|Argument analysis: Justices divided in procedural battle between Baltimore, oil companies in climate fight
Kannon Shanmugam argues for BP and other fossil fuel companies (Art Lien)
In a speech at Harvard Law School in 2015, Justice Elena Kagan told the audience that “we’re all textualists now” – that is, that any effort to interpret a statute begins (and often ends) with the language of the statute. That principle may ultimately prove dispositive in BP v. Mayor and City Council of Baltimore, in which the justices heard oral argument on Tuesday regarding a procedural aspect of a major climate-change lawsuit. Although the justices expressed concerns about the implications of a ruling for the oil and gas companies who are defendants in the lawsuit, several of them also seemed persuaded by the companies’ argument that their interpretation of the federal law at the heart of the dispute was more consistent with the actual text of the law.
The case began in 2018, when the city of Baltimore sued a group of oil and gas companies, including BP, Chevron and Exxon Mobil, seeking to hold the companies responsible for their role in climate change. Chevron transferred – the technical term is “removed” – the case to federal district court in Maryland, a move allowed by federal law. One of the grounds on which Chevron relied to remove the case was a law known as the “federal officer removal statute,” which allows the removal of lawsuits filed in state courts against federal officers or anyone acting as a federal officer: Chevron contended that the city was trying to hold the oil companies liable for actions that they took at the direction of federal officials, such as the production of fossil fuels offshore under leases with the federal government.
After the district court sent the case back to state court, the companies appealed to the U.S. Court of Appeals for the 4th Circuit. Under federal law, most orders remanding a case to state court cannot be appealed, but there are two narrow exceptions, allowing appeals in cases in which removal was based on either the federal-officer removal stature or a different statute that allows for the removal of civil-rights cases. The court of appeals ruled that removal under the federal-officer removal statute was not proper, and it rejected the companies’ argument that it could review the rest of the district court’s order sending the case back to state court.
Representing the oil and gas companies, lawyer Kannon Shanmugam told the justices that 28 U.S.C. § 1447(d), the statute governing appeals from remand orders, “permits review of the entire order, not particular issues.”
Shanmugam fielded several questions from justices who were concerned that defendants could use the exceptions for federal-officer and civil-rights removals as a loophole to ensure that they could have the court of appeals review the entire order sending the case back to state court, even if the grounds for federal-officer or civil-rights removals were frivolous. Chief Justice John Roberts raised this possibility first, asking Shanmugam why “everyone who wants to keep their case in federal court” wouldn’t “put in as many grounds for removal as they can,” and “all they have to do is tack on one of these federal officer or federal civil rights grounds? Is that right?”
Shanmugam assured Roberts that courts could sanction a defendant that raised a frivolous ground for removal. Moreover, he added, there was no evidence that defendants actually tried to use the exceptions to obtain review of the entire remand order.
Justice Stephen Breyer appeared unconvinced. If you are right, he told Shanmugam, a defendant will rely on the federal-officer removal statute or a civil-rights statute as a ground to remove the case to federal court. Because there’s a “big difference” between a ground being frivolous and meritorious, Breyer suggested, defendants will add one of those grounds. Assuming that the federal court doesn’t find that it’s frivolous, a defendant “will appeal on everything,” which will result in additional delay – directly contrary to the purpose of the statute, which was intended to “cut down on the time and delay caused by appeal.”
Justice Clarence Thomas also confessed skepticism. He told Brinton Lucas, the assistant to the U.S. solicitor general who argued on behalf of the United States in support of the companies, that although his reading of Section 1447(d) may or may not be correct, “I can’t avoid the odd sense that it seems as as though we are smuggling into appellate review … other issues that are not necessarily the issues that are front and center,” like federal-officer removal.
Lucas countered that such a scenario “really isn’t that unusual.” In other contexts, he observed, the grounds that trigger appellate review don’t “necessarily define the scope of that review.” And in any event, Lucas later added, the theoretical possibility of undesirable consequences is no reason to “carve up” remand orders.
Some justices also suggested that the companies’ position was undermined by Congress’ 2011 decision to add the federal-officer removal statute as an exception to the general bar on appellate review of remand orders. Congress made that change in the face of repeated rulings by the courts of appeals limiting appellate review of remand orders to the ground for removal – which, Justice Sonia Sotomayor posited, suggested that Congress understood that the scope of appellate review would not include other grounds for removal and had “ratified” the lower courts’ rulings.
Justice Brett Kavanaugh similarly identified the “ratification” doctrine as a problem for the companies. What do we say to that, he asked at one point? The law was settled, and “no one had gone the other way.” But Kavanaugh later acknowledged that the doctrine was, in his view, sometimes “overused.”
Both Shanmugam and Lucas stressed that the text of Section 1447(d) was on the companies’ side. There is no way, Shanmugam argued, to interpret the provision allowing appellate review of an “order remanding a case” to permit review of only a “portion of an order.”
Roberts seemed receptive to the companies’ text-based argument. He told Victor Sher, who argued for the city, that he would give him “an uninterrupted three minutes to explain to me how the language ‘an order remanding a case shall be reviewable by appeal or otherwise’ should be read to say a portion of an order remanding a case shall be reviewable by appeal or otherwise.”
Sher urged the court to look at the sentence as a whole, including the first clause, which imposes a general ban on appellate review of remand orders. Congress’ use of the words “order” and “reviewable” does not mean that the court of appeals has to address all of the issues raised in an order. Courts have “frequently disentangled” issues, Sher said.
Justice Neil Gorsuch also focused on the text of Section 1447(d). Everyone agrees, Gorsuch said, that the first reference in Section 1447(d) to “an order remanding a case” – in the general bar on appellate review of remand orders – refers to the whole order. And the Supreme Court usually interprets a term the same way throughout a statute, which would suggest that the second reference to “an order,” as part of the exceptions to the general bar, also refers to the entire order.
Kavanaugh also posited that the “text in isolation” is a problem for the city, and this time he appeared skeptical about the weight that the court should give the “ratification” doctrine. “It looks like it’s often used,” he observed, “like icing on a cake already frosted.” “I just wonder,” he continued, “how much work it can do here” when it isn’t clear “that Congress actually focused on this and intended in any way to ratify the interpretation.
Justice Amy Coney Barrett pressed Sher on his argument that a case hasn’t been removed “pursuant to” the federal-officer or civil-rights removal statute “unless it has been correctly removed” under those grounds. “Has any court of appeals,” she asked, “ever adopted that argument?”
After over an hour of argument, the justices appeared divided, and it was hard to predict exactly how the case is likely to come out, especially because Justice Samuel Alito is recused from the case. A decision is expected by summer; however the court decides the case, its ruling will have an impact not only in this case but also in 19 other similar cases around the country in which local governments are seeking to force the fossil fuel industry to pay compensation for coastal flooding, adverse health outcomes and other effects of climate change.
This post was originally published at Howe on the Court.
|Opinion analysis: A narrow win for creditors
On Thursday, the Supreme Court’s opinion in City of Chicago v. Fulton clarified that creditors do not violate the Bankruptcy Code’s automatic stay if they passively retain a debtor’s property after the debtor files for bankruptcy protection. The automatic stay is the provision of the Bankruptcy Code that halts all collection activity to allow the bankruptcy proceeding to unfold without creating a race among creditors.
The city of Chicago, like many municipalities, impounds cars for nonpayment of fines and fees. After their cars were impounded and they sought bankruptcy protection, Robbin Fulton, Jason Howard, George Peake and Timothy Shannon argued that the automatic stay in 11 U.S.C. § 362(a)(3) required the city to return the cars. The city refused, claiming that the debtors needed to use the Bankruptcy Code’s turnover provisions in 11 U.S.C. § 542(a) to request their cars back. The difference between the two provisions is one of timing and convenience. If Section 362 is the operative provision, merely filing a bankruptcy petition would create an obligation for Chicago to return the vehicles to the debtors. If Section 542 is the operative provision, the debtors may need to initiate an adversary proceeding — a mini lawsuit within the bankruptcy case — to obtain their cars.
As several amici noted, and as Justice Sonia Sotomayor explained in her concurrence, these impoundment policies deprive the vehicle owners of the transportation essential to earning the money they need to pay down the fines and fees they owe. For debtors, the timing matters. Although this policy presents many urgent issues, the question before the court in this case was quite narrow. Both Justice Samuel Alito’s opinion for a unanimous court and Sotomayor’s concurrence emphasized that the holding is limited to the question of whether Chicago violated Section 362(a)(3) by passively retaining the debtors’ cars. Indeed, in Shannon’s case, the city had demanded payment as a condition for releasing his car. The opinion explains that, since the court of appeals did not reach that issue, the Supreme Court would not opine on it. In other words, it is possible that the city’s policy with respect to impounded cars does violate the Bankruptcy Code, but its passive retention of a vehicle after its owner files a bankruptcy petition is not by itself a violation of Section 362(a)(3).
Writing for the 8-0 court (Justice Amy Coney Barrett took no part in the case, as it was argued in October before she joined the bench), Alito started with the text. In pertinent part, Section 362(a)(3) provides that “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate” violates the automatic stay. Relying on Webster’s Third New International Dictionary, the opinion explains that “to exercise” in Section 362(a)(3) means “to bring into play” or “make effective in action.” At oral argument, the justices had steered the discussion toward the “metaphysics” of the act/omission distinction – Chicago argued that not returning the cars was an omission, not an action – in several places. That distinction reappeared in the opinion, as Alito explained that “saying that a person engages in an ‘act’ to ‘exercise’ his or her power over a thing communicates more than merely ‘having’ that power.”
Alito then explained that the case was overdetermined: “Any ambiguity in the text of §362(a)(3) is resolved decidedly in the City’s favor by the existence of a separate provision, §542.” Section 542 dictates that entities holding debtors’ property “shall deliver to the trustee … such property or the value of such property unless such property is of inconsequential value or benefit to the estate.” The court identified three reasons why this provision required them to conclude that Chicago’s vehicle retention policy did not violate the automatic stay.
First, the debtors’ reading of Section 362 would render Section 542 “largely superfluous.” Although the statute might add procedural details, the court concluded that such a reading would be “a small amount of work for a large amount of text.”
Second, Alito found the debtors’ reading of Section 362 to contradict Section 542, because the latter exempts property “of inconsequential value or benefit to the estate,” and the former contains no such exemption. While the debtors had argued that Section 362 should be read to include Section 542’s exception, the court found “no textual basis” for doing so.
Finally, Alito looked at the history of amendments to the statute. Congress added the phrase “to exercise control over property of the estate” in 1984. The debtors argued that this amendment allowed them to use Section 362 to enforce Section 542, but the court did not buy that argument. The opinion explains that, “[h]ad Congress wanted to make §362(a)(3) an enforcement arm of sorts for §542(a), the least one would expect would be a cross-reference to the latter provision.” This last argument might be unrealistic given the Bankruptcy Code’s history of slapdash amendments (the 2005 amendments infamously inserted a hanging paragraph in a key provision).
Alito’s opinion contains no surprises following the argument. Even justices sympathetic to debtors, notably Sotomayor, could not read the text to support their argument.
The most interesting part of the ruling is Sotomayor’s concurrence, in which she yet again reveals herself to be the conscience of the court. Taking nearly as much space as the opinion itself, her concurrence explains not only why impoundment rules are bad policy, but also why debtors need their cars returned quickly. Digging into the facts of Peake’s case, she explained that “the City jeopardized Peake’s ability to make payments to all his creditors, the City included”. Ultimately though, Sotomayor concluded that “[i]t is up to the Advisory Committee on Rules of Bankruptcy Procedure to consider amendments to the Rules that ensure prompt resolution of debtors’ requests for turnover under §542(a), especially where debtors’ vehicles are concerned.”
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|Argument analysis: Justices sympathetic to FCC in media ownership dispute
The Supreme Court heard oral argument on Tuesday morning in a dispute arising from the Federal Communications Commission’s attempts to deregulate local media ownership. After nearly an hour and a half of debate, the justices seemed inclined to uphold the FCC’s efforts – even if not on the ground that big broadcasters would prefer.
Ruthanne Deutsch argues for Prometheus Radio Project (Art Lien)
FCC v. Prometheus Radio Project and National Association of Broadcasters v. Prometheus Radio Project, which the court consolidated for oral argument, center on the FCC’s 2017 orders that repealed rules governing “cross-ownership,” which bar the same entity from owning both a daily newspaper and either a radio or television station within the same market and also limit ownership of both radio and television stations in the same market. The FCC also modified rules limiting how many television stations one entity can own in the same local market. The FCC pointed to the decline of the newspaper industry and the proliferation of other media outlets as reasons for the change. On appeal, a divided three-judge panel of the U.S. Court of Appeals for the 3rd Circuit vacated the orders, with the majority holding that the FCC had failed to adequately consider the effect that repealing or loosening the ownership rules would have on media ownership by women and minorities.
The justices spent a sizable portion of Tuesday’s argument trying to clarify the parties’ positions on whether, and in what context, the FCC had previously considered how changes to the media ownership rules might affect ownership by women and minorities, and whether the agency was required to consider those effects. Malcolm Stewart, the deputy U.S. solicitor general who represented the FCC, emphasized that nothing in Section 202(h) of the Telecommunications Act of 1996, which directs the FCC to review its media ownership rules every four years and to determine “whether any of such rules are necessary in the public interest as a result of competition,” obligated the FCC to consider the impact of its 2017 changes on minority and female media ownership. On the other hand, Stewart acknowledged, the FCC had considered the impact in this case; it simply concluded, “based on the evidence we have,” that “there will not be a substantial effect” on ownership diversity from the changes.
Justice Sonia Sotomayor was skeptical of Stewart’s argument that the court should defer to the FCC’s decision to deregulate media ownership. The FCC has said that ownership diversity is a factor to be considered when deciding whether to deregulate, Sotomayor observed, and the court has “a legion of cases that say” that before an agency can reject one position, it must “give it adequate consideration.”
Sotomayor’s colleagues, however, were more sympathetic to the government’s position. In his questions for Ruthanne Deutsch, who represented the advocacy groups challenging the FCC’s orders, Chief Justice John Roberts pushed back against the groups’ contention that the FCC needed to provide a detailed explanation for its changes to the media ownership rules. If the FCC has two different priorities and it decides to focus on one, Roberts told Deutsch, “you seem to be suggesting that as a matter of policy,” it needs “to justify a determination that A is more important than B, when reasonable people can differ … on that.”
Justice Elena Kagan had a similar line of questions for Deutsch. If the FCC has historically considered ownership diversity as one factor in its broader analysis of whether retaining media ownership rules would serve the public interest, but in this case the FCC says that what little data that is available suggests that the changes to its rules won’t have an effect on ownership by women and minorities, Kagan queried, “Why isn’t that enough?”
Justice Neil Gorsuch followed, noting that the FCC and broadcasters were “stuck with rules from the 1970s that, 20 years ago, 25 years ago, Congress said were outdated.” If the FCC determines “in its best considered judgment, after multiple rounds of remands and multiple rounds of data collection and public comment, that it earnestly believes that these rules aren’t going to negatively impact anyone, it might actually benefit most people,” why shouldn’t it be allowed to “experiment with that for four years” and then “see what actually happened”?
Justice Brett Kavanaugh chimed in, noting that federal courts do not make “policy calls.” “We defer to agency policy judgments within the constraints imposed by Congress” as a general matter, Kavanaugh noted, and in this case Congress instructed the FCC to work in the “public interest” – “the broadest possible language” and “not much of a constraint at all” on the FCC’s discretion. “How can we, sitting here,” Kavanaugh concluded, “second-guess all that?”
Justice Amy Coney Barrett was skeptical about Deutsch’s citation to a study that would, Deutsch said, support the groups’ contention that the changes to the ownership rules would hurt minority and female ownership. “I thought,” Barrett said, that the study “was largely backward-looking.” And if it was, Barrett continued, then “why isn’t the Commission correct that there was no evidence in the record that showed there would be harm” from the changes?
Arguing for a trade association of TV and radio broadcasters, lawyer Helgi Walker urged the court to uphold the FCC’s changes to the media ownership rules, but she offered a different reason for the court to do so. In Walker’s view, the 3rd Circuit’s ruling was wrong because nothing in the text of Section 202(h) indicates that the FCC was required to consider the effect of its changes on ownership diversity. Pushing back against a suggestion from Sotomayor that a ruling based on the text of Section 202(h) would be more complicated than a decision deferring to the FCC’s interpretation of the law, Walker emphasized that the broadcasters wanted the court to clarify what Section 202(h) does or does not require precisely because the dispute has been going on so long. Otherwise, she cautioned, the litigation will continue after the next periodic review. Congress intended Section 202(h) to “drive real reform with a focus on competition,” she told the justices, but instead broadcasters were “labor[ing] under these rules that literally go back to the 1940s,” in contrast to “completely unregulated” new media outlets.
Gorsuch also focused on a separate issue: whether the 3rd Circuit should have control over this case and earlier challenges to the FCC’s orders following other periodic reviews. What authority, Gorsuch asked Deutsch dubiously, does the 3rd Circuit have to keep jurisdiction over three different rulemakings over the course of 15 years?
Sotomayor also pushed Walker to draw a line regarding when the courts of appeals should or should not retain jurisdiction in a complex case. Walker responded that this case was an easy one, because a scenario in which one panel holds control over the FCC’s rulemaking for 17 years is “excessive by any standard.”
Although the court after oral argument seemed likely to rule for the FCC and reinstate the 2017 orders, the FCC – which will soon be under Democratic control – is in the middle of the 2018 periodic review required by Section 202(h). In that scenario, more litigation could follow, which would be precisely the result that the broadcasters are hoping to avoid.
This article was originally published at Howe on the Court.
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