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  • Anastasia Boden

Did anyone else notice how many times Cato’s amicus briefs have been mentioned lately at SCOTUS? Asking for a friend…


What’s happening at the Court this week? A lot!

Monday


On Monday, the Court will hear Moody v. Netchoice and Netchoice v. Paxton, two highly anticipated cases coming out of Florida and Texas involving the government's attempt to dictate what speech social media companies allow on their platforms. The states are imposing these mandates, ironically, in the name of free speech.


It's a black fly infringement of liberty in your free speech chardonnay

Based on their perception that social media companies are de-platforming primarily conservative speech, Florida and Texas recently passed laws regulating these companies ability to moderate the content that's put up on their sites. Texas’s law, for example, prohibits social media companies from taking down any content based on its viewpoint. Florida’s law bars social media companies from “deplatforming” political candidates under any circumstances, prioritizing or deprioritizing (also known as shadow-banning) any post or message “by or about” a candidate, and removing anything posted by a "journalistic enterprise" based on its content. It also contains various disclosure provisions, including a requirement that companies disclose their reasoning any time they make certain moderation decisions.


The Fifth Circuit upheld Texas’s law because, in its view, companies do not have a “First Amendment right to censor what people say.” The Eleventh Circuit, by contrast, struck down Florida’s law under the First Amendment. And now the Supreme Court will resolve the split.


The case has far reaching implications, since the law is based at least in part on the idea that social companies have accumulated “monopoly power” that justifies regulation. If that theory is accepted, all sorts of new regulations could be passed when companies become, in the government’s view, too big or too powerful. Thus, the lawsuit has created something of a schism in conservative and libertarian circles, since it invites regulation that would nomrally be opposed by opponents of big government. You can see my colleague Clark Neily debate the inimitable "firehose of ideas" Richard Epstein on the topic at this year's Federalist Society National Lawyers Convention here.


I live in California, which has recently attempted to make social media companies engage in more content moderation, rather than less. It is therefore the inverse of Florida and Texas; it wants companies to take down more people's posts. This fact perfectly illustrates the problem: when you allow the government to dictate speech, it’s not always going to do the kind of dictating that you like.


Full disclosure/shameless plug: Cato submitted an amicus brief in these cases urging the Court to reverse the Fifth Circuit’s opinion. The brief largely discusses the problems of Pruneyard Shopping Center v. Robins, which ruled that states could require shopping mallsa and other public entitites to host other people's speech. In our view, the Court should walk back Pruneyard rather than expand it to new contexts. Whether viewed as a matter of First Amendment rights or property rights, private businesses have an interest in deciding what type of speech they host (the same way that you and I have an interest in deciding who comes to our dinner party or kicking them out if they say something we don't want to tolerate).


Another interesting amicus brief was submitted by employees actually tasked with making content moderation decisions. As they explain in their brief, they often take down some pretty heinous posts, including death threats aimed at the justices themselves. If Florida's and Texas's laws are upheld, they won't be able to do that. They also note that in many cases, free expression requires heavy moderation so that SPAMmers, trolls, and others are weeded out and others can be functionally heard. It's particularly clever since it not only uses real examples from Twitter and other websites to demonstrate the value of moderation, it uses tweets directed specifically at the Court.



In FL's or TX's world, moderators could not take this comment down.


Tuesday

 

On Tuesday the Court will hear McIntosh v. United States and Cantero v. Bank of America.


McIntosh concerns the government's perpetual abuse of rules during litigation. While McIntosh was being prosecuted for robbery, the government made vague allusions to forfeiture but never actually pursued it. In fact, the first McIntosh ever heard anything about forfeiture was at sentencing. Just as the district court was about to sentence him, the government informed the district court that, in addition to a $75,000 restitution order, it was asking for a $75,000 forfeiture money judgment as well as forfeiture of McIntosh's BMW, which was allegedly purchased with proceeds from a prior robbery.


The district court then ordered the government to submit a forfeiture order within a week, but it never did so. McIntosh argued that the government therefore lost its right to seek forfeiture because it failed to timely comply with Rule 32.2, which lays out the required notice for forfeiture. The government's mistake, he said, cost him thousands, because the car's value (which was to be credited against any monetary judgment) had continuously eroded over the years. The district court and court of appeals disagreed, calling the rule a mere “time related directive,” meaning it was a rule that could be violated without consequence (not really much of a rule, amirite?)


This is (yet another) one of those cases where one imagines that if was one of us mere civilians breaking the rules rather than the government, we’d pay dearly. But when it’s the government who breaks the rule, they try to say the rule was just a suggestion.


After McIntosh, the government will consider whether the National Bank Act preempts a state law requiring mortgage lenders to offer a minimum interest rate on escrow accounts, such that the law cannot be applied to national banks. Despite all of the possible analogies to Marbury v. Madison, I’m going to leave it at that.


Wednesday


Wednesday morning the Court will hear Garland v. Cargill, which asks whether a bump stock device is a “machine gun” under federal law.


Since 1986, Congress has prohibited the transfer or possession of any new “machinegun,” which the National Firearms Act defines as any weapon which "shoots, is designed to shoot, or can be readily restored to shoot, automatically more than one shot, without manual reloading, by a single function of the trigger.” But in addition to weapons themselves, the statute also includes “any part designed and intended solely and exclusively, or combination of parts designed and intended, for use in converting a weapon into a machinegun.”


For some context: a “bump stock” allows users to alter their guns so that they spit out hundreds of shots per minute. After the horrific mass shooting in Las Vegas was carried out using bump stocks, the Bureau of Alcohol, Tobacco, Firearms and Explosives deviated from its prior rules interpreted the relevant statute as encompassing bump stocks. The Fifth Circuit held that the statutory definition of “machinegun” does not include bump stocks, and so the ATF's rule was invalid. But there's a circuit split on the issue, and now the Court has agreed to resolve it.


That argument will be followed by Coinbase, Inc. v. Suski, which is back at the Court for a second time. In Coinbase, Inc. v. Bielski, the Supreme Court ruled that a district court must stay its proceedings while a party is appealling a denial of a motion to compel arbitration. Suski involves the appeal referenced in that case. And it asks whether, when parties enter into an arbitration agreement with a delegation clause that delegates certain decisions to an arbitrator, an arbitrator or a court is the proper party to decide whether that arbitration agreement is narrowed by a later contract.

 


Looking forward to seeing the Court discuss Dogecoin, the digital currency that started the whole case.

I'll be back at the end of the week with a recap of the arguments, per usual. In the meanwhile, enoy this article summarizing some recent remarks about collegiality from two very important SCOTUS ladies you may have heard of before....

It’s been a busy few days at the Supreme Court. On Tuesday, the justices issued an orders list that included the denial of cert in Coalition for TJ v. Fairfax County School Board, a Pacific Legal Foundation case concerning the use of racial proxies in K-12 school admissions. The sting of this denial was lessened (a bit) by a fiery dissent from denial of cert (aka dissental) written by Justice Samuel Alito and joined by Justice Clarence Thomas. Justice Alito wrote that the lower court’s decision is based on "a patently incorrect and dangerous understanding of what a plaintiff must show to prove intentional race discrimination." He charged that this reasoning is "a virus that may spread if not promptly eliminated."


The Court also announced decisions in two cases: McElrath v. Georgia and Great Lakes Insurance SE v. Raiders Retreat Realty Co


With Justice Ketanji Brown Jackson writing in McElrath, the unanimous Court held that the jury verdict that McElrath was not guilty of murder by reason of insanity was an acquittal for purposes of the Double Jeopardy Clause, notwithstanding any inconsistency with the jury’s other verdicts. Justice Alito wrote a concurrence, noting that "[b]ecause the Constitution does not permit appellate review of an acquittal, the State Supreme Court’s decision must be reversed." He clarified that this case is "different from [one] in which a trial judge refuses to accept inconsistent verdicts and thus sends the jury back to deliberate further. Some States follow this practice, and our decision does not address it."


Justice Brett Kavanaugh wrote for the unanimous Court in Great Lakes Realty, holding that choice-of-law provisions in maritime contracts are presumptively enforceable under federal maritime law, with narrow exceptions. Justice Thomas concurred, putting the SCOTUS bar on notice that the Court has "retreated from … the unsound holding" of a 1955 case the respondent (the losing side) relied on to argue that state law governs these contracts. 


The justices also heard oral arguments in four cases. Here are the highlights. 


Tuesday

The justices kicked off the day with Corner Post, Inc v. Board of Governors of the Federal Reserve System, which looks at when the six-year statute of limitations, 28 U.S.C. § 2401(a), for APA challenges to final agency action begins to run: when the rule becomes final or when it actually has harmed the plaintiff. 


You can read about the background of the case here, but in brief, Corner Post brought an APA challenge to a rule in 2018 that the Fed adopted in 2011. Corner Post didn’t open its doors until 2017, so it couldn’t challenge the rule during the first six years it was in effect. The Fed argues that Corner Post is out of luck because the statute of limitations has run. Corner Post says the clock began to run from the date it was injured, which was not until 2017 so its challenge is timely. 


Bryan Weir of Consovoy McCarthy made his SCOTUS debut representing Corner Post, the North Dakota convenience store and truck stop (that I hear has great fried chicken). Benjamin Snyder, assistant to the Solicitor General, argued on behalf of the Fed’s Board of Governors.  


Right out of the gate, Justice Thomas wanted to know if there are other cases with a similar fact pattern. Weir pointed out those are in short supply since only one court has adopted Corner Post’s reading of § 2401(a). He explained that even the government agrees that this is a "relatively uncommon" situation and that a regulated entity would normally be injured when a rule goes into effect. But Justice Elena Kagan saw this as an opportunity for open-ended challenges to old agency rules. 


Weir replied that if that were the case, there would have been a flurry of challenges to old rules in the circuit that adopted the same reading of § 2401 as Corner Post. But that "just didn’t happen. There was no uptick." 


Justice Sonia Sotomayor suggested that when businesses open up, they’re accepting the regulatory landscape that’s in place.

Weir answered that the Court has recognized that’s "a tall task to ask of any small business owner" but in any event, the first time Corner Post was injured (and as a result, when its cause of action accrued) was when "it swiped its first debit card and paid its first fee." 


Justice Jackson asked if Corner Post was reading more into the statute than was there.

 


Weir responded that’s how the statute reads, and that since §2401(a) applies not just to APA claims but to other civil actions against the government, the government’s view wouldn’t make sense.  


Justice Alito asked why "late-arising objectors" like Corner Post couldn’t just petition the agency for a new rulemaking to get relief. That’s not a substitute for judicial review, Weir explained, and it puts the government in the driver’s seat. "The government gets to decide when it rules … and it can sit on it for years," Weir argued. Then if a petition is denied, the agency’s decision gets very deferential review by courts. 


The biggest takeaway from the argument is that Justice Jackson maybe sorta gave away the outcome of the Loper Bright and Relentless cases seeking to overturn Chevron. Check this out:

"We had other doctrines." Volokh Conspirator Jonathan Adler had a similar reaction



 When it was the government’s turn, Justice Thomas wanted to know when the government thinks Corner Post’s claim accrued. 

The government's answer left Justice Thomas scratching his head. "Is that normal… ?" And Snyder replied that it's unusual for other contexts but not for administrative law challenges. 


Chief Justice John Roberts wasn’t buying it. He pressed the government for any other way Corner Post could challenge this rulenot an enforcement, not a rule ("maybe they don’t want a rule. They want the government to stop what it’s doing to them")"what else is there?" He continued, "You do have a specific injury inflicted by the government, the individual has standing, and your argument is, well, Congress doesn’t want people to sue, or somebody else had the chance to sue and you could have joined that trade association."


Justice Kavanaugh wanted to know about the real world implications. Snyder said, "it’s pretty hard to overstate the significance of allowing [these types of] challenges to be brought more than six years later." 


This had me thinking of agencies dusting off decades-old laws and discovering new, broad grants of authority (pouring new wine from old bottles), but I digress.


Justice Alito also brought up that Sec 2401(a) is a "very broad statute that applies to every civil action against the United States" and "you want us to say that the term 'accrue' means something different in different contexts … Have we ever said anything like that?"


Justice Amy Coney Barrett brought up the timing of Corner Post's injury and claim accrual.

 

Snyder replied that with pre-enforcement review, "a plaintiff can bring suit even if they are not yet subject to enforcement."


Several justices followed up with questions about what the necessary conditions would have been for Corner Post to challenge the rule (before it opened) and what would be necessary to show standing.


Next up was Bissonnette v. LePage Bakeries Park St., LLC. The Federal Arbitration Act (FAA) establishes a federal policy strongly favoring arbitration over litigation to resolve contract disputes, but it carves out an exception for employment contracts of seamen, railroad employees, and "any other class of workers engaged in foreign or interstate commerce." The question before the Court is whether someone must be employed in the "transportation industry" to come within the meaning of the "other class of workers" clause. 


Independent distributor/truck drivers for a bakery goods company argued they are exempt from arbitration because their work includes transporting these goods. Flowers Food, the bakery goods company, maintained that since they are in the bakery business, not the transportation business, the distributor/truck drivers aren’t exempt. 


Jennifer Bennett, the attorney for the distributor/truck drivers, pointed out that they are not seeking to dramatically expand the class of workers who are exempt from the FAA. Truckers have substantially replaced the railroad employees of yore. "[W]e're not making the exemption broader. We're just taking the people who would have been railroad employees, and now they're truck drivers." Some businesses "use companies like FedEx, and some companies do what Flowers did, which is essentially bring a trucking company in-house themselves. There's no reason that those workers should be treated any differently."


Justice Kavanaugh asked Bennett how they should interpret the "other class of workers" language. What connects seamen, railroad employees, and other workers? Wasn’t it the case that when Congress passed the FAA in 1925, it wanted most workers to be subject to arbitration agreements, and the exemption was intended for industries that had existing arbitration regimes. In other words, “Congress was accommodating the future” when it included the “other workers” clause. 


Bennett replied that "even if this Court were going to try to discern some purpose of the exemption and instead of focusing specifically on the text" (shots fired at the "we're all textualists now" crowd) the assumption that "there was a mandatory arbitration scheme that covered seamen, and that's actually just … not correct." She said some could go straight to court, rather than arbitration. (The attorney for the other side later disputed this characterization).  


Later, Justice Kavanaugh said, "I think the number of workers who are going to be exempt and number of companies who are going to have to deal with this is massive if you lose."


The attorney for Flowers/LePage Bakeries, Traci Lovitt, agreed. She described how in recent years there have been "cases against Domino's franchisees, so you're bringing in every franchise restaurant … You're bringing in the medical industry … because they need to get their products very quickly from one place to another. You're bringing in basically the entire food industry, because … these point-to-sale shipments like breads, things that go bad, beer … that whole industry is now in … You're now bringing in every retail industry that is shipping their ownthey have got, you know, warehouses going to brick and mortars." But the reason this wasn't a problem before is "because the background rule has been that it's the transportation industry."


Justice Alito asked if the lower court’s approach (read about it here) poses line drawing problems. Lovitt responded that it wouldn’t and that, "ninety-five percent of these cases, it's clear. The FedExes, the UPS, the Yellow Freights. It's very clear who's in the shipping industry because they're in the business of shipping other people's goods."


Justice Barrett asked if changes in the transportation industry have made the FAA’s exemption of seamen and railroad employees an anachronism. "And then wouldn’t it be for Congress to fix it?" Lovitt asserted that in 1925, the exemption "encompass[e]d the entirety of the transportation industry while anticipating that the industry was also evolving."


Wednesday

Everyone v. EPA! The justices heard oral arguments on four consolidated applications for stays of EPA's "Good Neighbor" rule. (More on that here.) As University of Texas law professor Steve Vladeck noted, this is only the third time since 1971 the Supreme Court has heard oral argument on an emergency application, so that might explain some of the justices' self-professed confusion over how to handle the matter. Four attorney—Mathura Sridharan for the state challengers, Cate Stetson for the industry challengers, Malcolm Stewart for the federal government, and Judith Vale for the states supporting EPA—appeared before the Court in this supersized oral argument.

A lot of the justices’ questions centered on why they needed to rule now. Justice Jackson asked Sridharan what the emergency was when the parties haven’t even briefed the case in the lower court. Sridharan said, "At the breakneck speed we're going, in order to … get into compliance with an unlawful federal rule, we are spending immense sums, both the states as well as our industries. And on top of that, we are facing the threat of power shortages and heating shortages."


Justice Jackson asked Stetson whether the parties sought expedited review in the D.C. Circuit. Stetson said, "[W]e did move for expedited briefing. We were not given the briefing schedule that we wished … After th[is] Court granted argument in late December, we asked for a delay in order to impose some order on the process between this Court and that court." 


Justice Barrett asked Stetson about the costs the industry challengers have incurred. "[P]art of your argument for emergency relief is the crushing costs and the risk of, you know, energy disruption, et cetera. What has been happening so far?" 


Stetson replied, "The industries that I represent have been incurring costs to try to start permitting, compliance, all sorts of issues involving the run-up to installation of these controls. But let me pause on this because I think it also responds to a question, Justice Kagan, that you asked, which is … we don't need to show in this posture cert worthiness. Nor do we need to show, Justice Jackson, you know, that this is an emergency. What we need to show is for a stay that we have a likelihood of success on the merits and irreparable harm." 


Following up on Justice Kagan’s earlier question about whether the likelihood that the Court would grant cert on the merits is part of the consideration at this stage, Justice Barrett asked Malcolm Stewart what the federal government’s position is on cert worthiness. Is that part of the Court’s assessment, and if so, is this case cert worthy? 


Stewart answered, "[I]t's our view that you should consider cert worthiness asif likelihood of success means likelihood of success in this Court, then that has to be not just would the Court rule in their favor if it took the case but what's the chance that the Court would take the case." But at this stage it’s not cert worthy because "we don't know what the D.C. Circuit is going to do. It's certainly possible that the D.C. Circuit will issue a ruling for or against us that would raise issues of overarching importance, and so the cert calculus wouldwould change then."


There was also a lot of discussion of the reasonableness of the Good Neighbor rule given that twelve of the 23 states were not currently subject to it. Justice Sotomayor wanted to know how the eleven remaining states are harmed by the others not being subject to the rule, since "states are bound by the number that was calculated on the larger group." Here's more from Justice Sotomayor:

"If twelve are not paying it, what does it matter to you?" she asked. Stetson said, "that is the bug and not the feature of this plan … EPA looked at the aggregate costs of controls over … hundreds of [electric generating units] across all of the states, hundreds of industries, units across all of the states. It figured out what that aggregate cost was and then it decided to allocate obligations."  


Justice Kavanaugh followed up on this: "[T]o Justice Sotomayor's question, show us how it works. But that's … [EPA’s] burden, I think, to showto justifyto not be arbitrary and capricious." But EPA's didn't have an explanation. It's a "goose egg." Stetson agree, "It is a goose egg."  



Later in the argument, the Chief tried to drill down with Stewart what the smallest number of states EPA could have implemented this plan for; what if it was just the smallest state of the 23? 

Stewart replied, "I don't think that they have any plan to do that."


Justice Alito asked if someone brought a motion for reconsideration by EPA, is there a deadline for EPA to respond? Stewart said no but "there is a mechanism for arguing that EPA has unreasonably … delayed." How reassuring.


Last but not least was Warner Chappell Music, Inc. v. Nealy.


The question is whether under the discovery accrual rule, a copyright plaintiff can recover damages for acts that occurred more than three years before the filing of a lawsuit. The Court phrased the question presented to avoid deciding when a copyright infringement claim accrue. (Under the discovery rule, claims accrue when the copyright owner knows or reasonably should have known about the infringement while under the injury rule, the claim accrues on the date of the infringement.) But that didn’t stop the justices from asking about it. 


Justice Thomas asked the first question: Did the lower court rule on the existence of the discovery rule? 


Representing alleged infringers Warner and Artist, Kannon Shanmugam replied that the lower court applied its own precedent. But the scope of the discovery rule "is to some extent intertwined with the substantive question that is presented here."


Justice Barrett jumped in: Hold on… "Mr. Shanmugam, we took it off the table, and your cert petition did not ask us to grant cert on the merits of the discovery rule."


The two went back and forth about whether a footnote in the cert petition was sufficient to present the issue. Justices Sotomayor and Jackson entered the fray. Ultimately, Shanmugam replied, "Once this Court rephrased the question presented, we abandoned any argument that there is no discovery rule. My point to this Court is simply that the scope of the discovery rule is relevant to this question."


This led Justice Alito to ask:

The two questions are (1) whether there is a discovery rule for when copyright infringement claims accrue; and (2) if there is, how does that affect relief? Alito suggested maybe they should dismiss the petition as improvidently granted, aka DIG it (can you dig it? IYKYK).


Justice Jackson asked where the statute says damages are limited. "I take it your position is you can't go back any more than three years, but I don't see that in the statute."


Shanmugam responded: “[W]hen it comes to retrospective relief, if the act took place more than three years earlier, the implication of the statutory language is you are out of luck. You cannot recover for retrospective relief. If you're bringing a claim for prospective relief, it will turn on whether there is a likelihood of future infringement.”


Justice Gorsuch wanted to know: “How do you get to this … a discovery rule, but it’s only a three-year discovery rule?”



Justice Jackson asked Joe Earnhardt, the attorney for the copyright plaintiff, about the possibility of a DIG.


He replied, "I think either path is viable … [but] I believe it would be helpful to theto the bar to clarify that it's wrong, that there is no separate damages bar, and that would resolve the circuit split that currently exists."


Of the discovery rule, Earnhardt asserted, "[W]e don't have sort of a dog in the hunt … in this case about whether there is a discovery rule or not, but, for 40 years, the courts of appeals unanimously have found that there is one, and Congress during that time period has amended the Copyright Act 79 times, reasons big and small, and they've never stepped in to say that there's not one."


Justice Gorsuch followed up: "[Y]ou don’t have a dog in the hunt on whether there’s a discovery rule … then why are we here?"


Earnhardt explained, "All I mean by saying we don't have a dog in the hunt is we don'twe don't have that issue before us."


That's it for this week. I'll leave with you my favorite SCOTUS item of the week: Six of the eleven advocates this week were ladies. To quote Shania Twain, "Let's go girls."

  • Elizabeth Slattery

After a brief lull in oral arguments, the Court is BACK! Though if you’re a judicial junkie, there has been plenty to occupy your time the past couple weeks.  


Also, if you missed it, Anastasia and I appeared on the Institute for Justice's Short Circuit podcast to talk about a couple rulings from the Fifth Circuit involving Humphrey’s Executor (where are my Article II aficionados at???) and Younger abstention. 


Turning our attention back to the Supreme Court, the justices are packing a lot (truckers, truck stops, hip hop, and more!) into just two days of oral arguments this week.


Tuesday


The first argument of the week is Corner Post, Inc v. Board of Governors of the Federal Reserve System, in which the justices will grapple with the timing of when someone challenging an agency’s action must bring a suit pursuant to the Administrative Procedure Act (APA). 


The APAaka the Constitution for agenciesauthorizes judicial review of an agency action that causes a regulated party to “suffer[ ] legal wrong . . . or [be] adversely affected or aggrieved.”  The APA includes a generous six-year statute of limitations “after the right of action first accrues” for suit to be filed. Agencies have argued (successfully in several lower courts) that the clock begins to run from the date an agency action becomes final. In other words, as the plaintiff in this case puts it, the “clock starts ticking for everyone the day the agency acts, no matter when that action first harms a particular plaintiff.” Challengers of agency action have maintained the clock begins to run when the action has actually harmed them.

Corner Post is a convenience store and truck stop in Watford City, North Dakota that opened in 2018. It sought to challenge a rule issued by the Board of Governors of the Federal Reserve (Board) in 2011 that imposes certain fees on merchants that accept debit card payments. In 2021 (ten years after the rule went into effect and three years after Corner Post opened its doors), Corner Post filed an APA suit challenging the rule in federal district court, arguing that it exceeded the authority Congress gave the Board. The government saidas I often tell my kids“Tough tacos!” because the statute of limitations had run out.


The district court and the U.S. Court of Appeals for the Eighth Circuit agreed with the government. While one circuit court has held that APA claims first accrue when the plaintiff is injured, the Eighth Circuit joined five other circuits in holding that the claim accrued “upon publication of the regulation.” The court also noted that Corner Post was not entitled to equitable tolling of the statute of limitations because it had not demonstrated it “diligently” pursued its rights (you know, when it didn't even exist). 


Now at the Supreme Court, Corner Post argues that aside from the APA’s plain text supporting its position, the Court has previously held that a statute of limitations begins to run when a plaintiff “has a complete and present cause of action,” which does not occur until a plaintiff “can file suit and obtain relief.” Corner Post further maintains the Court already has construed the APA’s six-year statute of limitations to follow this rule.   


The government says Corner Post offers “no sound basis” for its “challenger-by-challenger approach” and that the APA’s language governing who can challenge an agency’s action doesn’t “extend the deadline for when such challenges may be brought.” While Corner Post points out the unfairness of the statute of limitations running before it could even sue, the government responds that holding otherwise would “frustrate reliance interests … and would allow exactly the sorts of stale, decades-old claims that statutes of limitations are intended to prevent.”


Anastasia’s Cato Institute filed an amicus brief maintaining that a regulatory agency should not be allowed to evade judicial scrutiny when its actions impose new injuries. And my colleagues at Pacific Legal Foundation also filed an amicus brief pointing out that this is just one of the government’s many tricks to avoid scrutiny from courtsalong with standing, ripeness, and mootness as well as “insist[ing] their coercive conduct isn’t really [final] ‘agency action’ to begin with.”   


The justices have heard several cases implicating statutes of limitations in recent yearsin the context of copyrights, federal tort claims, Veterans Court appeals, and the federal quiet title act last term (which was ably litigated and won by my colleagues at Pacific Legal Foundation). And these cases have led to expanding Americans’ access to courts, rather than allowing the government to rely on cramped reading of statutes to shield its actions from judicial review. 


If you want an extended run-down of the oral argument, tune in Wednesday for this Federalist Society webinar featuring my PLF colleague Molly Nixon.  


The second argument of the day is Bissonnette v. LePage Bakeries Park St., LLC, which involves a class action alleging labor law violations by the company that manufactures Wonder Bread and many packaged baked goods including buns, rolls, and snack cakes


The Federal Arbitration Act (FAA) establishes a federal policy strongly favoring arbitration over litigation to resolve contract disputes. It carves out an exception to that preference for arbitration in employment contracts of seamen, railroad employees, and other “transportation workers” engaged in foreign or interstate commerce.


The Bissonnette plaintiffs are independent distributors that purchased the rights to sell and distribute packaged baked goods manufactured by Flowers Foods. They filed a putative class action against Flowers Foods and its subsidiary LePage Bakeries, alleging several violations of federal labor laws. They argued they are exempt from the FAA as transportation workers. (The parties disagree about whether the plaintiffs are “distributors” or “truck drivers.” I'm Switzerland on the matter, so I will refer to them as distributor/truckers.)


Flowers Foods filed a motion to compel arbitration, which the district court granted. On appeal, the U.S. Court of Appeals for the Second Circuit agreed, holding the plaintiffs are not “transportation workers” under the FAA because they are employed in the bakery industry, not a transportation industry. The court reasoned that an individual works in a transportation industry if the work “pegs its charges chiefly to the movement of goods or passengers” and the “predominant source of commercial revenue is generated by that movement.” A dissenting judge maintained that “[o]f course these truckers are transportation workers.”


The question presented to the Supreme Court is whether a class of workers that is actively engaged in interstate transportation must also be employed in the transportation industry to be exempt from the FAA.


The distributor/truckers argue that the categories Congress exempted from the FAA were defined by their work transporting goods, not by revenue or price structures or the employer’s work more generally. They claim the lower court’s requirement that workers must be in the transportation industry is unsupported by the FAA’s text or the Supreme Court’s precedents. They point to the most recent FAA case the Supreme Court decided, Saxon v. Southwest Airlines (2022), in which it explained that “any class of workers directly involved in the transporting of goods across state or international borders falls within [the FAA’s] exemption.” 


Flowers Foods maintains that Congress excluded seamen and railroad employees from the FAA so it would not “unsettle established or developing statutory dispute resolution schemes” to “ensure that the channels of national and international commerce remained stable and open.” By contrast, baked goods manufacturers and their distributors are not engaged in the transportation industry. Flowers Foods asserts the distributor/truckers’ reading of the FAA exemption is “so broad it makes the prior enumeration meaningless” and “leaves countless workers without any federal arbitration remedy.” It also charges the distributor/truckers with misreading Saxon, which considered whether “a particular class of workers within the transportation industry” (i.e. cargo loaders for Southwest Airlines) was exempt from the FAA. 


I don’t really have a dog in this fight but would note that the rise of the “gig” economy has posed questions about the scope of the FAA and drivers for Grubhub, Uber, Amazon, and more. Arbitration is supposed to offer contracting parties a quicker, cheaper, and less formal way to resolve disputes, but these benefits are undercut when the parties nevertheless end up in court arguing about whether to arbitrate their claims at all.


Swiss flag

Wednesday


The justices will start the day considering four consolidated applications for stays in Ohio v. EPA, Kinder Morgan, Inc. v. EPA, American Forest & Paper Association v. EPA, and U.S. Steel Corp. v. EPA. It's everyone against EPA day.


The Clean Air Act divides responsibility between the states and federal government, tasking EPA with setting minimum air quality standards and allowing states to come up with plans to meet those standards. These cases stem from EPA’s disapproval of nearly two dozen states’ plans to implement air-quality standards for ozone pollution set by the agency in 2015. EPA then imposed the Good Neighbor rule, requiring 23 states to follow a federal plan to reduce smog-forming emissions that affect downwind states' ability to meet mandated air quality standards.


Several industry groups and businesses, as well as Indiana, Ohio, and West Virginia filed petitions for review of the rule, arguing it is arbitrary and capricious agency action. The U.S. Court of Appeals for the D.C. Circuit denied requests to stay the Good Neighbor rule while it considers the merits of these petitions. The challengers sought emergency relief from the Supreme Court, asking the justices to stay the rule while the legal challenges proceed in the D.C. Circuit. The Supreme Court announced it would hear oral arguments on the stay applications. 


Several states also challenged EPA’s disapproval of their plans in other appellate courts (and obtained stays of the rule), but those are not at issue in the consolidated cases the Supreme Court will hear this week. 


State Farm man on phone at desk
Like a "Good Neighbor," EPA is there.

It’s a high bar to obtain an emergency stay from the Supreme Court. The justices consider three factors: (1) whether the applicants are likely to succeed on the merits, (2) whether the applicants will be “irreparably harmed” without the stay, and (3) whether the balance of equities and “the public interest” favor a stay. And it's not every day the justices hear arguments on a stay application; they often are decided by one member of the Court based only on the stay application and response (as part of the so-called "shadow docket.")


The challengers argue the Good Neighbor rule “simultaneously abrogated the rights of States to regulate air pollution within their borders” and forced regulated industries “into the immediate expenditure of hundreds of millions of dollars pending the lower court’s review, all while jeopardizing the reliability of the electric grid.” Further, the challengers contend that EPA’s decision to exempt more than half of the states that were originally subject to the rule undermines its claim that uniform application is necessary to achieve its goal. They also point out that since the rule has been stayed for some states, there is no harm in staying its implementation here while the D.C. Circuit cases are pending. 


EPA maintains that the challengers are seeking “extraordinary relief” that should be granted “sparingly and only in the most critical and exigent circumstances.” In the agency's view, the states and industry groups have not satisfied the demanding standard for injunctive relief. It asserts that delaying implementation of the rule would “impose negative health consequences and additional regulatory burdens on downwind States and their citizens.” It urges the Court not to consider the appellate stays of the rule because “the validity of [EPA’s disapproval of state plans] is not the subject of this suit and has not been finally determined by any court.”


While these legal challenges have been pending, EPA has been hard at work and proposed a rule in January that would subject five more states to the Good Neighbor rule. The Solicitor General sent a letter to the Court explaining, “To the extent that this Court’s forthcoming decision on the pending applications affects the validity of the proposed rule, EPA will of course take that into account before finalizing the rule.”


The second argument of the day is Warner Chappell Music, Inc. v. Nealy, and the statute of limitations fun continues! This case has something for everyonecopyright law, backstabbing, hip hop, and so much more. Let’s dig in. 


The Copyright Act allows a copyright owner to bring an action for infringement within “three years after the claim accrued.” The law does not define when a claim accrues, so most courts follow the discovery rule (holding that claims accrue when the copyright owner knows or reasonably should have known about the infringement) instead of the injury rule (holding that claims accrue on the date of the infringement). This case concerns whether a copyright owner may recover damages for acts that occurred more than three years before the suit was filed. 


In the early 1980s, two men in FloridaSherman Nealy and Tony Butlercreated Music Specialist, Inc. (MSI) and recorded several singles that were registered with the Copyright Office. Butler wrote or cowrote most of MSI's songs, with Nealy serving as a producer. MSI was Miami bass music (aka booty bass), a subgenre of hip hop. In a tale as old as time, MSI broke up, Nealy landed in prison for dealing cocaine, and Butler started 321 Music LLC. At some point while Nealy was in prison, Butler licensed the rights to MSI works to other artists. One arrangement allowed Flo Rida to “interpolate” (which is different from sampling) MSI’s 1984 “Jam the Box” in the 2008 song “In the Ayer.”  


Later that year, Butler entered an agreement with Warner Chappell Music, Inc. and Artist Publishing Group, giving them administrator rights over MSI’s catalog. Nealy got out of prison and learned that yet another person (Robert Crane) was distributing songs from the MSI catalog. Nealy and a lawyer met with Crane about this potential infringement, but there was no resolution before Nealy landed back in prison from 2012 to 2015. There was ongoing litigation between Crane and Butler, Warner, and Artist over the MSI’s catalog, but Nealy was not involved in that litigation or aware of it, he claims. After he was released from prison, Nealy says that in 2016 he learned about Butler’s deal with Warner and Artist. He commenced this copyright infringement action against Warner and Artist in 2018.


The case ping-ponged between the district and appellate court, with the district court certifying to the appeals court the question of whether damages are limited to a three-year “lookback period” from the date the complaint was filed. Warner and Artist argued to the U.S. Court of Appeals for the Eleventh Circuit that the Supreme Court had already settled the matter when, in Petrella v. Metro-Goldwyn-Mayer, Inc. (2014), it held that a copyright owner may “gain retrospective relief only three years back from the time of suit.”


The Eleventh Circuit disagreed, holding that a copyright owner may recover retrospective damages if the claim was timely under the discovery rule. It reasoned that Petrella involved claim accrual under the injury rule, so its discussion of retrospective relief is inapplicable in a case using the discovery rule. The court also noted that the text of the Copyright Act does not mention a three-year limit on remedies for an otherwise timely claim.


As an aside, Petrella is a fascinating copyright dispute over Raging Bull, the 1980 Martin Scorsese film about real-life boxer Jake LaMotta. MGM renewed its copyright of the film in 1991, and Paula Petrella, the daughter of a then-deceased man who collaborated on three works that formed the basis for the film’s screenplay, threatened to sue MGM for copyright infringement. She didn’t commence her suit until 2009. It eventually reached the Supreme Court, which allowed her suit to go forward while limiting the period of relief to the three years prior to her filing of the complaint. Petrella and MGM ultimately settled for an undisclosed amount


Now at the Supreme Court, Warner and Artist renew their arguments about Petrella governing. They also contend the broad discovery rule, as applied by some circuits, is inconsistent with the Copyright Act and the Court’s precedents. The discovery rule should be limited to discovery “delayed by fraud, latent disease, or medical malpractice.”


Nealy urges the Court to adopt the majority rule allowing damages for “all timely claims” instead of limiting them to three years before the complaint was filed. He also says the fate of the discovery rule is not properly before the Court in this case. Indeed, the Court reframed the question presented by Warner and Artist to avoid taking on the discovery vs. injury rules, but the justices are “Supreme” so (though unlikely) they could change their minds and reach that issue.


That’s all for now! Check back later this week for highlights from these arguments. 


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