traditionally includes consideration of all the relevant factors.’” “And courts have therefore long found non-debtor releases to be appropriate in certain narrow circumstances under §1123(b)(6). Indeed, courts have been approving such non-debtor releases almost as long as the current Bankruptcy Code has existed since its enactment in 1978.” Turning to this case, he said that, “as in many past mass-tort bankruptcies, the non-debtor releases were appropriate and therefore authorized by 11 U.S.C. §1123(b)(6) of the Code. The nondebtor releases were needed to ensure meaningful victim and creditor recovery in the face of multiple collective-action problems.” In short, “the non-debtor release provision solved two separate collective-action problems that dogged Purdue’s mass-tort bankruptcy: (i) It protected Purdue’s estate from the risk of being depleted by indemnification claims, and (ii) it operated as a settlement of potential claims against the Sacklers and thus enabled the Sacklers’ large settlement payment to the estate. That settlement payment in turn quadrupled the amount in the Purdue estate and enabled substantially greater recovery for the victims.” Justice Kavanaugh then critiqued the majority’s application of the ejusdem generis canon, its reading of related provisions, and its reading of history and practice. He closed by saying that “[o]pioid victims and other future victims of mass torts will suffer greatly in the wake of today’s unfortunate and destabilizing decision. Only Congress can fix the chaos that will now ensue.”
Ohio v. EPA, 23A349.
By a 5-4 vote, the Court stayed a federal plan adopted by the Environmental Protection Agency for controlling ozone pollution under the Clean Air Act’s Good Neighbor Provision. Once EPA sets standards for “common air pollutants,” states have three years to submit a State Implementation Plan, or SIP. Under the Good Neighbor Provision, state plans must prohibit emissions “in amounts which will . . . contribute significantly” to another state’s nonattainment of air-quality standards. As long as a SIP satisfies the Clean Air Act, including its Good Neighbor Provision, EPA “shall approve” it. If EPA rejects a SIP, it “shall” issue a Federal Implementation Plan, or FIP (unless the state corrects the deficiencies in its SIP first). In 2015, EPA revised its air-quality standards for ozone, which required states to submit new SIPs. Many states did so. In February 2022, EPA announced its intention to disapprove of 19 of those SIPs as failing to address adequately the states’ obligations under the Good Neighbor Provision. A few months later, EPA disapproved four more SIPs. During the public comment period on the proposed SIP disapprovals, EPA proposed a single FIP “to bind all 23 States.”
Under the FIP, EPA identified how much various emissions-control measures typically cost to reduce a ton of nitrogen-oxide emissions. “Next, the agency sought to predict how much each upwind State’s nitrogen-oxide emissions would fall if emissions-producing facilities in the State adopted each measure. . . . Then, the agency estimated how much, on average, ozone levels would fall in downwind States with the adoption of each measure. . . . To pick which measures would ‘maximiz[e] cost-effectiveness’ in achieving ‘downwind ozone air quality improvements,’ EPA focused on what it called the ‘knee in the curve,’ or the point at which more expenditures in the upwind States were likely to produce ‘very little’ in the way of ‘additional emissions reductions and air quality improvement’ downwind[.]” (Citation omitted.) Some commentators asked what would happen if some or many of the 23 states were not covered by the FIP, as would be possible if EPA’s disapproval of some of them were flawed. “[A] different set of States might mean that the ‘knee in the curve’ would shift.” As it turned out, litigation over SIP disapprovals led to stays of those disapprovals in four states during the comment period. EPA nonetheless issued its final FIP, which included a severability provision stating that, should any jurisdiction drop out, its rule would “continue to be implemented as to any remaining jurisdictions.” After EPA issued its final FIP, more courts stayed more SIPs, eventually totaling 12 stayed SIPs in states that account for over 70% of the emissions EPA had planned to address through its FIP. Industry groups and some of the remaining states challenged the FIP in the D.C. Circuit, asking that court to stay enforcement of the FIP during their appeal. The D.C. Circuit denied relief. In an opinion by Justice Gorsuch, the Court granted the stay applications.
The Court found that both parties asserted strong arguments on three of the stay factors, making the fourth factor―likelihood of success on the merits―decisive. That is because, the Court concluded, EPA failed to “reasonably explain[]” “why the number and identity of participating States does not affect what measures maximize cost-effective downwind air-quality improvements.” Put another way, EPA “ignored ‘an important aspect of the problem’ before it.” In so holding, the Court rejected EPA’s contention that it did, in fact, “offer a reasoned response to the applicants’ concern,” namely, the severability provision. The problem with that argument, stated the Court, is that the severability provision fails to answer the decisive question: “[W]hether and how measures found to maximize cost effectiveness in achieving downwind ozone air-quality improvements with the participation of 23 States remain so when many fewer States, responsible for a much smaller amount of the originally targeted emissions, might be subject to the agency’s plan. Put simply, EPA’s response did not address the applicants’ concern so much as sidestep it.”
The Court next rejected EPA’s contention that “no one raised that concern during the public comment period.” The Court disagreed, citing to various comments in the record and noting that EPA admitted it added the severability provision based on that concern. Third, the Court rejected EPA’s contention that “the applicants must return to EPA and file a motion asking it to reconsider its final rule before presenting their objection in court.” The Court explained that EPA based this argument on the proposition that the grounds for the applicants’ objection arose after the period for public comment, but that’s not the case. Finally, the Court rejected the dissent’s argument that EPA’s lack of a reasoned response is “harmless” given “the apparent lack of connection between the number of States covered and the FIP’s methodology.” The Court emphasized that EPA didn’t make that argument, and that “at oral argument, even the government refused to say with certainty that EPA would have reached the same conclusions regardless of which States were included in the FIP.”
Justice Barrett filed a dissenting opinion, which Justices Sotomayor, Kagan, and Jackson joined. She emphasized that “the Court does not conclude that EPA’s actions were substantively unreasonable—e.g., that the FIP cannot rationally be applied to fewer States because a change in the number of participants would undermine its rationale or render it ineffective. Nor could it, given the significant evidence in the record (not to mention EPA’s denial of reconsideration) that the covered States did not, in fact, affect the plan’s emissions-reduction obligations. Thus, the only basis for the Court’s decision is the argument that EPA failed to provide ‘a satisfactory explanation for its action’ and a ‘reasoned response’ to comments. There are at least three major barriers to success on such a claim.” (Citations omitted.) First, Justice Barrett pointed to a procedural barrier to the applicants’ challenge: “No one could have raised during the proposal’s comment period the objection that the final rule was not ‘reasonably explained.’” (Internal quotation marks omitted.) Second, she disputed “that any commentator raised with ‘reasonable specificity’ the underlying substantive issue: that the exclusion of some States from the FIP would undermine EPA’s cost-effectiveness analyses and resulting emissions controls. The Court concludes otherwise only by putting in the commenters’ mouths words they did not say.” (Citations omitted.) “If a commenter had said with reasonable specificity what the Court says today—that ‘a different set of States might mean that the “knee in the curve” might shift,’ EPA could have responded with more explanation of why its methodology did not depend on the number of covered States—as it has recently explained. But EPA cannot be penalized if it did not have reasonable notice of this objection.” (Citation omitted.)
Justice Barrett next argued that, “[g]iven the explanations and state-agnostic methodology apparent in the final rule and its supporting documentation—and the paucity of comments specifically raising the issue—EPA may well have done enough to justify its plan’s severability.” That is because, first, “the rule and its supporting documents arguably make clear that EPA’s methodology for calculating cost-effectiveness thresholds and imposing emissions controls did not depend on the number of covered States.” Justice Barrett emphasized that EPA relied on “national, industry-wide data” in “calculat[ing] cost-effectiveness thresholds.” And “these thresholds and the FIP’s resulting emissions limits appear not to depend on the number of covered States.” That shows why EPA adopted the severability provision as a solution to states dropping out: “EPA views the plan as ‘severable along . . . state and/or tribal jurisdictional lines.’” Lastly, Justice Barrett would apply the Clean Air Act’s “stringent harmless-error rule,” which provides that a court “reviewing alleged procedural errors . . . may invalidate [an EPA] rule only if the errors were so serious and related to matters of such central relevance to the rule that there is a substantial likelihood that the rule would have been significantly changed if such errors had not been made.’ §7607(d)(8) (emphasis added).” In her view, “[i]f the Act’s harmless-error rule applies, applicants are unlikely to prevail. Given the apparent lack of connection between the number of States covered and the FIP’s methodology for determining cost thresholds and emissions limits, it is difficult to imagine a ‘substantial’ likelihood that the rule would have been ‘significantly’ different had EPA just responded more thoroughly.”
SEC v. Jarkesy, 22-859.
By a 6-3 vote, the Court held that “the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties against him for securities fraud.” In the 2010 Dodd-Frank Act, Congress empowered the SEC, for the first time, to seek civil penalties not only in federal court but also through in-house administrative adjudications. The SEC invoked that power against respondents George Jarkesy and Patriot28, which misled investors in their investment fund. An administrative law judge ruled against respondents. The SEC reviewed the ALJ’s decision and issued a final order that levied a civil penalty of $300,000 against respondents, as well as disgorgement, a cease and desist order, and other equitable relief. A divided panel of the Fifth Circuit vacated that final order, holding (among other things) that the agency’s in-house adjudication of the matter violated respondents’ Seventh Amendment right to a jury trial. In an opinion by Chief Justice Roberts, the Court affirmed and remanded.
The Court stated that its analysis of the jury-trial right issue follows its approach in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989), and Tull v. United States, 481 U.S. 412 (1987). Under those decisions, the first issue is whether the action “implicates the Seventh Amendment.” If it does, the next issue is “whether the ‘public rights’ exception to Article III jurisdiction applies.” The Court answered the first question yes and the second question no. Starting with the first question, the Court quoted Granfinanciera as holding that the Seventh Amendment “extends to a particular statutory claim if the claim is ‘legal in nature.’” In making that assessment, courts must “consider the cause of action and the remedy it provides,” with the remedy being “the ‘more important’ consideration.” “In this case, the remedy is all but dispositive. For respondents’ alleged fraud, the SEC seeks civil penalties, a form of monetary relief. While monetary relief can be legal or equitable, money damages are the prototypical common law remedy. What determines whether a monetary remedy is legal is if it is designed to punish or deter the wrongdoer, or, on the other hand, solely to ‘restore the status quo.’” (Citation omitted.) And so in Tull, the Court held that “’civil penalt[ies are] a type of remedy at common law that could only be enforced in courts of law.’ The same is true here.” (Citation omitted.) That is because civil penalties imposed by the SEC are tied “to the perceived need to punish the defendant rather than to restore the victim.” The Court found that “[t]he close relationship between the causes of action in this case and common law fraud confirms that conclusion. Both target the same basic conduct: misrepresenting or concealing material facts.”
The Court then turned to the “public rights” exception to Article III jurisdiction, and concluded that “this case does not fall within the exception.” The Court explained that “[i]f a suit is in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory.” By contrast “public rights” are matters that “‘historically could have been determined exclusively by [the executive and legislative] branches.’” Walking through its cases, the Court found that public rights include the collection of revenue, Congress’s power over foreign commerce and immigration, “relations with Indian tribes, the administration of public lands, and the granting of public benefits such as payments to veterans, pensions, and patent rights.” (Citations omitted.) By contrast, and as held in Granfinanciera, actions that were “’quintessentially suits at common law’” (there, fraudulent conveyance actions) did not fall within the public rights exception. And here, SEC civil penalties “target the same basic conduct as common law fraud, employ the same terms of art, and operate pursuant to similar legal principles.”
The Court rejected the SEC’s contention that the public rights exception applies “because Congress created ‘new statutory obligations, impose[d] civil penalties for their violation, and then commit[ted] to an administrative agency the function of deciding whether a violation ha[d] in fact occurred.’” Granfinanciera rejected most of those arguments. And the fact “that the Government is the party prosecuting this action” does not matter: “we have never held that ‘the presence of the United States as a proper party to the proceeding is . . . sufficient’ by itself to trigger the exception.” Finally, the Court rejected the SEC’s reliance on Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 430 U.S. 442 (1977), which held that the Occupational Safety and Health Review Commission could adjudicate alleged violations of the Occupational Safety and Health Act of 1970 (OSH Act) and impose civil penalties. The Court here distinguished Atlas Roofing on the ground that “the OSH Act did not borrow its cause of action from the common law.” Its occupational safety and health standards “resembled a detailed building code,” not “common law terms of art.” And, the Court here said, “[t]he cases that Atlas Roofing relied upon did not extend the public rights exception to ‘traditional legal claims.’”
Justice Gorsuch wrote a concurring opinion, which Justice Thomas joined. He wrote “separately to highlight that other constitutional provisions reinforce the correctness of the Court’s course.” He first discussed how abuses of British vice-admiralty courts in the Colonies prompted Article III of the Constitution and the Seventh Amendment, as well as the Fifth Amendment’s Due Process Clause. Justice Gorsuch stated that all three provisions “were meant to work together, and together they . . . require[] the result the Court reaches.” He then disparaged the Government’s contention that “all that need be done to dispense almost entirely with three separate constitutional provisions is an Act of Congress creating some new statutory obligation.” To the contrary, he said, “public rights are a narrow class defined and limited by history . . . that has traditionally included the collection of revenue, customs enforcement, immigration, and the grant of public benefits.” Justice Gorsuch then criticized the Court’s decisions that “have allowed the government to chip away at the courts’ historically exclusive role in adjudicating private rights,” starting with Crowell v. Benson, 285 U.S. 22 (1932), and culminating in Atlas Roofing. And he criticized the “dissent’s competing account of public rights” as “astonishing,” saying “that the Constitution has never countenanced the dissent’s notion that the Executive is free to reassign virtually any civil case in which it is a party to its own tribunals where its own employees decide cases and inconvenient juries and traditional trial procedures go by the boards.”
Justice Sotomayor filed a lengthy dissenting opinion, which Justices Kagan and Jackson joined. Justice Sotomayor asserted that “the Seventh Amendment’s jury-trial right ‘applies’ only in ‘an Article III court,’” meaning “the critical issue in this type of case is whether Congress can assign a particular matter to a non-Article III factfinder.” The answer to that question, she said, is that “public rights always can be assigned outside of Article III,” and “[i]t has long been settled and undisputed that . . . a matter of pubic rights arises ‘between the government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.’” Justice Sotomayor maintained that “through an unbroken series of cases over almost 200 years,” the Court has emphasized the principle that “the doctrine’s heartland consists of claims belonging to the Government.” She said that “[a] unanimous Court made this exact point nearly half a century ago in Atlas Roofing.” And she distinguished Granfinanciera and Tull as involving a dispute between private parties and a suit in federal court, respectively. Granfinanciera “set forth the public rights analysis only for ‘disputes to which the Federal Government is not a party in its sovereign capacity.’” And Tull merely held that “when the Government sues an entity for civil penalties in federal district court, the Seventh Amendment entitles the defendant ‘to a jury trial to determine his liability on the legal claims.’” Justice Sotomayor criticized the majority’s efforts to distinguish Atlas Roofing, finding that “[i]n both statutory schemes, regardless of any perceived resemblance to the common law, Congress enacted a new cause of action that created a statutory right belonging to the United States for the Government to enforce pursuant to its sovereign powers.”
Justice Sotomayor closed by noting “the momentous consequences” of the Court’s ruling. “Following this Court’s precedents and the recommendation of the Administrative Conference of the United States, Congress has enacted countless new statutes in the past 50 years that have empowered federal agencies to impose civil penalties for statutory violations.” She further noted that, while some agencies (such as the SEC) “can pursue civil penalties in both administrative proceedings and federal court,” other agencies “do not have that choice,” and are empowered to seek such penalties only in agency enforcement proceedings. Those agencies require a new statute from Congress if they are to impose civil penalties.
Murthy v. Missouri, 23-411.
By a 6-3 vote, the Court held that the plaintiffs―two states and five social-media users―lacked Article III standing to “sue[] dozens of Executive Branch officials and agencies, alleging that they pressured the [social-media] platforms to suppress protected speech in violation of the First Amendment.” The major social-media platforms, Facebook, Twitter, and YouTube, “have taken a range of actions to suppress certain categories of speech,” including “speech they judge to be false or misleading.” That includes those who posted false information relating to the Covid pandemic and the 2020 presidential election. Meanwhile, during that time “various federal officials”―including officials at the White House, the Office of the Surgeon General, the CDC, the FBI, and the Cybersecurity and Infrastructure Security Agency (CISA)―“regularly spoke with the platforms about COVID–19 and election-related misinformation.” The plaintiffs filed suit against dozens of federal officials and agencies, “alleging that they pressured the platforms to censor the plaintiffs’ speech in violation of the First Amendment.” After extensive discovery, the district court found that officials at the various federal agencies likely “coerced” or “significantly encouraged” the platforms “to such an extent that the[ir content-moderation] decision[s] should be deemed to be the decisions of the Government.” The court issued a sweeping injunction against the federal defendants. The Fifth Circuit affirmed in part and reversed in part. After holding that the plaintiffs have standing, the court found that White House officials and the Surgeon General’s Office likely coerced and significantly encouraged the platforms to moderate their content, and that the CDC and CISA significantly encouraged the platforms to do so. It then narrowed the injunction to provide that the defendants, and their employees and agents, shall not “coerce or significantly encourage social-media companies to remove, delete, suppress, or reduce, including through altering their algorithms, posted social-media content containing protected free speech.” In an opinion by Justice Barrett, the Court reversed and remanded.
The Court held that none of the plaintiffs had Article III standing. Starting generally, the Court stated that “[t]he primary weakness in the record of past restrictions is the lack of specific causation findings with respect to any discrete instance of content moderation. The District Court made none. Nor did the Fifth Circuit, which approached standing at a high level of generality.” The Court emphasized that “the platforms moderated similar content long before any of the Government defendants engaged in the challenged conduct. . . . This evidence indicates that the platforms had independent incentives to moderate content and often exercised their own judgment. To be sure, the record reflects that the Government defendants played a role in at least some of the platforms’ moderation choices. But the Fifth Circuit, by attributing every platform decision at least in part to the defendants, glossed over complexities in the evidence.”
The Court next turned to the specific plaintiffs’ claims of standing. Before doing so, the Court noted that “[t]he plaintiffs rely on allegations of past Government censorship as evidence that future censorship is likely. But they fail, by and large, to link their past social-media restrictions to the defendants’ communications with the platforms.” The Court then addressed the standing claims of the two state plaintiffs, Louisiana and Missouri. The Court found no evidence to support the states’ allegations that Facebook’s action against a Louisiana state representative’s posts regarding the Covid vaccine were “pursuant to the CDC-influenced policy.” The Court then addressing the standing of three plaintiffs who “are doctors who questioned the wisdom of then-prevailing COVID-19 policies.” Again, the Court found scant evidence that the social-media platforms’ actions were taken in response to pressure from the defendants and, indeed, found no “evidence that White House officials ever communicated at all with LinkedIn.” Next, the Court looked at plaintiff Jim Hoft, whose “news website, ‘The Gateway Pundit,’ experienced election and COVID-19-related restrictions on various platforms.” Again, the Court found little evidence that the platforms’ actions were taken in response to the government defendants’ pressure. Finally, the Court addressed Jill Hines, who “makes the best showing of a connection between her social-media restrictions and communications between the relevant platform (Facebook) and specific defendants (CDC and the White House).” “That said,” found the Court, “most of the lines she draws are tenuous[.]” After walking through various restrictions on her postings, the Court said: “Still, Facebook was targeting her pages before almost all of its communications with the White House and the CDC, which weakens the inference that her subsequent restrictions are likely traceable to ‘government-coerced enforcement’ of Facebook’s policies, rather than to Facebook’s independent judgment.” (Citation omitted.)
The Court added that to have standing for a claim seeking forward-looking relief, the plaintiffs “must proffer evidence that the defendants’ ‘allegedly wrongful behavior w[ould] likely occur or continue.’” The Court found that those plaintiffs who failed even to show “past restrictions likely traceable to the Government defendants” are “particularly ill suited to the task of establishing their standing to seek forward-looking relief.” And even Hines fails at this stage. The Court noted that “[b]y August 2022, when Hines joined the case, the officials’ communications about COVID–19 misinformation had slowed to a trickle. . . . It is thus very difficult for Hines to show that she faces future harm that is traceable to officials in the White House and the Surgeon General’s Office.” The Court also found that the plaintiffs suffer from “a redressability problem”: “without evidence of continued pressure from the defendants, it appears that the platforms remain free to enforce, or not to enforce, those policies—even those tainted by initial governmental coercion. The platforms are ‘not parties to the suit, and there is no reason they should be obliged to honor an incidental legal determination the suit produced.’”
Finally, the Court rejected the plaintiffs’ “right to listen” theory, based on their claimed interest in reading and engaging with the content posted by others whose postings were restricted. The Court found that theory “startlingly broad, as it would grant all social-media users the right to sue over someone else’s censorship―at least so long as they claim an interest in that person’s speech.” The Court said that it has never accepted such a sweeping approach to standing, and approved listener-based standing “only where the listener has a concrete, specific connection to the speaker.” The Court also rejected the states’ related theory that claimed “a sovereign interest in hearing from their citizens on social media.” The Court rejected it as “’a thinly veiled attempt to circumvent the limits on parens patriae standing,’” which the states do not have against the Federal Government.
Justice Alito filed a dissenting opinion, which Justices Thomas and Gorsuch joined. Justice Alito stated that, “[i]f the lower courts’ assessment of the voluminous record is correct, this is one of the most important free speech cases to reach this Court in years.” Justice Alito asserted that “government officials may not coerce private entities to suppress speech, see National Rifle Association of America v. Vullo, 602 U.S. 175 (2024), and that is what happened in this case.” He then spent 10 pages detailing the record on that score, focused on the White House and Surgeon General’s Office’s pressure on Facebook to restrict postings by Jill Hines. He found that, “[f]or months in 2021 and 2022, a coterie of officials at the highest levels of the Federal Government continuously harried and implicitly threatened Facebook with potentially crippling consequences if it did not comply with their wishes about the suppression of certain COVID–19-related speech. Not surprisingly, Facebook repeatedly yielded.”
Turning to the standing inquiry, and still focusing on Hines, Justice Alito first found injury-in-fact: “the record clearly shows that Hines was still being censored when she sued—and that the censorship continued thereafter. That was sufficient to establish the type of injury needed to obtain injunctive relief.” (Citation omitted.) As to traceability, he stated that Facebook’s censorship of Hines was the “’predictable effect’” of “the White House and Surgeon General’s Office repeatedly hector[ing] and implicitly threaten[ing] Facebook to suppress speech expressing the viewpoint that Hines espoused.” Justice Alito then detailed specific occasions on which “the White House officials successfully pushed Facebook to tighten its censorship policies” in ways that impacted Hines. Next, Justice Alito concluded that Hines “easily satisfied the” redressability requirement. “[T]here is ample proof that Hines’s past injuries were a ‘predictable effect’ of the Government’s censorship campaign, and the preliminary injunction was likely to prevent the continuation of the harm to at least ‘some extent.’”
In the final section of the dissent, Justice Alito addressed the merits of Hines’ First Amendment claim. He applied the rule set out in Bantam Books, Inc. v. Sullivan, 372 U.S. 58 (1963), that “the Government may not coerce or intimidate a third-party intermediary into suppressing someone else’s speech.” Justice Alito found the “three leading factors” in that inquiry met. First, it is “beyond any serious dispute that the top-ranking White House officials and the Surgeon General possessed the authority to exert enormous coercive pressure.” Second, “the officials’ communications with Facebook . . . possess all the hallmarks of coercion that we identified in Bantam Books and Vullo.” And third, “Facebook’s quavering responses to [the Government officials’] demands show that it felt a strong need to yield.”
Snyder v. United States, 23-108.
Title 18 U.S.C. §666(a)(1)(B) makes it a federal crime for a state or local official to “corruptly solicit[,] demand[,] . . . or accept[] . . . anything of value from any person, intending to be influenced or rewarded in connection with” any official business or transaction worth $5,000 or more. By a 6-3 vote, the Court held that §666 does not criminalize “gratuities—for example, gift cards, lunches, plaques, books, framed photos, or the like—that may be given as a token of appreciation after the official act.”
The case involved James Snyder, who in 2013 as mayor of Portage, Indiana awarded two contracts to a local truck company, Great Lakes Peterbilt, to purchase five trash trucks from the company for about $1.1 million. In 2014, Peterbilt cut a $13,000 check to Snyder. The FBI and federal prosecutors suspected that the payment was a gratuity for the City’s trash truck contracts. Snyder said the payment was for his consulting services as a contractor for Peterbilt. A federal jury ultimately convicted Snyder of accepting an illegal gratuity in violation of §666(a)(1)(B). The district court sentenced Snyder to one year and nine months in prison. On appeal, Snyder argued that §666 criminalizes only bribes, not gratuities. The Seventh Circuit affirmed Snyder’s conviction. In an opinion by Justice Kavanaugh, the Court reversed and remanded.
The Court offered six reasons for its holding—text, statutory history, statutory structure, associated punishments, federalism, and fair notice. First, stated the Court, Congress modeled the text of §666(a)(1)(B) on §201(b), the bribery provision for federal officials, not on §201(c), the gratuities provision for federal officials. Section 201(b) contains similar mens rea requirements of “corruptly” accepting a payment “in return for” “being influenced” in an official act, whereas §201(c) contains no express mens rea requirements. Turning to statutory history, the Court observed that when Congress enacted §666(a)(1)(B) in 1984, it “borrowed language” from §201(c). Two years later, Congress “overhauled” §666, “eliminat[ing] the gratuities language” and instead adopting language that resembled §201(b). The Court found it “strange” to interpret §666 to “mean the same thing now that it did before the amendment.”
Third, the Court reasoned that the structure of §666 suggests it is a bribery statute, not a “bribery-and-gratuities” statute. The Court found “no other provision” in the U.S. Code that prohibits both bribery and gratuities in the same provision, and stated that bribery and gratuities are “two separate crimes” with “two different sets of elements.” Further, the “absence of a separate gratuities provision in §666 reinforces that §666 is a bribery statute for state and local officials.” Fourth, the Court observed that for federal officials Congress separated punishments for bribery and gratuities into “two distinct provisions” of §201 to “reflect their relative seriousness.” For example, accepting a bribe as a federal official is punishable by up to 15 years in prison, while accepting an illegal gratuity as a federal official is punishable by only up to 2 years. If §666 covered gratuities, felt the Court, Congress would have “inexplicably” authorized punishing gratuities to state and local officials five times more severely than gratuities to federal officials.
For its final two reasons, the Court applied the principles of federalism and fair notice. The Court stated that “[i]nterpreting §666 as a gratuities statute would significantly infringe on bedrock federalism principles.” States have the “prerogative to regulate the permissible scope of interactions between state officials and their constituents.” “The differing approaches by the state and local governments,” the Court stated, “reflect policy judgments about when gifts expressing appreciation to public officials for their past acts cross the line from the innocuous to the problematic.” Accepting §666 to cover gratuities would, in effect, gut these “carefully calibrated policy decisions.” Additionally, the Court cited the fair notice concern that interpreting §666 to cover gratuities would “create traps for unwary state and local officials.” The Court found no clear lines separating “innocuous” or “obviously benign” gratuities from criminal gratuities, leaving state and local officials to “guess” which gratuities are permissible and risk up to 10 years in federal prison “if they happen to guess wrong.” The Court further rejected the assumption that the Government will enforce this statute “responsibly.”
Justice Gorsuch filed a short concurring opinion. He stated that for all the majority’s reasons, “any fair reader of this statute would be left with a reasonable doubt about whether it covers the defendant’s charged conduct,” and invoked the rule of lenity in joining the majority and siding with the “presumptively free individual.”
Justice Jackson filed a dissenting opinion, which Justices Sotomayor and Kagan joined. Justice Jackson, among other things, criticized the majority for “elevat[ing] nonexistent federalism concerns over the plain text” of §666. Reaching the right conclusion “need not march through various auxiliary analyses: We can begin—and end—with only the text.” In an effort to prevent public officials from using their positions for private gain, Congress used “expansive, unqualified language” in §666 to “criminalize graft involving state, local, and tribal entities, as well as other organizations receiving federal funds.” Section 666 plainly “imposes criminal penalties on state, local, and tribal officials who ‘corruptly’ solicit, accept, or agree to accept ‘anything of value from any person intending to be influenced or rewarded.’” “Influenced” captures quid pro quo agreements made before an official act is taken, and covers bribes. “Rewarded,” meanwhile, “easily covers the concept of gratuities paid to corrupt officials after the fact.” Language of other statutes has similarly used the word “reward” when Congress “wants to criminalize gratuities.”
Justice Jackson then laid out the guardrails present in §666 that provide “adequate notice to those this statute covers.” Officials must accept payment “corruptly.” Section 666 is inapplicable to “expenses paid or reimbursed” or “bona fide salary, wages, fees, or other compensation” made in the usual course of business. It also requires the “criminalized payment be ‘in connection with any business, transaction, or series of transaction’ of the covered entity” and involve something greater than $5,000 in value. Lastly, §666 applies only when a covered entity “’receives, in any one year period, benefits in excess of $10,000 under a Federal program involving’ some ‘form of Federal assistance.’” The dissent then defended Congress’s authority to take legislative action and regulate the acceptance of gratuities for state and local officials. “Section 666’s regulation of state, local, and tribal governments reflects Congress’s express choice to reach those and other entities receiving federal funds.” The Court has “long held that when Congress has appropriated federal money, it ‘does not have to sit by and accept the risk of operations thwarted by local and state improbity.’”
NAAG Center for Supreme Court Advocacy Staff
- Dan Schweitzer, Director and Chief Counsel
- Kia AzadbakhtLaw Clerk
The views and opinions of authors expressed in this newsletter do not necessarily state or reflect those of the National Association of Attorneys General (NAAG). This newsletter does not provide any legal advice and is not a substitute for the procurement of such services from a legal professional. NAAG does not endorse or recommend any commercial products, processes, or services.
Any use and/or copies of the publication in whole or part must include the customary bibliographic citation. NAAG retains copyright and all other intellectual property rights in the material presented in the publications.
