This block of oral arguments include issues concerning administrative agency authority (in the context of e-cigarettes), sovereign immunity for the confiscation of property during the Holocaust, healthcare for trans minors, the fraudulent inducement theory under federal mail and wire fraud laws, rights of reservists, causation under environmental law, and an equity court’s authority to award disgorgement of profits. [See menus at the top of the page for information about attending arguments in person or listening in online.]
Monday, December 2
First up is a critical case involving the power of administrative agencies, this time in the context of vaping and e-cigarette products. A 2009 law, the Family Smoking Prevention and Tobacco Control Act, prohibited flavored “cigarettes” and required FDA approval of any new tobacco products, which can come only after the agency has determined that the new product is “appropriate for the protection of the public health.” 21 U.S.C. § 387g(a)(3)(A). The companies in FDA v. Wages and White Lion Investments, L.L.C., sought approval for e-cigarettes (with names including “Rainbow Road,” “Crème Brulee,” and “Jimmy the Juice Man Peachy Strawberry”), asserting that they would allow adult smokers to transition to less harmful products. The FDA rejected the application, and the 5th Circuit held that the FDA action was “arbitrary and capricious” under the Administrative Procedures Act, 5 U.S.C. § 706. Importantly, this is a line drawn by statute and is different from the Court-defined deference under the recently overruled Chevron framework, although there is good reason to think that some members of the Court will view administrative agency authority with a similar level of skepticism/hostility. A critical issue in this case is whether the FDA rejected the applications because it “secretly” had a requirement that the applicants provide longitudinal studies that affirmatively show the health value of the product or simply because the FDA found that the studies the applicants did provide did not, in fact, support the benefits the companies claimed but instead only demonstrated serious risks to youth. Amy Howe has a useful and more thorough overview, which also notes that the 5th Circuit decision is out of step with other Circuits in multiple respects and was authored by “Judge Andrew Oldham, often mentioned as a possible nominee for the Supreme Court if a vacancy arises during the second Trump administration.”
The second case today is not one for the casual observer – unless you’re particularly interested in how sovereign immunity impacts bankruptcy estates! When a bankrupt entity makes a payment that does not provide it anything of value (and especially when it benefits someone other than the creditor), that is often treated as a “fraudulent conveyance” and the funds must be returned to the bankrupt estate to be fairly apportioned out to all creditors. In U.S. v. Miller, the company paid back taxes to the IRS, which arguably benefited the owners individually, and then filed for bankruptcy. The IRS claims that sovereign immunity prevents application of state law that would recover that payment. Useful explainer here.
Tuesday, December 3
Just one case today, Republic of Hungary v. Simon, arising from “the Hungarian government’s confiscation of property owned by Jews during the Holocaust. ‘Nowhere was the Holocaust executed with such speed and ferocity as it was in Hungary.‘” (D.C. Circuit decision.) The Court will, once again, focus on the scope of the Foreign Sovereign Immunity Act. FSIA permits suits against sovereign entities for property taken in violation of international law that also “is present in the United States in connection with a commercial activity carried on in the United States by the foreign state.” The Supreme Court has held that states taking their own citizens’ property is not a violation of international law that triggers an exception to sovereign immunity. So the DC Circuit here only allowed claims by Czechoslovakian citizens to go forward against Hungary, rejecting claims by (arguably) Hungarian citizens that they were “stateless” by the time Hungary seized their assets.
As to the US commercial-nexus requirement, the Circuit remanded the case for factual findings but noted that “plaintiffs need not produce evidence directly tracing the liquidated proceeds of their stolen property” but rather the defendants would bear the burden to “affirmatively establish by a preponderance of the evidence that their current resources do not trace back to the property originally expropriated.” This allocation of the burden of proof was required because “Congress knew that an expropriating foreign state or instrumentality thereof might ‘exchange[]’ or liquidate the stolen property—i.e. convert it to cash or cash equivalents. It included language in the FSIA to enable plaintiffs to satisfy the expropriation exception’s jurisdictional nexus requirements in those circumstances.” D.C. Circuit, citing 28 U.S.C. § 1605(a)(3).
The Supreme Court has accepted cert. on: “(1) Whether historical commingling of assets suffices to establish that proceeds of seized property have a commercial nexus with the United States under the expropriation exception to the Foreign Sovereign Immunities Act; (2) whether a plaintiff must make out a valid claim that an exception to the FSIA applies at the pleading stage, rather than merely raising a plausible inference; and (3) whether a sovereign defendant bears the burden of producing evidence to affirmatively disprove that the proceeds of property taken in violation of international law have a commercial nexus with the United States under the expropriation exception to the FSIA.”
Wednesday, December 4 – Trans Rights and Tenn. SB 1
One of the more politically contentious cases is scheduled for today: U.S. v. Skrmetti concerns Tennessee’s SB1, which prohibits puberty blockers, hormone therapy, and surgeries for trans minors. These are very familiar issues, so I won’t say much here. KFF offers a thorough overview of this specific case as well as laws concerning healthcare for trans minors nationally. The Court has accepted cert. on a 14th Amendment equal protection question. The federal government argues that the law classifies on the basis of sex:
the law frames its prohibition in explicit sex-based terms: The covered treatments are banned if they are prescribed “for the purpose” of “[e]nabling a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex” or “[t]reating purported discomfort or distress from a discordance between the minor’s sex and asserted identity.” But the law leaves the same treatments entirely unrestricted if they are prescribed for any other purpose, such as treating delayed or precocious puberty. Thus, for example, a teenager whose sex assigned at birth is male can be prescribed testosterone to conform to a male gender identity, but a teenager assigned female at birth cannot.
Accordingly, expect a lot of argument concerning Justice Gorsuch’s decision in Bostock, which held that Title VII’s prohibition on “sex” discrimination encompassed discrimination on the basis of gender identity (or sexual orientation). This would allow supporters of trans rights to subject the law to heightened scrutiny under the 14th Amendment as a form of sex discrimination, without having to argue for the level of scrutiny that should apply to discrimination on the basis of gender identity.
Monday, December 9
The first case today concerns the fraudulent inducement theory under federal mail and wire fraud laws, in the context of a scheme to disguise business arrangements in order to satisfy the “disadvantaged business enterprises (DBE)” contracting rules. Federal Dept. of Transportation funds are awarded subject to requirements that recipients set participation goals for DBEs. In Kousisis v. U.S., the contractor committed to working with a DBE but that was just a pass-through entity, which got a 2.25% fee on supplies purchased from other entities. The Court appears to have taken the case to resolve a “Circuit split,” concerning “whether deception to induce a fair commercial exchange is property fraud,” according to the Petition. The case has not received a great deal of attention, but there are useful summaries here and here.
The second case today, Feliciano v. Dept of Transportation, is important for people serving the reserves: “Whether a federal civilian employee called or ordered to active duty under a provision of law during a national emergency is entitled to differential pay even if the duty is not directly connected to the national emergency.” The Federal Circuit Blog offers a thorough argument preview.
Tuesday, December 10
An environmental law case today concerning causation could have major implications for the government’s response to climate change: “Whether the National Environmental Policy Act requires an agency to study environmental impacts beyond the proximate effects of the action over which the agency has regulatory authority.” The most familiar component of NEPA is probably the requirement for an environmental impact statement (EIS) for major federal projects. In Seven County Infrastructure Coalition v. Eagle County, Colorado, the Surface Transportation Board approved a railway after its EIS declined to consider how the new line would impact existing lines or the impacts of increased crude oil drilling, refining, and transportation (including potential spills). Berkeley Law offers a very thorough discussion of causation and environmental law as part of its assessment of this case.
Wednesday, December 11
The final December argument comes in the context of a trademark infringement award that required disgorgement of profits (coming to some $43 million), but could have broader implications for how courts calculate awards, as this post notes. The question presented sheds a little light on the rather absurd caption: Dewberry Group, Inc. v. Dewberry Engineers, Inc., Whether an award of the “defendant’s profits” under the Lanham Act can include an order for the defendant to disgorge the distinct profits of legally separate non-party corporate affiliates.